IR35 represents a tax legislation aimed at distinguishing legitimate businesses from what is referred to as disguised employees. The focus is on personal service companies (limited company contractors) who may resemble employees of their end clients rather than providing authentic business-to-business services. The objective is to recover the additional PAYE tax and National Insurance Contributions (NICs) that these contractors would have paid if classified as employees.
When discussing IR35, we often use the terms “inside” and “outside” to describe your status. But what do these terms mean?
In brief, they indicate your IR35 status as either a bona fide contractor (outside) or an employee for tax purposes (inside). These terms depict whether you fall within the scope of the legislation or not.