Conflicting IR35 status determinations

[assignment]

Hi,

After the announcement on the delay of the IR35 changes, I’m left in a bit of a pickle. I’m pretty new to contracting (started Q3 last year). I’d say I was pretty diligent when it came to choosing my status, I did a lot of research and ended up paying for a full contract and working practices assessment from QDOS. They recommended I go inside, mainly due to right of substitution. I answered all of the questions as honestly as I could. I knew that a lot of people in similar roles were operating outside but I just went with the advice and moved on.

Fast forward to this year and my client determined my role to be outside of IR35. They worked alongside QDOS and we filled in a working practices review which was approved by my client to be accurate and my status determination was finalised and approved. I literally copied and pasted my answers from my previous QDOS review, so I know I was consistent.

The question is what do I do now? The amount of money I’ll lose by staying inside for the remainder is quite substantial, but that determination is now my responsibility and I can’t get insurance because of the lack of right of substitution . I’m happy to pay the tax I owe but I don’t want to overpay, especially when I’ve been told I should be outside by my client and so many others are outside.

I’m probably in the minority but I think the changes are a good thing, in terms of responsibility being with the end client. Maybe the status indicators and HMRC's approach are unfair but this idea of me having to roll the dice on being investigated seems flawed.

TIA

[jamesbrown]

Unfortunately, you've had a contract review, and that review said inside.

If you were to ignore that now, it probably would not end well for you under investigation, given that you previously accepted it to be inside. As a minimum, it's a significant risk.

Obviously, it would've been better for you had the client been allowed to carry this risk, but they would've been in the same difficult position that you're in now. Out of curiosity, did you tell them that you were currently operating inside? If not, they might argue that you withheld information material to their judgement.

Anyway, my advice would be to continue as-is. You'd obviously accepted that situation as reasonable and trying to reduce your tax bill now would not be a reasonable thing to do in the circumstances.

[assignment]

I should clarify that the contract was originally determined to be outside and working practices inside, on substitution. And actually there are two agencies between myself and my client, one says substitution is allowed and the other doesn't. So I think most people are stating they have ROS because of that first layer.

I didn't bring up the fact I chose to operate inside but it wasn't to be deceptive, my client worked with QDOS who did my initial review so I just assumed I'd be inside and but that didn't happen. I just followed the process I was asked to.

In my head the most recent one has more weight because the client approved everything I said, but there's no reason to choose one over another. It is frustrating to know other contractors in similar roles are operating outside, feels a bit like I'd have been better off being more ignorant to it all.

[jamesbrown]

Honestly, I think you’re doing the right thing. If you were to change your tax status on this contract now, without the reality changing, I think you’d be in a very precarious position. The client would’ve been too, but that’s up to them.