The Happy Accountant

The financial consequences of being inside IR35 are mainly (there are other consequences) you lose the tax-avoidance facility of dividends. 
Essentially, if you are within IR35, you must calculate a “deemed payment” and pay NICs and PAYE (tax) on that deemed payment.
The tax-deductible amounts that you can claim in travel and expenses will also be affected.

IR35 was first propsed in 1999 and was introduced into UK legislation in 2000. The primary aim has been to prevent the avoidance of tax and national insurance by trading through an intermediary (commonly a limited company) rather than being an employee.
Prior to IR35, individuals could form a limited company and invoice their “client”/”employer” and [...]

Once a payroll is in operation, HMRC lay down certain requirements as to what records and information needs to be kept.  These include:

employees names, addresses (and their dates of birth)
gross pay, NICs, PAYE, other deductions, net pay (keeping a copy of their payslip would normally satisfy this requirement, assuming the payslip contained all the correct [...]

Logically, the basics of payroll are straightforward but unfortunately, there are various rules and thresholds which can make actually operating a payroll less so.
In calculating an employee’s pay, normally, you begin with their gross pay and then work out the deductions.  After taking away all the deductions, the net pay figure is what is left owing to [...]

It is generally possible to register as an employer by telephone or email (if special circumstances apply, you may have to register via and HMRC office).  Either way, you will need the following information to hand:

general information about yourself and your company (including your national insurance number and UTR number - unique taxpayer reference number)
information [...]

For anyone who has a self-assessment tax return due.  Remember that the final deadline for both on-line filing of your return and payment of your 2006-07 tax liability is 31 January 2008.  You may also have a payment on account to make by the same date.
There is an automatic fixed penalty of £100 for late [...]

Investment Income
The various types of investment income can be broken down into three main headings:

Income from shares
Income from other fixed assets (for example, property)
Interest

If there are any losses or interest payable, these are then deducted (but they are shown separately on the face of the Profit and Loss Account as opposed to being hidden away in a note to [...]

On top of their pay, you may offer your employee “perks” such as a company car, clothing allowance, relocation expenses, childcare vouchers and private health insurance, to name a few.
Some of these benefits will be taxable in the hands of the employee: that is, the employee will have to pay tax on the financial benefit of [...]