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Moose
2nd September 2004, 16:53
Wha's the chances of getting caught if you say 'honest gov, I thought I was outside IR35'

planetit
2nd September 2004, 17:10
If you can show that you took some steps to determine whether IR35 applies (like getting your contract reviewed, or just noting down the reasons you believe you are outside) then you won’t be penalised if the IR come along and prove you are inside. You will just have to pay the extra tax and interest.

Moose
3rd September 2004, 00:00
I spoke to Quay Accountancy today and they said they check the contract and submit it to the IR for review to determine IR35 status.

But if most people don't get the IR crawling over them, then why would you temp fate by being proactive in contacting them? :rolleyes

Vetran
3rd September 2004, 00:56
you shouldn't. Join the PCG (or at least read some of their guides) use a sensible review service that doesn't submit your contract and get some insurance.

partimer
3rd September 2004, 09:14
>You will just have to pay the extra tax and interest

That's the problem.
You could be running your business exactly the same way for years and the way your accountant told you to. Hire your Mrs as secretary. Pay dividends to her. Then the IR can reinterpret a rule and bang heres a request for 35k (+ interest) under section s660a.

Same with IR35. Make lots of effort to be outside it and then you'll probably still end up at the special commission under appeal.

The IR35 treat each contract separately so you could have two simultaneous contracts with 2 different customers and the IR will still try it on.
What a cr@p piece of legislation. They could just have said "no company can pay dividends to one shareholder of greater than 30 percent of turnover" but then the MPs who sit on the board of directors would lose out ...

planetit
3rd September 2004, 09:31
True, but at least you won’t get locked up for tax evasion.

Join the PCG for the insurance. Follow the advice on running a business outside IR35. Maybe get your contract reviewed by an expert if you think it’s worth it. Don’t submit it to the IR for review.

4Contractors
7th September 2004, 13:14
submit it to the IR for review to determine IR35

This is the worst possible step to take unless Quay are clever enough to get the contract checked anonymously.

I doubt it somehow - steer well clear of this idea - you will seriously regret it !!

Vetran
7th September 2004, 15:14
IR won't give an opinion on a contract unless it is in force so you can't submit it anonymously.

Moose
7th September 2004, 19:52
Quay contacted me today to say that they would never submit a contract to the IR without the express permission of the client and that their contract review was one of the services they provide, but not compulsary.
(They worked it was me from my user name and email address :eek )

So chaps...don't fear, Quay won't stitch you up.

Vetran
11th September 2004, 15:06
There you go then, as I said I personally wouldn't get them on the Radar if I could avoid it.

chrisev
14th September 2004, 08:16
I agree the best method is to try and avoid the radar and thought it would be wise to have the cash in a separate account so the Ltd company could pay up if needed.

BUT, what if I take reasonable steps to be outside IR35 (contract review etc), I took all money out of the company as salary & dividends so the company didn't have the money to pay the IR when they decided it should have been inside IR35 ?

So the company goes bust, the IR doesn't get paid and I could start another ltd company couldn't I ? Providing the company has been properly run and I took steps to see that I was outside IR35 even if I was wrong.

There must be a simple answer to this method as I've never seen this mentioned anywhere.

What am I missing ?

planetit
14th September 2004, 08:28
"As I understand it" if a company has failed to pay the correct amount of PAYE tax, and doesn't have the money to make that good, the director can be held personally responsible and pursued for the money.

IR35 Avoider
14th September 2004, 11:14
I don't think they could hold you responsible in your capacity as a director, unless they were able to prove that your judgement about not being IR35 caught was so bad as to be negligent.

They don't need to go down that route though. Under IR35 the "deemed payment" is treated as your salary. You are personally liable for the tax and employees NI you owe on your salary, it's just for the administrative convenience of Hector that it is usually deducted and handed over by your employer. If your employer (your company) doesn't hand it over, then you have to.

I think there are some circumstances where the tax bill cannot be passed from employer to employee, but I don't think they help in this case. I think the limitations are that the bill can only be passed to you if (a) you and your employer knew the correct tax had not been deducted or (b) your employer made an honest mistake in deducting to little tax. I'm not sure about this though.

If your company has gone bust and you weren't negligent, I suppose you could escape paying the employers NI. On the other hand, you will be worse off overall because your company will not have used the deemed payment to reduce its corporation tax bill.