IR35 investigations in 2020/21

[ComplianceLady]

the third assumption relies on

FOURTH ASSUMPTION: HMRC lied when they said they won't do this....

HMRC said they won't *automatically* investigate - for that to be truthful they just have to pick and choose when to investigate.....

[northernladuk]

HMRC said they won't *automatically* investigate - for that to be truthful they just have to pick and choose when to investigate.....

So.. Just to put you on the spot. Is any advice on here about leaving before you get a determination too much of a kneejerk and we are over playing the whole outside before now inside issue?

What's your opinion?

Have we had an opinion from QDOS and the like?

[ComplianceLady]

So.. Just to put you on the spot. Is any advice on here about leaving before you get a determination too much of a kneejerk and we are over playing the whole outside before now inside issue?

What's your opinion?

Have we had an opinion from QDOS and the like?

We are encouraging clients to consult - not determine. That gives them the chance to give contractors a heads up without exposing them to risk (if the contractor leaves).

I'm 100% expecting a mass shift of outside to inside to trigger a review - where there's a mix of old status and new status I don't see it as being a risk but for example I work wth a client that has 250 contractors who are outside, they should be inside and if the client determines them all inside and they mostly stay I expect an enquiry.

I think those clients that think everyone is inside will go the 'policy decision' route which gives a bit more protection for those staying.

The one issue I think it's worth being wary of that I don't see being discussed is that the clients are holding off talking about it - I have clients who know they're going to be moving everyone to PAYE but don't want to tell the contractors yet as they're worried about them leaving. I expect a procession of announcements after the finance bill. Clients don't feel they can 'consult' as contractors will leave before the client is ready.

QDOS will honour insurance *if* the information was accurate.

Final point is that I only see it as a risk if you get an inside determination and stay. I can't see HMRC gathering information on people who were outside, told they would be inside and then left - there'll be too many other, better, targets.

My expectation is that you'll have a phishing approach - client determines everyone inside, letters sent to all contractors who now work inside saying 'we believe you got status wrong', some offer evidence, those that don't are given tax bills. Just taking that approach will net HMRC a fair amount. The difference in tax take in Year 1 of the reform v Year 2 is coming from historical cases in my view so I think it's wise to be wary, though I think it will be prioritised like this:

Pre 2020 Post 2020
Outside -> Inside, same client
Outside -> Outside, targetted sectors
Outside -> policy PAYE only, same client
Outside -> Outside, previous outside is now inside only client
Everyone else

[gnarledcontractor]

I think those clients that think everyone is inside will go the 'policy decision' route which gives a bit more protection for those staying

Does the fact that its a policy decision really change anything?

To all intents and purposes if they put you on PAYE then you're by implication inside aren't you?

[CompoundOverload]

We are encouraging clients to consult - not determine. That gives them the chance to give contractors a heads up without exposing them to risk (if the contractor leaves).

I'm 100% expecting a mass shift of outside to inside to trigger a review - where there's a mix of old status and new status I don't see it as being a risk but for example I work wth a client that has 250 contractors who are outside, they should be inside and if the client determines them all inside and they mostly stay I expect an enquiry.

I think those clients that think everyone is inside will go the 'policy decision' route which gives a bit more protection for those staying.

The one issue I think it's worth being wary of that I don't see being discussed is that the clients are holding off talking about it - I have clients who know they're going to be moving everyone to PAYE but don't want to tell the contractors yet as they're worried about them leaving. I expect a procession of announcements after the finance bill. Clients don't feel they can 'consult' as contractors will leave before the client is ready.

QDOS will honour insurance *if* the information was accurate.

Final point is that I only see it as a risk if you get an inside determination and stay. I can't see HMRC gathering information on people who were outside, told they would be inside and then left - there'll be too many other, better, targets.

