Change contract from outside to inside IR35 with the same client Change contract from outside to inside IR35 with the same client
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  1. #1

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    Default Change contract from outside to inside IR35 with the same client

    My existing client has offered me inside ir35 contract after march. I have worked with them for the last 2 years. What are the implications of now switching contract from outside to inside ir35 . Will it trigger a tax investigation by hector and retrospectively tax demands for the past 2 years. Please advice.

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    You say you were outside. Client now admits you weren't. HMRC will be rubbing their hands with glee.
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    Quote Originally Posted by northernladuk View Post
    You say you were outside. Client now admits you weren't. HMRC will be rubbing their hands with glee.
    Depends on what the client has really offered. A significant number of people seem to get confused between being told "leave or Umbrella" and "leave or go inside".

    Its rather worrying as it is a fundamental fact people need to be clear on before making any decisions.

    If, in this case, if Andy2 has been told "leave or inside" then I suspect most here would advise leave, unless he has 2 years worth of employee and employer tax sitting in a savings account, and is willing to relinquish that if HMRC come calling. Or can MVL the PSC in time.
    Last edited by Paralytic; 9th February 2020 at 16:18.

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    Quote Originally Posted by northernladuk View Post
    You say you were outside. Client now admits you weren't. HMRC will be rubbing their hands with glee.
    The client has made a blanket decision to force all the contractors to go through brolly or leave.
    So it doesn't matter whether a contractor was outside or inside ir35 earlier
    Now the question is there will be thousands of contractors in the same position as me after march who will continue with the same client but inside ir35, will hector investigate them all ?
    Last edited by Andy2; 9th February 2020 at 16:47.

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    Quote Originally Posted by Andy2 View Post
    The client has made a blanket decision to force all the contractors to go through brolly or leave.
    So in answer to your first post.

    There is a system that agencies have to use to report all payments to external parties (i.e. payments to you via your PSC).
    That report for April onwards will continue to list you but show you being paid via a different company (an umbrella) and a subsequent join to another database table will show you paying a lot more tax in April then you were back in February (say).
    HMRC might run that report and were they to do so they may proceed to send you a letter asking what changed and would you like to correct your personal tax returns for the previous 2 years.

    Now no-one on here can say whether going inside will trigger such a report and the investigation you are concerned about. But it's possible and only you can estimate how likely it is to occur and whether it's better to take the risk, or better to leave and find a another client via a different agency.
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    Quote Originally Posted by eek View Post
    So in answer to your first post.

    There is a system that agencies have to use to report all payments to external parties (i.e. payments to you via your PSC).
    That report for April onwards will continue to list you but show you being paid via a different company (an umbrella) and a subsequent join to another database table will show you paying a lot more tax in April then you were back in February (say).
    HMRC might run that report and were they to do so they may proceed to send you a letter asking what changed and would you like to correct your personal tax returns for the previous 2 years.

    Now no-one on here can say whether going inside will trigger such a report and the investigation you are concerned about. But it's possible and only you can estimate how likely it is to occur and whether it's better to take the risk, or better to leave and find a another client via a different agency.
    I think the solution is for the contractors to exchange their clients with each other after march, that will mitigate the risk.
    Now someone should setup a website where people with same skillset can exchange their contract information with each other.

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    Default Change contract from outside to inside IR35 with the same client

    Quote Originally Posted by Andy2 View Post
    I think the solution is for the contractors to exchange their clients with each other after march, that will mitigate the risk.
    Now someone should setup a website where people with same skillset can exchange their contract information with each other.
    Go for it. About 6 months too late mind. But you’ll get plenty of support from contractors, if not clients.

    And agency legal departments will have a field day.
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    Quote Originally Posted by Andy2 View Post
    The client has made a blanket decision to force all the contractors to go through brolly or leave.
    So it doesn't matter whether a contractor was outside or inside ir35 earlier
    Now the question is there will be thousands of contractors in the same position as me after march who will continue with the same client but inside ir35, will hector investigate them all ?
    That blows your (+ via QDOS et al. if you done that!) self-determination so far that you were outside.
    The client has literally said, nah, we don't consider that role to be Outside (and since things cannot have changed in working practices just on 6th April morning, you see, you were inside all along - in Hector's books!).

    If I were you, I will not consider that client at all, and will be looking to leave.
    TBH, I am doing the same end of Feb... thankfully my contract ends then anyway, and they have hence not bothered to give me a SDS.

    If you don't, ensure you have got all that extra cash (to cover all payments of 2 years so far), to part away in Tax, E + E NIs, et al.

    When hector comes knocking, you cannot tell him you are just one among many contractors who have done this, so please leave me!.
    There will be no one to go to court with you, excepting you (and your family helping you!). Think about it long and hard.
    This forum / your advisers here are not going to defend you there.

    Stay away from that client, please.

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    How would hmrc know who my end client is. so unless they do full tax enquiry they wouldnt know that i am continuing at the same client

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