IR35 Clarification Required

**northernladuk** · 4 June 2018, 14:21

Originally posted by That Pettifer Woman View Post

I'm fully up to speed with being IR35 compliant -

Bearing in mind there is no such thing as being IR35 compliant, are you sure about that?

We were discussing somebody who had been investigated by HMRC and they decided against him with respect to a 12 month contract. He was ordered to pay approximately £26,500 PAYE and NI. Hearing that, I thought that he must have been on a good day rate in order to have to pay up that much on top of the corp tax that he'd already paid.

When I mentioned this, my colleague told me that when HMRC decide against you, any corp tax paid by your Ltd isn't taken into account at all and they look at the total income from the contract as salary and charge you the full whack on the total invicable amount (plus any penalties, interest, no doubt) without making any allowances for any corp tax already paid by your Ltd.

Is this right? Sounds like HMRC having their cake and eating it to me. (Fortunately the guy in question appealed and won his case)

All income becomes taxable if you are deemed inside. What you did in the past incorrectly won't matter a bean. The whole investigation proves that CT wasn't the correct thing to do so instead they'll start the whole calculation again taking the full amount and tax it. Or something like that anyway.....but.....

Why worry about all that? Get a good policy that covers the investigation and any liabilities such as TLC35 from QDOS and forget about the whole thing? Get IPSE+ membership and be (almost) doubly covered.

Nothing you can do about how much the penalties or the complexity of how they work it out. Forget that and just concentrate on starting off and stayint outside IR35 and get your insurances in place.

Do both those things and you will be two steps ahead of a vast majority of other contractors.

**PerfectStorm** · 4 June 2018, 14:35

Originally posted by northernladuk View Post

Bearing in mind there is no such thing as being IR35 compliant, are you sure about that?

There is such a thing as being able to read between the lines - a vital skill for any contractor.

**jamesbrown** · 4 June 2018, 14:43

The answer is that it depends.

Yes, in principle, you can have overpaid CT credited back.

In practice, there are time limits for doing so (4yrs for CT IIRC).

The interaction in the time limits for having overpaid CT credited back and the time taken for an investigation to complete could interact adversely, I suppose.

If a settlement isn't agreed between the parties, it's possible to get a binding assessment at tribunal.

You can look to the recent appeal in Christa Ackroyd Media Ltd v CRC by way of example, I think. IIRC the gross amount due was ~400k, but this was reduced to ~200k after accounting for CT.

In short, I think overpaid CT would be factored into the amount due, in practice, yes. Obviously, HMRC's starting position may be different.

**northernladuk** · 4 June 2018, 14:56

Originally posted by PerfectStorm View Post

There is such a thing as being able to read between the lines - a vital skill for any contractor.

Well yes... but no. I'd generally agree but to use terms like 'compliant' could indicate a fundamental misunderstanding of what IR35 is which needs correcting. It might not as you say.. but no harm in pointing it out early. I'd hate the OP, when asked about her Conduct of Employment Agencies and Employment Business Regulations 2003 status, she answers she is compliant for example.

**OneManBand** · 4 June 2018, 17:24

Originally posted by northernladuk View Post

Get a good policy that covers the investigation and any liabilities such as TLC35 from QDOS and forget about the whole thing? Get IPSE+ membership and be (almost) doubly covered.

If someone has the TLC35 cover (e.g. me), what could they gain by also getting the IPSE membership?

**SueEllen** · 4 June 2018, 17:45

Originally posted by OneManBand View Post

If someone has the TLC35 cover (e.g. me), what could they gain by also getting the IPSE membership?

IPSE will fight your case to the highest courts possible if necessary to ensure that other members are protected. They have found they don't have to do this as HMRC doesn't like fighting with their members.

**northernladuk** · 4 June 2018, 17:51

Originally posted by OneManBand View Post

If someone has the TLC35 cover (e.g. me), what could they gain by also getting the IPSE membership?

Nothing really to be honest. Just maybe peace of mind for people worried about IR35? IPSE+ is a no brainer without it though IMO. The business interruption cover, jury service and so on as well as being able to make it all back on the Advantages scheme (forget the new name).

**OneManBand** · 5 June 2018, 08:11

Originally posted by SueEllen View Post

IPSE will fight your case to the highest courts possible if necessary to ensure that other members are protected. They have found they don't have to do this as HMRC doesn't like fighting with their members.

But surely you'd have only one legal team representing you in court, not two? I still don't see the point of having both TLC35 and IPSE+.

Yes, I know IPSE+ has other features like jury service cover etc, but I am talking about IR35 only.

**pr1** · 5 June 2018, 08:22

Originally posted by OneManBand View Post

But surely you'd have only one legal team representing you in court, not two? I still don't see the point of having both TLC35 and IPSE+.

Yes, I know IPSE+ has other features like jury service cover etc, but I am talking about IR35 only.

You are correct, it is overkill - if you asked AbbeyTax (via IPSE membership) to represent you QDOS would not pay out on TLC35 if they lost.

IR35 Clarification Required