New contractor & IR35

[chrisev]

I'll be starting my 1st contract in a few months after quiting my permanent job last week. I have read stacks about IR35 over the past year and came to the conclusion that I am unable to determine if I'm in or out of IR35 until I have some contract work history behind me as I don't know the nature of work I'll be doing.
When do you have to declare yourself in or out of IR35 ? I don't want to opt in unnecessarily or get accused of avoiding tax. I see from other posts that an agency may ask you to opt in or out when signing a contract!!!

At this point it is my intention to move around doing short term contracts and not remain with a single client for an eternity.

[antell]

If you want to know whether your circumstances bring you inside or outside the IR35 legislation then a solicitor or (better still!) a barrister can give you an opinion. They would need to see the contract and also have information about the surrounding circumstances, in order to advise you whether IR35 applies or not.

Note that IR35 is not the same thing as the employment agency regulations "opt out".

John Antell

barrister

www.john.antell.name

[xoggoth]

Not same thing at all.

NAA but I would not get too concerned about this immediately.

If you think your contract is outside IR35 you will avoid any penalties if you have made reasonable efforts to ensure this is a correct viewpoint. This does not have to include professional input, just do your own research and write down your reasons. There are various contract review services and insurances available if you prefer more certainty.

You theoretically decide at 19th April each year, as that is when any IR35 deemed payment is due from previous year. Assuming there are no penalties as above (and given cases so far you would really need to be taking the piss basically) you would just need to pay interest on amounts paid after that if the IR finds you are caught.

If not totally sure, do the sums to see what you could owe in the worst case and do not spend it. There are several IR35 calculators on the internet. Check what the money can earn in the best account you can find (compound interest) against what you might end up paying the IR in interest (simple interest). Unless you are earning a really high rate you may find the difference is not all that frightening.

Don't forget to claim all expenses and allowances (including pension) to make amount you might owe as small as possible.

[Moose]

Xoggoth...or anyone else, how often do the IR query the contracts?
If I had say 3 contracts over a year (hopefully), and felt none were inside IR35, would they on me like a spaniard on your sister or do you (or some guy you were talking to in a pub one night) generaly get away with it? :\

[fiddleabout]

The IR have been amazingly lax in checking IR35 status. The vast majority of contractors have never been questioned at all despite probably 50% declaring "not caught".

They can go back over 6 (iirc) years of records though and more if they decide there has been deliberate evasion.

[xoggoth]

Generally in enquiries they do not go back more than three years and one is not obliged to keep records longer than that. Not sure if IR35 is any different.

PS Fastest thing about a Spaniard on my sister would be speed he tried to escape I think.

[tim123]

Re: Keeping records

I can't speak for how far back the IR go if they do turn up, but you are *definately* required to keep all relevent records for the past 6 years. Chucking them away after 3 is asking for trouble.

tim

[Moose]

Re: Keeping records

Thanks Chaps, I've a feeling my current position is outside IR35 as the boss is never in, there's no direction and the machines are so crap I need to use my lappy to get anything done.

[4Contractors]

Re: Keeping records

The IR's usual method of starting IR35 investigations is the so called PAYE revue.

As stated in a recent thread do not agree to a meeting ! Have a reasonable excuse planned for this eventuality - perhaps your clients cannot spare you. Use your accountant to advise you and deal with the IR exclusively through the post - I don't think the IR have progressed to that new fangled email thing yet

[chrisev]

Re: Keeping records

Thanks for the advice, I think I'll back both horses and do all I can to stay out of the IR's way, definitely not self declare inside IR35, and keep a bit of money aside in case they do decide I owe them some money.

Not sure I can sit on it for 6 years though !!!
:hat