IR35
[ch 5: page 33]IR35 is the name of a piece of legislation that was introduced in 2000 to tackle “disguised employment”, in other words, the avoidance of tax and National Insurance by using a PSC in circumstances where, if you took away the PSC, the individual providing the services would be an ordinary direct employee.
IR35 says that any person who would have been an employee were it not for the presence of the PSC must pay the same tax and National Insurance as any direct employee of the hirer. In practice, however, in 2014 the House of Lords Select Committee heard that HMRC has not devoted resources to the effective enforcement of IR35. As a result it has not been successful in tackling tax avoidance.