IR35 and marriage

In the UK there is a tax regulation IR35 which is designed to enable the government to regard a contract or agency worker (such as me) as a disguised employee of the client for tax purposes. Naturally, IR35 is for the benefit of the government, not the contractor. It means that if you stay in the same place for too long and get settled in, the tax man will hit you with income tax and national insurance on the whole value of your invoices without reference to your real expenses. In short, you probably end up paying £xxk more tax than you should.

The key points in determining if you are a disguised employee are:

• personal service
• direction and control
• mutuality of obligation

Source: http://www.pcg.org.uk/cms/index.php?option=com_content&task=view&id=4230&Itemid=291

Now, in my inexpert opinion, a test of a good principle of law is that you can apply the same principle in other areas. Lets take marriage for example. If the tax man can prove that in my relationship with my wife:

• I provide her with personal service with no right of substitution
• She tells me what to do
• I have obligations to continue my contract with her

then of course I am a disguised employee of my wife, and should be taxed accordingly. :)

My conclusion is that IR35 is an unfair tax rule.