IR35 Retrospective Tax Claims

[ComplianceLady]

No one has been caught by retro taxation to date so I wouldn't be making it a decision point in whether you retire or not.

It's an interesting point that you talk about admitting your gig is inside yet not once have you mentioned leaving the client and getting a gig elsewhere. This smacks of permie-tractor to me for a number of reasons so maybe the inside determination isn't as far wrong as you think?

Not sure if you're going from the strict definition of retrospective but 6 public sector workers have been given tax bills for previous tax years after moving to an umbrella solution with the same end client / role post April 2017.

Their limited contract was terminated and a new one generated under PAYE following an inside decision from the public sector client. HMRC didn't open investigations, they just sent them a bill saying 'we believe you've been taxed incorrectly and should have been a deemed employee'.

I was told this a couple of weeks ago by the compliance director at the agency that supplies them so I trust that it's fairly accurate. Discussion from others in the same field and the consensus was that HMRC are keen to demonstrate the effectiveness of this change in raising tax revenues.

A tax accountancy advisor said closing the limited company will deter enforcement but not prevent it and so the advice from them (and us to our contractors) is not to switch from outside IR35 to inside IR35 or PAYE. If you're going to accept an inside IR35 engagement it's worth moving to an entirely new one.

Haven't read the entire thread so apologies if I've duplicated.

[jk3838]

Not sure if you're going from the strict definition of retrospective but 6 public sector workers have been given tax bills for previous tax years after moving to an umbrella solution with the same end client / role post April 2017.

d.

For the previous tax year ? Or years ?

If years How many years ?

[cojak]

Not sure if you're going from the strict definition of retrospective but 6 public sector workers have been given tax bills for previous tax years after moving to an umbrella solution with the same end client / role post April 2017.

Their limited contract was terminated and a new one generated under PAYE following an inside decision from the public sector client. HMRC didn't open investigations, they just sent them a bill saying 'we believe you've been taxed incorrectly and should have been a deemed employee'.

I was told this a couple of weeks ago by the compliance director at the agency that supplies them so I trust that it's fairly accurate. Discussion from others in the same field and the consensus was that HMRC are keen to demonstrate the effectiveness of this change in raising tax revenues.

Quelle surprise.

Not.

https://www.contractoruk.com/forums/...ur-notice.html

I guess that we are going to need the same count down for the 24th February 2020 ( or should that be the 31st December this year...?)

[Acme Thunderer]

Not sure if you're going from the strict definition of retrospective but 6 public sector workers have been given tax bills for previous tax years after moving to an umbrella solution with the same end client / role post April 2017.

Their limited contract was terminated and a new one generated under PAYE following an inside decision from the public sector client. HMRC didn't open investigations, they just sent them a bill saying 'we believe you've been taxed incorrectly and should have been a deemed employee'.

In other words an HMRC fishing trip, looking to see who will pay up without a fight. Would they not have to open an investigation on each individual contractor and prove they were inside IR35 to force it? I strongly suspect HMRC doesn't have the manpower for this. It also doesn't have a deterrent effect, as the individuals are now inside IR35, so not worth incurring a lot of cost for little gain.

[webberg]

In other words an HMRC fishing trip, looking to see who will pay up without a fight. Would they not have to open an investigation on each individual contractor and prove they were inside IR35 to force it? I strongly suspect HMRC doesn't have the manpower for this. It also doesn't have a deterrent effect, as the individuals are now inside IR35, so not worth incurring a lot of cost for little gain.

Yes - an enquiry on each individual in each year is usually required.

No - the onus of proof is upon the individual.

HMRC are likely to come along with a "you were contracting 16/17 and your end client said you were an employee 17/18. On the basis that your job description did not change and neither did your end client, we think you were likely inside IR35 for 16/17 (and perhaps 15/16). What evidence do you have for claiming otherwise?"

The public sector - esp Civil Service - has a group think that says if an individual is grade 4 say, then they can do ANY grade 4 job in the department. In HMRC that is a nonsense (a VAT specialist being reassigned to income tax fraud?). Perhaps in many other places also a nonsense. However, the starting assumption is there.

Consequently, in seeking to disprove HMRC's starting assumption, you have to fight this group think and point to differences between the two years or perhaps a change of circumstances or some other reason.

I guarantee you that relying upon a defence of "the end client was just being cautious" is almost certainly not enough.