Q. I am considering renting a premises to specifically use to run my business from. Will this put me outside of IR35?
A. If you can provide evidence that your business owns or rents a premises separate from your home and clients address, you will score 10 points on the Business Entity Test. Below is a list of evidence sufficient to support this:
- Address Of Business Premises
- Lease or Contract For Business Premises
- Utility Bills For Business Premises
- Home Address (to demonstrate that the premises is separate from this address)
- Client Address (again to demonstrate that the premises is separate from this address)
It is vital that you are able to provide evidence otherwise you will not be able to pass the business premises test.
It is worth noting that it makes no difference as to which of you owns or rents the business premises – you yourself or your business, it just needs to be separate from your home address or the clients address.
Operating your business from a premises for many reasons indicates that you are operating as your own business as this indicates financial investment and simply an employee would not be expected to rent or own their own business premises.
Ultimately it won’t put you outside of IR35, as HMRC would still be looking at the written contract and your working practices, but it would certainly be seen as a positive factor.
How would a subscription to shared workspace be viewed in the eyes of HMRC? Would this score any points on the BET?
Would renting virtual office space from Regus count? No utility bills because it’s included in the fees, but you get a business address, rooms when you need them, an answering service etc.
thanks
Dan – Are you paying rent for the shared office space?
Malcolm – Though renting a virtual office remains to be unproven, however, this would be in the eyes of many IR35 experts, enough to pass the business premises test on the BET, as a very strong case with evidence of renting office space can be put forward to HMRC