Are Professional Contractors Exempt from IR35 and AWR?
Although IR35 and AWR are totally different pieces of legislation, they are to some extent, interrelated. IR35 is tax legislation that determines whether or not a contract worker can be considered an employee whilst AWR ensures that contract workers who are employees will be treated equally as those who were directly recruited by the end client, the hirer.
The bottom line in both instances is whether or not the contractor can be considered an employee. If there is any question as to whether you are within the scope of either IR35 or AWR, the certified accountancy Nixon Williams can consult with you to help you make that determination. In most cases, a professional such as a doctor, lawyer or anyone certified by a professional body can be considered outside the scope of both IR35 and AWR.
They are the professionals and most often to not work under the direct supervision of the hirer. This has become the standard litmus test for determining what kinds of taxes must be paid (i.e. National Insurance) and whether or not the contractor is privy to equal benefits as permanent hires. However, there may be times when even professionals can be under the direct supervision of the hirer so there is another test which must be met.
As it is explained on nixon williams, the final determining factor is whether or not the contractor is working as a business or as an employee. If the professional contractor is in business as a limited company, for example, and is a shareholder in that business, then he or she would not generally be considered an employee of the hirer. When asking if professionals fall under the scope of IR35 and AWR, the final answer lies in determining whether they can be considered to be an employee or if they are self employed.