The tests build a picture of how a business operates and cover the following areas:
• Business premises
• Previous PAYE
• Business plan
• Repair at own expense
• Client risk
• Right of substitution
• Actual substitution
Each test asks a question and a yes answer gives a score in points with the total points falling into one of the three risk bands. Businesses can take the test themselves but it does not automatically mean that they will not receive an inspection so evidence to support the answers given must be available and kept in the event of an inspection.
This does not alter the fact that IR35 applies to specific assignments rather than the business as whole. Some or all, or indeed none of the assignments undertaken by an individual working through a limited company may fall within IR35 and HMRC have come up with a set of example scenarios to help businesses work out if it applies. If it does apply then PAYE tax and National Insurance Contributions will apply to that income after certain allowable deductions.
The guidance can be downloaded here: http://www.hmrc.gov.uk/ir35/guidance.pdf