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IR35 issues

I write to clarify IR35 and issues raised on criminalisation of IFAs. I

urge readers to under-stand the real implications.

First, the Inland Revenue does not make it a policy to incarcerate

taxpayers indiscriminately Second, if IFAs were to come under IR35 (which

in most cases is unlikely), this usually would be dealt with by means of

financial redress.

IR35 centres on the question of whether an IFA trading would have been

employed were it not for the setting up of self-employment or the formation

of the company through which to trade. The “normal” IFA, that is, the oneto

five-partner firm should not come under the IR35 legislation. IR35 applies

to an individual or partnership who effectively has one clientfor whom they

continuously work. IFAs have literally hundreds of clients.

In no way would the emp-loyment provisions apply in that situation as it

would require each and every client to instruct the IFA how to work, when

to work and for the client to provide the IFA with the tools of the trade,

for example, computers.

IFAs are no different to any other business. As regards the relationship

between the IFA and the networks, a distinction needs to be drawn between

overall control of a business and taking responsibility for a particular

aspect of a business, that is, compliance.

Merely providing the systems for compliance in no way constitutes an

employer/ employee relationship.

There may be certain cases where an IFA may work within an IFA firm and

because of the relationship may be caught under IR35 but this situation is

no different to any other employer/employee situation.

As regards an IFA being responsible for misselling to a client by not

advising him sufficiently about IR35, advisers are not tax experts. They

should perhaps advise their client to see their accountant and then base

their own proposals on that advice.

Jonathan Friedman

Friedmans Chartered Accountants, London E11

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