When explaining the types of individuals IR35 applies to you will hear the terms ‘inside’ and ‘outside’ IR35 being used.
To be ‘inside’ IR35 means the individual is, for tax purposes, an employee and is subject to PAYE.
A genuine contractor is ‘outside’ IR35 status. To be 'outside IR35' means that you are operating as a genuine business (for example taking financial risk), and therefore operating outside of the IR35 rules. Contractors operating 'outside IR35', are able to pay themselves a salary, draw the remainder of income as dividends, and remain responsible for their own taxes.
HMRC is interested in individuals that claim to be operating ‘outside’ IR35 but are, other than by name, an employee of the company.
According to reports HMRC will have new powers to look at bank accounts without the account holder being told. Currently, banks must tell customers if tax officials request to look to their statements.
