IR35 contractor earning categorisation by home office, employee or self employed

[jpsingh]

Hi There

Anyone with experience of how Home Office treats IR35 covered contractors when they act as sponsors for spouse visa please? Are they considered as employee or self employed? Which category should they select in application form?

The accounting situation is:
1. A govt organisation is main employer (where this contractors work on day to day, under IR35 contract)
2. They pay into an umbrella company, who does PAYEE taxes and issue pay slips.
3. In hand salary in pay slip goes in Ltd company of the contractor (he is director of this Ltd company).
4. Contractors transfers full amount from limited company to personal account as it is already taxed by umbrella company in step 2.

Step 3 is necessary here as this is only way this person can buy contractor insurance, which is required by the actual govt organisation where he actually works on day to day.

Which category he should chose in spouse's application form? Employee or self employed?

Thanks
JP

[seagul]

Hi There

Anyone with experience of how Home Office treats IR35 covered contractors when they act as sponsors for spouse visa please? Are they considered as employee or self employed? Which category should they select in application form?

The accounting situation is:
1. A govt organisation is main employer (where this contractors work on day to day, under IR35 contract)
2. They pay into an umbrella company, who does PAYEE taxes and issue pay slips.
3. In hand salary in pay slip goes in Ltd company of the contractor (he is director of this Ltd company).
4. Contractors transfers full amount from limited company to personal account as it is already taxed by umbrella company in step 2.

Step 3 is necessary here as this is only way this person can buy contractor insurance, which is required by the actual govt organisation where he actually works on day to day.

Which category he should chose in spouse's application form? Employee or self employed?

Thanks
JP

Above situation seems most parallel to self employment, especially beyond the step # 3 as if the deposit instead has been entering into personal bank account then it could fall under salaried employment.

[jpsingh]

Thanks for reply @seagul

Trouble with that theory is that employment agency in middle is issuing pay slips after deducting basic rate tax. He cannot issue a second pay slip from his Ltd company as that will become illegal from HMRC point of view. Neither can he draw money from Ltd company as dividends as amount is classified as salary. So he has to just take full money out of Ltd company to zero out the accounting but not issuing any pay slips.

Home asks for salary slips of dividend proofs from Ltd company for self employed status.

He did spend money to call Home offive paid advice service as well as paid email service. As usual, they provided scripted answer and pointed to finances section of guidance, which has no mention for IR35 contracts.

I am wondering if he should put it as employment and explains in cover letter that lack of guidance on IR35 contractors from home office means he is applying based on how HMRC classify such contractores, which is PAYE employee.

[seagul]

Thanks for reply @seagul

Trouble with that theory is that employment agency in middle is issuing pay slips after deducting basic rate tax. He cannot issue a second pay slip from his Ltd company as that will become illegal from HMRC point of view. Neither can he draw money from Ltd company as dividends as amount is classified as salary. So he has to just take full money out of Ltd company to zero out the accounting but not issuing any pay slips.

Home asks for salary slips of dividend proofs from Ltd company for self employed status.

He did spend money to call Home offive paid advice service as well as paid email service. As usual, they provided scripted answer and pointed to finances section of guidance, which has no mention for IR35 contracts.

I am wondering if he should put it as employment and explains in cover letter that lack of guidance on IR35 contractors from home office means he is applying based on how HMRC classify such contractores, which is PAYE employee.

Rather than wasting your money on calling/writing to UKVI for getting only a generic/incorrect reply better to go through the following guidance which might give you other alternative route. https://www.google.com/url?sa=t&source= ... xLurhR6nv1