IR35 - what is an 'office holder'?

The draft Finance Bill 2013 which should be effective in April 2013, includes an amendment to the IR35 rules so that IR35 will apply to so-called ‘office holders’.

Presently, there is no statutory definition of the term ‘office holder’- although we anticipate this should be addressed by April. Until then, based on general references to the term and previous cases, we can only assume that this means a post which is fundamental to an organisation or which governs it operation- a specific position probably at senior level.

We also suspect that substitution will play an important part and that limited company contractors that take up temporary, senior, managerial roles for specific positions may therefore fall foul of the amendments. However, we expect that this should not apply to roles that are purely linked to a project and where the organisation could appoint a successor.

Perhaps surprisingly, HMRC’s manuals at present state that a manager or divisional head does not constitute an office. This is on the basis that these types of role only exist whilst the organisation wishes them too; they do not necessarily have longevity.

Until the Bill is enacted, as I’m sure you can appreciate, I cannot give you a definitive answer to your question. But I trust the above has highlighted and summarised the speculation and therefore forewarn you of the possible amendments. If you would like to discuss your affairs in more detail, please feel free to contact your local TaxAssist Accountant. One of the services your local TaxAssist Accountant can offer you is a review of contracts to test if they break the IR35 rules.

Date published 15 Jan 2013

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.