My expectation is that you'll have a phishing approach - client determines everyone inside, letters sent to all contractors who now work inside saying 'we believe you got status wrong', some offer evidence, those that don't are given tax bills. Just taking that approach will net HMRC a fair amount. The difference in tax take in Year 1 of the reform v Year 2 is coming from historical cases in my view so I think it's wise to be wary, though I think it will be prioritised like this:

Pre 2020 Post 2020
Outside -> Inside, same client
Outside -> Outside, targetted sectors
Outside -> policy PAYE only, same client
Outside -> Outside, previous outside is now inside only client
Everyone else

Re your point below:

Final point is that I only see it as a risk if you get an inside determination and stay. I can't see HMRC gathering information on people who were outside, told they would be inside and then left - there'll be too many other, better, targets.

When you say get an "inside determination and stay". Do you mean an inside determination pre April 2020 and stay post April?

What if you get a determination that is inside in November but stay until end of December and leave?

[northernladuk]

I think those clients that think everyone is inside will go the 'policy decision' route which gives a bit more protection for those staying

Does the fact that its a policy decision really change anything?

To all intents and purposes if they put you on PAYE then you're by implication inside aren't you?

I think what that means is the role hasn't actually been determined inside using the agreed guidance so is not a slam dunk.

It still leaves a question to be asked about the clients working practices as a whole and why they went inside as a blanket which can only be resolved by an investigation. The results will be either..

Win. Role was outside and the plociy to go inside was nothing to do with the status of the role.

Lose. Client blanketed it because they have been directing, no RoS and you were inside all along.
If one loses then then everyone else on that client is screwed.

I do hope if it is the former and the client blanket has nothing to do with the role which is outside then a crap storm erupts to put pressure to stop this.

[BlueSharp]

Re your point below:

Final point is that I only see it as a risk if you get an inside determination and stay. I can't see HMRC gathering information on people who were outside, told they would be inside and then left - there'll be too many other, better, targets.

When you say get an "inside determination and stay". Do you mean an inside determination pre April 2020 and stay post April?

What if you get a determination that is inside in November but stay until end of December and leave?

That would very much depend on what the client said to HMRC.

[northernladuk]

Re your point below:

Final point is that I only see it as a risk if you get an inside determination and stay. I can't see HMRC gathering information on people who were outside, told they would be inside and then left - there'll be too many other, better, targets.

When you say get an "inside determination and stay". Do you mean an inside determination pre April 2020 and stay post April?

What if you get a determination that is inside in November but stay until end of December and leave?

Then you have been doing a role that has been inside and there is documented evidence to support this so are at risk. Maybe not as much as if you are there after April and you hit HMRCs radar but you, and the client know your old role was inside. Question is how confident are you HMRC won't find out as that's all you've got left to hope for.

[CompoundOverload]

Then you have been doing a role that has been inside and there is documented evidence to support this so are at risk. Maybe not as much as if you are there after April and you hit HMRCs radar but you, and the client know your old role was inside. Question is how confident are you HMRC won't find out as that's all you've got left to hope for.

That's my worry. If you leave based on the inside determination you look guilty and could still get a pull.

If you stay (which I most certainly would not) then you are a sitting duck.

Doing a determination this early is both good and bad but waiting on it knowing it's going to potentially put a big red X on your back is vs leaving before you know the outcome is a bit of a conundrum.

[gnarledcontractor]

I think what that means is the role hasn't actually been determined inside using the agreed guidance so is not a slam dunk.

It still leaves a question to be asked about the clients working practices as a whole and why they went inside as a blanket which can only be resolved by an investigation. The results will be either..

Win. Role was outside and the plociy to go inside was nothing to do with the status of the role.

Lose. Client blanketed it because they have been directing, no RoS and you were inside all along.
If one loses then then everyone else on that client is screwed.

I do hope if it is the former and the client blanket has nothing to do with the role which is outside then a crap storm erupts to put pressure to stop this.

Again this depends on attitude to risk. This being the case, I'd be having a very in depth conversation with QDOS. I'm not satisfied that
HMRC won't look at this situation as the same, and even if the contract and working practices were proved to be outside its a whole load of stress of an investigation that no-one really needs.

I agree with yourself and Cojak - I have an extension pending and I am waiting for client to make their pronouncement.. If they decide on the blanketing approach then I won't be renewing. If I have to go PAYE with another client then so be it.