Introduction to this document

Deduction for deemed employment payments

A company can claim a deduction from its taxable profits in respect of the notional cost of a deemed payment of salary made for the purposes of IR35. The deduction is allowable for the accounting period in which the deemed payment was made.  Where the deemed payment is made after the company’s corporation tax return has been submitted, a separate claim can be made.

How to claim

A claim can be made within the amendment window for the self-assessment return for an accounting period, i.e. within one year from the filing date of the tax return by amending the return. Or, if later, by submitting a claim using the overpayment relief method, no later than four years from the end of the accounting period for which the claim is being made. The formula below presupposes that overpayment relief is being claimed.

Provisional claims

Where an IR35 investigation is still ongoing, you will need to make a provisional claim which can only be done by the overpayment relief method, i.e. between two and four years after the due filing date.