New HMRC Penalties for Contractors from 01st April 2009
For all tax returns submitted after 01st April 2009, under new legislation (Schedule 36 of the Finance Act 2008), HMR&C will be able to impose financial penalties on any contractors who do not take reasonable care in assessing their contract and working arrangements in respect to IR35.
Don’t run the risk; use ContractorUmbrella to avoid any possibility of such problems! ContractorUmbrella process your payments through PAYE and will ensure that you pay the correct tax and NI contributions from the outset.
As an example, a contractor sources his first contract as a help-desk assistant. His contractor colleagues advise him that paying himself a small salary and drawing the remaining income as dividends, through his own Limited Company is the most tax efficient way to be paid. Happy with this advice; it is exactly what he does, without having a professional review carried out on his contract to determine his IR35 status.
As a result, he underpays his tax contributions by £10,000 throughout the course of the financial year. Under the new legislation, HMR&C have the power to recover the underpayment of £10,000, impose a penalty of 100% of the deficit and charge interest.
This potentially leaves the contractor in question owing £20,800 in penalties and interest to HMRC.
If you fall inside of IR35 or are unsure of your IR35 status, use ContractorUmbrella to ensure that you do not fall foul of the new government legislation. Your income is processed through PAYE and therefore the IR35 rules will not apply to you. Rest easy at night without the worry of a big tax bill and fine!
ContractorUmbrella also provides a professional IR35 review service for contractors. If it is found that you fall inside of IR35 and as a result register, the review charge is waived.
If you would like to make an enquiry about our services, please do not hesitate to contact a member of our team on 01206 713680 or email us at email@example.com.
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