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contractbunny8
9th May 2017, 13:33
Hi,

Had a quick look but couldn't find anything on this so making a new post.

I'm in a situation where I'm considering going back to the same PS client, where earlier in the year I was working as 'outside IR35' but now the position will be 'Inside IR35'. I left on mutual terms and haven't been on any 'Inside IR35' contracts at this PS client.

Questions on going back as 'Inside IR35':

1) Can the HMRC back date the 'Inside IR35' to my contract earlier which was 'Outside IR35'? - I was there as outside close to 2 years, and on going back will be working under the same manager, but on a completely different role.

2) What % should I ask for as a rough increase as my take home pay check will be affect by the 'Inside IR35' tax/NI/other bits?

If I do go back, I would have had around 9-10 weeks off from that PS, not sure if that makes any difference.

Hopefully these questions are the easy ones!

Cheers,

northernladuk
9th May 2017, 14:21
Hi,

Had a quick look but couldn't find anything on this so making a new post.

I'm surprised. These are pretty core questions and even not following it that much I've seen this discussed plenty.



I'm in a situation where I'm considering going back to the same PS client, where earlier in the year I was working as 'outside IR35' but now the position will be 'Inside IR35'. I left on mutual terms and haven't been on any 'Inside IR35' contracts at this PS client.

Questions on going back as 'Inside IR35':

1) Can the HMRC back date the 'Inside IR35' to my contract earlier which was 'Outside IR35'? - I was there as outside close to 2 years, and on going back will be working under the same manager, but on a completely different role.

If it is truly a completely different role then you are comparing apples with pears. Your outside result was for one contract, your inside for a completely different. IR35 is on a contract by contract basis. If they are completely different they can't compare the two. They have to be taken on their own merits.


2) What % should I ask for as a rough increase as my take home pay check will be affect by the 'Inside IR35' tax/NI/other bits?


25-30% I believe are the numbers quoted on multiple threads but if this is a new contract then stick in the rate you want for the new work, not compare it to the old contract which you say is different.


If I do go back, I would have had around 9-10 weeks off from that PS, not sure if that makes any difference.

I very much doubt it makes any difference at all.

Look for some threads by Psychocandy. They document the transition from an outside gig to an inside one in excruciating detail.

SeanT
9th May 2017, 14:28
...in excruciating detail.

:smokin:D

TheFaQQer
9th May 2017, 14:40
1) Can the HMRC back date the 'Inside IR35' to my contract earlier which was 'Outside IR35'? - I was there as outside close to 2 years, and on going back will be working under the same manager, but on a completely different role.

Yes and no.

HMRC cannot "back date" a contract to make it inside IR35, but they could open up an investigation into that contract and look at whether you were genuinely outside or not. If they do look into your past work then you want to make sure that you have professional representation before the brown envelope hits the mat, and don't attempt to answer any questions from HMRC on your own.

You have two separate contracts, so the new one cannot be back dated, but the old one could be investigated.


2) What % should I ask for as a rough increase as my take home pay check will be affect by the 'Inside IR35' tax/NI/other bits?

There's no definite answer to this, because if you are inside IR35 you are now not only liable for two lots of National Insurance (plus the Apprentice Levy, probably) but you cannot claim any travel and subsistence expenses any more. My advice would be to work out what you want your take home to be in a typical month. Add on your travel and subsistence expenses and any other expenses that you cannot claim any more, since these have to come out of your post tax income. Then look at some PAYE calculators to determine what the new rate needs to be to get you that take home - you (and your client) might find that eye wateringly high. I went through some numbers with someone recently and because of expenses, they needed a 65-70% increase in rate to take home the same amount as they were on before. I also know of some people who are taking home more because the client has given everyone staying a blanket 30% increase and they have lower expenses than other people.

You may have other questions as well as they arise - have a look at the FAQ sticky at the top of the forum as well, as there may be other questions that you don't know you should ask :)

Good luck in the new role.

contractbunny8
9th May 2017, 15:11
cheers everyone, most helpful!

So if the company I used was to be 'closed', I'm guessing HMRC can review whilst its open/being closed, but once its closed its closed, is this the right way of thinking about this?

i.e if I'm 'Inside IR35' I don't need the company, so I'm closing it. :)

northernladuk
9th May 2017, 15:13
cheers everyone, most helpful!

