Will changes to IR35 rules affect Small Businesses?

The Government proposes using criteria similar to the Companies Act 2006 (CA 2006) to define small business. Section 382 CA 2006 defines a small company. In brief, a company counts as a small company if for a particular financial year it meets two or more of the following conditions (see S382(3)):

1. Turnover – Not more than £10.2 million

2. Balance sheet total – Not more than £5.1 million

3. Number of employees – Not more than 50

If you sit outside of this, you will have to understand the IR35 rules and use an appropriate assessment tool to reach an accurate status decision. In 2017 the government introduced CEST which is an online tool. CEST has come in for some criticism and the government has committed to working with stakeholders to enhance the tool. More news with follow in Autumn 2019.