Over the last year, the issue – politically driven – of IR35 and office holders has arisen. It arises from “self employed” directors off large public undertakings and political angst arising therefrom.
Originally, last year, separate legislation was planned, however the latest is that the idea of separate legislation has been scrapped, and instead the IR35 legislation is to be amended.
The amendment will be via Finance Act 2013, clause 22, which is on page 68 of the explanatory notes
Of most interest is how office is defined, here HMRC say:
An office is a separate and independent position to which duties are attached; an office does not owe its existence to the incumbent or the discretion of an organisation. For example, the post of manager of a factory or a head of division in an organisation is not an office because such a post will normally only exist as long as the organisation wishes. It will not have the independent existence or endurance required to establish it as an office.
So, in a roundabout way, we are back to the “controlling person” originally proposed – someone who can control a entity, including budget setting and hiring / firing staff, to a high degree, i.e. a senior / controlling director rather than a mere manager.
HMRC are on record as saying – IR35 forum minutes early 2013 – that the legislation is not intended to apply to someone holding the “office” of being a director of their own company.
Bringing this together, it would appear that most controlling appointments based on ownership will be excluded, as the office arises from ownership of the company, and this then would leave it applying to situations of senior managers being contracted in, i.e. very senior interim appointments.
Doubtless more clarity will appear over time – although as with anything IR35 clarity is a relative concept – but it seems most people have little to worry about.