IR35 retrospective charges

[BrilloPad]

How can HMRC get back the tax?

Retrospection is illegal?

[Paddy]

This is HMRC internal guide lines to their tax inspectors


ESM0117 - Employment Status Manual - HMRC internal manual - GOV.UK

Where it is agreed that a worker who has previously been regarded as self-employed should now be treated as employed, then you will need to consider whether to pursue the employer for NICs and tax for back years. The law and practice relating to NICs and tax is different, so you will need to consider each separately.

You need to draw your own conclusions about HMRC. As an example, I had a long conversation with them about 20 years ago about a very nasty property billionaire who lives not far away (he was also listed in the Panama Papers). He buys up leases and then enforces old redundant covenants to gain possession. His company is registered in Panama and the money comes back to the UK tax-free. HMRC said they do not have the budget to prosecute “such a large fish”. HMRC on go after the small fish and that satisfies their statistics.

Example here...

Why does HMRC go after the small fry but let the big fish go? | Life and style | The Guardian

HMRC are a bizarre outfit. Last week, they sent a letter to my friend Janet in Cumbria. They had discovered that she was selling art works and hadn’t told them, so naturally they were on it, demanding that she fill in a tax return.

But Janet is a pensioner, living on £155 a week, hasn’t paid tax for nine years, and her “art work” earns her nothing. She rang them up and explained, for ages, that she belongs to the village amateur artists’ group, sometimes puts her paintings into local exhibitions, designs and prints packets of 10 cards, which she sells at the post office, but after paying for materials, framing, mounting, exhibiting, printing and packaging, her profit is about minus £400 annually.