PAYE/Divs

[jaybro]

I have recently taken a contract that although initially sold as being outside IR35 has been deemed inside IR35 following professional review of working practices etc.

At present I am on the fence with this decision and can see both arguments purely due to the vagueness of IR35.

I have spoken at length to contractor colleagues and friends who believe that the contract is outside and would personally treat it as being outside if they had taken it on.

I’m at a stage now where bye I need to take some money from the business, kids need feeding these days. I would be interested in your thoughts on this dilemma.

Many thanks.

[Dom at Fox Bartfield]

IR35

Who carried out the IR35 review? Perhaps worth a second opinion but if it comes from a reputable firm then I'd be inclined to go with it. However, during their review did they make any suggestions as to how it could be taken outside?

Of course the decision is yours as to whether you declare yourself in or out, depending on your thoughts as to the risk but it appears you have a professional opinion. Have you shared the professional review with your colleagues?

You could take funds from the company on the basis of being inside IR35 in the meantime, leaving enough in to cover the tax/NI, should you decide to go with the contract review decision. Then provides the opportunity to get a second opinion or make an changes necessary.

[taxevo]

Agree with Dom on this, if the review has been carried out by a reputable firm then you should follow their advice. If you feel so strongly that the advice you have been given doesn't reflect your interpretation of the contract and working practices then seek a second opinion.

Who sold you the contract as outside IR35? Often agencies mention that their contracts are IR35 friendly but it is always worth getting a review from an expert that factors in your working practices.

[Alchemy Accountancy]

You have a professional opinion on this, but it is just that - an opinion. You could keep getting other opinions until you hear one that you like - but if HMRC were to look at it, their opinion might differ to the one that you like the sound of, in which case you then have a potentially expensive fight on your hands.

[northernladuk]

I'd say the same as the others. You don't mention who's reviewed it which would be key to me. If it was QDOS who I've always used and what they say has always been in line with what I know the I'd go with their advice.

If the reviewer wasn't with one of the well known names like Baur & Cottrell and others then I'd be getting it reviewed again. If they also say inside then there is your answer.

I wouldn't be hunting around to try get the advice I want to hear if the big guys have reviewed it. Some contracts are just like that and you've just got to weigh up the pros and cons to make a business decision whether to take it or not.

[ShandyDrinker]

I have had an instance whereby the two (as I see it) most well known IR35 contract review companies (QDOS and B&C) have disagreed with their status opinion, not necessarily on the working practices but more on specific clauses.

If you find yourself in that position then it's ultimately up to you to make a defensible judgement call as to whether you take the completely safe route or are prepared to defend your decision should there be an investigation.

With the changes coming in for the off-payroll rules in the private sector I think it's only ever going to be possible to take the most risk averse approach and if your contract (and practices) fail an IR35 review (in addition to CEST) then the risk of being declared outside IR35 will then just be too great.

[Lance]

how about you change your working practises?

I assume your contract is outside, so work to your contract and if asked to do stuff that puts you inside (i.e. asks you to not follow the contract) say 'no'.

[WordIsBond]

What do you mean as 'initially sold' as being outside? Is this a public sector job where they made an outside determination? If so, forget the contract review, you shouldn't have bothered, and go with outside, the risk isn't yours.

If you mean the agency said it was outside, well, you've learned an expensive lesson about trusting agents on something of which they probably know nothing and might lie if they did know anything.

[jaybro]

For clarity, I’m working in the private sector therefore the decision on my IR35 status is down to me. One of the top two organisations have reviewed my contract and working practices and deemed it to be inside IR35.

I believe I have right of substitution for example. It’s in my contract but to substitute would not be straightforward. My boss agrees that a substitute would be possible if they met the criteria but my reviewer believes that it is more likely that they would decline a substitute and arrange an alternative via their normal resourcing route, which then means HMRC are likely to believe it’s not a true unfettered right of substitution.

In addition, there are permanent members of staff doing a very similar role and the argument is that I am there to bolster resources rather than provide a specific set of skills, but couldn’t this be said of locum doctors? Surely there are not all classed as inside IR35.

Don’t get me wrong, I’m not looking for reasons to justify classing myself as outside IR35. I am merely trying to get some unbiased views given that the contractors I have personally asked either know me or work at the same place.

[jaybro]

Who carried out the IR35 review? Perhaps worth a second opinion but if it comes from a reputable firm then I'd be inclined to go with it. However, during their review did they make any suggestions as to how it could be taken outside?

Of course the decision is yours as to whether you declare yourself in or out, depending on your thoughts as to the risk but it appears you have a professional opinion. Have you shared the professional review with your colleagues?

You could take funds from the company on the basis of being inside IR35 in the meantime, leaving enough in to cover the tax/NI, should you decide to go with the contract review decision. Then provides the opportunity to get a second opinion or make an changes necessary.

Yeah, the review was from a reputable firm. I have explained this decision with other contractors I know, who have years of experience and they would consider it outside IR35. More details below.