So if the company I used was to be 'closed', I'm guessing HMRC can review whilst its open/being closed, but once its closed its closed, is this the right way of thinking about this?

i.e if I'm 'Inside IR35' I don't need the company, so I'm closing it. :)

Closing the company opens a whole new can of worms as, depending on your situation, you may have problems starting a new one 'in the same trade' due to new rules.

As TF says, read the stickies. If it's not covered in there I am sure there have been a couple of threads about what to do with the old one. Again, somewhere in PC's posts is what he did with his company.

northernladyuk
9th May 2017, 16:51
Closing the company opens a whole new can of worms as, depending on your situation, you may have problems starting a new one 'in the same trade' due to new rules.

As TF says, read the stickies. If it's not covered in there I am sure there have been a couple of threads about what to do with the old one. Again, somewhere in PC's posts is what he did with his company.

I missed that. Was it a good one?

northernladuk
9th May 2017, 17:25
I missed that. Was it a good one?

My current infraction status mean I am unable to answer that.

MrMarkyMark
9th May 2017, 17:45
My current infraction status mean I am unable to answer that.

:laugh

northernladyuk
9th May 2017, 20:59
My current infraction status mean I am unable to answer that.

Linky?

northernladuk
9th May 2017, 21:02
Linky?

http://forums.contractoruk.com/showthread.php?t=121310

psychocandy
10th May 2017, 07:49
Moving domain (and email) to another provider? (http://forums.contractoruk.com/showthread.php?t=121310)

Have you been drinking???

northernladyuk
10th May 2017, 09:03
Have you been drinking???

Please do show some decorum and respect.

http://forums.contractoruk.com/business-contracts/67620-behaviour-professional-forums.html

TheFaQQer
10th May 2017, 10:14
Closing the company opens a whole new can of worms as, depending on your situation, you may have problems starting a new one 'in the same trade' due to new rules.

It's only a potential problem if you claim ER on the closure of the company - if you paid out any remaining money as a dividend or salary and paid tax on that then you wouldn't have a problem with closing the company down and restarting.

If you claim ER and then continue in the same trade then the uncertainty starts, particularly over whether taking on employment counts as continuing in the same trade or not.

contractbunny8
11th May 2017, 17:18
1) Can the HMRC back date the 'Inside IR35' to my contract earlier which was 'Outside IR35'? - I was there as outside close to 2 years, and on going back will be working under the same manager, but on a completely different role.



Update on this is the agency have confirmed I'll be going back to the SAME ROLE, so I guess this could add a lot of weight if HMRC want to do retrospective 'Inside IR35' investigations into the 2 years I was there previously?

northernladuk
11th May 2017, 17:58
Could do.

psychocandy
12th May 2017, 08:20
Update on this is the agency have confirmed I'll be going back to the SAME ROLE, so I guess this could add a lot of weight if HMRC want to do retrospective 'Inside IR35' investigations into the 2 years I was there previously?

Hmmm. Risky.... Not sure I'd be keen.
You could get insurance - people like QDOS will cover you for things like this i.e. retrospective claims. If I remember correctly few hundred £. For me this would be a no brainer.

Not saying HMRC will do this but who knows. And of course, if they ask client first thing they'll say is "yes its same role, so?"

malvolio
12th May 2017, 08:26
Hmmm. Risky.... Not sure I'd be keen.
You could get insurance - people like QDOS will cover you for things like this i.e. retrospective claims. If I remember correctly few hundred £. For me this would be a no brainer.

Not saying HMRC will do this but who knows. And of course, if they ask client first thing they'll say is "yes its same role, so?"

They will cover you only if you are genuinely outside IR35 in their opinion. which means that you are probably genuinely outside IR35...

Still seems like a waste of money to me and it's been said a couple of times that retrospective investigations are unlikely, but it is still a risk that some will want to minimise.

psychocandy
12th May 2017, 09:20
They will cover you only if you are genuinely outside IR35 in their opinion. which means that you are probably genuinely outside IR35...

Still seems like a waste of money to me and it's been said a couple of times that retrospective investigations are unlikely, but it is still a risk that some will want to minimise.

If I remember correctly its based on a contract review and a short questionnaire. As long as you're ok with this then they will cover you.

I remember when I was in the same position. I'd had the initial contract sorted by them anyway and there were no nasties on the questionnaire.

Waste of money maybe. But then so is things like house insurance if you never need it. Going back to me - worked out my liability was over £30K minimum IF I got stung. Covered by insurance which was less than one day rate.

