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IR35 - Low Risk

If you have taken the ‘business entity’ tests, and you are in the ‘low risk’ band, you need to keep evidence to support your answers. If HMRC check whether IR35 applies to you, you will need to provide evidence that you are in the ‘low risk’ band.

If your evidence proves to be under HMRC satisfaction that IR35 does not apply to you or that you are in the ‘low risk’ band, the IR35 review will be closed. And they will undertake not to check again whether IR35 applies to you for the next three years, provided that:

  • the information you have given us is accurate
  • your circumstances – and, in particular, your working arrangements – do not change in that time.

The business entity tests look at how your business works overall. But, for the purposes of calculating PAYE and NIC under IR35, you need to consider each engagement separately.

So, if you are in the ‘low risk’ band, you must still keep an eye on your engagements.

If you are in the ‘low risk’ band, you may happen to enter into an engagement which is within IR35. If so, your intermediary must apply the IR35 rules to the income from that engagement.

So based on my IR35 Business Entity Test results which option is the best for me? Going with an Umbrella Company or going with my own limited company? Find out more.