IR35: Period working for 1 client

[BlackenedBiker]

I have been working for a client (big multinational) for coming up to a year.

I am working via an agency and I have a contract that includes right to substitution etc.

The clients lawyers (probably HR) are now concerned that IR35 will effect them. So if HMRC catch me for IR35 and I am unable to pay then it will come back to them and they will be liable for the fines.

To this end they are suggesting that their best strategy with all contracting consultants is to restrict any single period of work to 1 year.

My directors are livid and have asked me to see what I can find out about this issue.

It was my understanding that all liabilities lie with my company and as it is a limitied company all liabilities end with my company.

Furthermore, I was of the understanding that with regards to the period of time it was after 2 years that a contractor lost the right to claim for expenses if working for 1 client.

The director is going to provide me with the presentation given by legal/hr and I will post details on here.


All comments are welcome

[TheFaQQer]

You are right.

IF you are found to be inside IR35, then any tax liability falls on you and your employer (the company that you work for, not the client). You would be a deemed employee of your company, but not of the client, so they are worrying over nothing.

Also, the length of time you are with a client has no bearing on IR35 whatsoever - there are cases where the contractor has been with the client for 6 or more years and still be found to be outside. The only thing that has a time limit is the 2-year rule with regard to expenses - once you know that you will be working in the same location (not client) for over 2 years, then you can't claim travel and subsistence expenses.

Client needs to get some new lawyers by the sounds of it.

[BlackenedBiker]

You are right.

IF you are found to be inside IR35, then any tax liability falls on you and your employer (the company that you work for, not the client). You would be a deemed employee of your company, but not of the client, so they are worrying over nothing.

Also, the length of time you are with a client has no bearing on IR35 whatsoever - there are cases where the contractor has been with the client for 6 or more years and still be found to be outside. The only thing that has a time limit is the 2-year rule with regard to expenses - once you know that you will be working in the same location (not client) for over 2 years, then you can't claim travel and subsistence expenses.

Client needs to get some new lawyers by the sounds of it.

I agree, bloody half-baked HR. Thanks for the reply. Is there a website/on-line resource that but this information succinctly. It would be v. useful is making a case I think.

[Qdos Contractor]

You'd be surprised (or maybe not) at how often this happens.

Everything TheFaQQer says is spot on. If you use an IR35 expert for contract reviews etc it might be worth getting them to speak to the client to explain. That normally does the job.

[Moscow Mule]

PCG Legal maybe? If you're a member of course...

[ratewhore]

<snip>

My directors are livid and have asked me to see what I can find out about this issue.

<snip>

Do they know where you have come for advice

[northernladuk]

The clients lawyers (probably HR) are now concerned that IR35 will effect them.

Advise them they ought to stop focussing on their contractors and go find a decent legal/HR team lol....

[jetrimby]

Perfect replies agree totally. Just to add as you mentioned the worry over what happens if your company couldnt pay the tax bills. As you are owner/director of that company the Revenue have pretty strong powers to come after you but not your customers (that would only apply if you were self employed)

[mahon and co]

Try a safer way of working

I have been working for a client (big multinational) for coming up to a year.

I am working via an agency and I have a contract that includes right to substitution etc.

The clients lawyers (probably HR) are now concerned that IR35 will effect them. So if HMRC catch me for IR35 and I am unable to pay then it will come back to them and they will be liable for the fines.

To this end they are suggesting that their best strategy with all contracting consultants is to restrict any single period of work to 1 year.

My directors are livid and have asked me to see what I can find out about this issue.

It was my understanding that all liabilities lie with my company and as it is a limitied company all liabilities end with my company.

Furthermore, I was of the understanding that with regards to the period of time it was after 2 years that a contractor lost the right to claim for expenses if working for 1 client.

The director is going to provide me with the presentation given by legal/hr and I will post details on here.


All comments are welcome

These arrangements are fraught with IR35 risk. So much depends on the contract details. If trouble looms one of the leading experst in ths field is Dave Smith of Accountax Consulting at Trinity House in Milton Keynes. Dave Smith has the best record of defeating the Revenue.

For the future a much safer arrangement is to use a contractor's scheme that involves an EBT. It is IR35 proof and the contractor's take home pay is about 80% or slightly more of billed fees.

[TopBanana]

Sounds like someone in HR may have a hidden agenda?