Retrospective unlikely (for now) but then again its unlikely I'll ever get a gas leak at home and my house explodes. Either way I'd rather know I'm covered financially.

malvolio
12th May 2017, 09:57
Yeah, whatever. Too many things wrong in that post but hey, they've changed the rules, you're following them, you're now paying probably 30% more taxes that you are actually liable for so they're happy. Can't believe they see much point in going backwards myself..

contractbunny8
12th May 2017, 11:16
Hmmm. Risky.... Not sure I'd be keen.
You could get insurance - people like QDOS will cover you for things like this i.e. retrospective claims. If I remember correctly few hundred £. For me this would be a no brainer.

Not saying HMRC will do this but who knows. And of course, if they ask client first thing they'll say is "yes its same role, so?"

Cool thanks, have signed up to Qdos for old contract reviews/insurance etc, probably something I should have done along the way, but yeah its not the destination but the journey.

northernladuk
12th May 2017, 11:44
Not sure they will cover you retrospectively would they?

psychocandy
12th May 2017, 12:56
Yeah, whatever. Too many things wrong in that post but hey, they've changed the rules, you're following them, you're now paying probably 30% more taxes that you are actually liable for so they're happy. Can't believe they see much point in going backwards myself..

Maybe, maybe not. I dont know where they plan to focus or what resources they have.

BUT, its hard to defend a position where HMRC have got a bit of paper saying "client says your inside IR35, so why did you declare outside if its the same role?"

psychocandy
12th May 2017, 13:00
Not sure they will cover you retrospectively would they?

Yes they will cover for any work pre-April as long as the contract review is ok etc. EVEN if you're staying in a PS role past April and client decides its inside - as I would have been.
Obviously, you've got to work out the liabilty and buy the right amount of cover (£25K chunks up top £100K I believe).

Of course, past April no chance but it, at least, covers the worry about that. Not ideal I know but when you're choices are on the bench, or stay in PS role I wouldnt go near if there was even a minute risk of getting hoofed in the nuts by HMRC for £50K. Like I said, few £....

This was a few months ago mind. At the time, I thought the insurers werent really thinking it through. After all, as per previous post, how can you defend it when client says your inside and its the same role as last year?

malvolio
12th May 2017, 13:49
Yes they will cover for any work pre-April as long as the contract review is ok etc. EVEN if you're staying in a PS role past April and client decides its inside - as I would have been.
Obviously, you've got to work out the liabilty and buy the right amount of cover (£25K chunks up top £100K I believe).

Of course, past April no chance but it, at least, covers the worry about that. Not ideal I know but when you're choices are on the bench, or stay in PS role I wouldnt go near if there was even a minute risk of getting hoofed in the nuts by HMRC for £50K. Like I said, few £....

This was a few months ago mind. At the time, I thought the insurers werent really thinking it through. After all, as per previous post, how can you defend it when client says your inside and its the same role as last year?
It's actually very simple. Firstly the decision point has been changed and your client and you have made different assessments of the situation. The client has probably not looked at your contract specifically so made a decision using the suspect and inaccurate ESS tool just to meet the new rules. Previously you made an assessment based on contract reviews and informed opinion. Which one do you suppose is more robust when challenged at tribunal?

Unless of course you previously ignored reality and declared your role to be outside when it wasn't. In which case...

This is also why talk of retrospection in pointless. If HMRC did do that and were defeated on appeal, as would be highly likely, the whole PS/IR35 pack of cards falls down. Why would they risk that?

Hobosapien
12th May 2017, 15:55
If the old contract was deemed outside IR35 by a reputable reviewer (e.g. QDOS) with all the written proof that provides, and the new contract is same as the old as far as role requirements goes yet client says it's inside IR35, then as long as you operate as you did to be outside previously (working practices regardless of new contract terms) then should be little to worry about.

Even if the HMRC bogeyman does investigate they (if QDOS et al know their stuff) should find you actually outside regardless of the client's determination. If they do find you inside for the new contract due to rule changes since the old contract then it still looks good as far as any retrospective investigation goes as they can't apply new rules to old contract determination. :smokin

That's the theory, may take a while for any feedback on real world investigations to see if it hold up. :eyes

Hobosapien
13th May 2017, 06:11
Also I wonder if after the PS client 'forcing' the contractor to operate inside IR35 on a catch-all determination whether any tax can be claimed back if a future investigation by HMRC accepts the real work practices and situation was actually outside IR35?

May take a class action lawsuit by those affected to get any movement from HMRC if they apply retrospective actions for their own advantage only.