IR35 Myths

[meanttobeworking]

So the real question is why doesn't CEST reflect case law rather than HMRC's view of what case law should be?

And the REAL real question is - if the answer to this question is as obvious to anyone else that looks at it as it is to us, how can they still be getting away with it?

[malvolio]

And the REAL real question is - if the answer to this question is as obvious to anyone else that looks at it as it is to us, how can they still be getting away with it?

Because (a) HMRC don't accept it and (b) the Treasury civil service, who are the real drivers here, don't understand anything other than master/servant and keep advising ministers that anyone who doesn't fit that label is doing so to avoid paying taxes - and using erroneous figures and forecasts to prove it - and (c) successive chancellors are apparently incapable of understanding that £Xbn of tax that is not owed does not represent an £Xbn loss to the Treasury,

On that last point, freelances of all kinds, including us, represent £300bn of income to UK's GDP, another fact that ministers are only just beginning to comprehend.

[LondonManc]

Sorry I am newly back to the UK and trying to understand IR35

If I work for 2 or more clients and invoice all of them, but pay myself 50% of the fees received via PAYE (through my own Ltd payroll) leaving the rest to roll up in the business how does that work?

I am accounting for PAYE on some income not drawing out dividends on rest.

Can it be the case that I consider some aspects of the roles within IR35 but not all so I am part and part? Or can I pay myself less than the company is paid for the work done?

Thanks

Mark

IR35 works on a contract-by-contract basis, not a person.

If you have two contracts side by side, one can be inside, one outside. Have a chat with your accountant about how to most efficiently get the money to you - that's what you're paying them for after all.

[LetterBox]

Except every case that has been won - and there are a lot of them - have centered on that work for pay situation and whether or not the worker was required to do work and where and how. Only HMRC keeps bringing cases challenging that and only HMRC keeps losing.

So the real question is why doesn't CEST reflect case law rather than HMRC's view of what case law should be?

CEST has been challenged and found to be broken by the lack of MoO, if the government adds MoO then they know that for them it will break it's purpose (of 90% capture).

Whether big business believe CEST is made up nonsense or based on cast iron actual case facts doesn't matter. CEST is hassle, risk is unwanted, absolutely perfect response from business for the government... in the short term at least.

[technobabble]

IR35 works on a contract-by-contract basis, not a person.

If you have two contracts side by side, one can be inside, one outside. Have a chat with your accountant about how to most efficiently get the money to you - that's what you're paying them for after all.

Thanks - I don't yet have the Ltd company nor an accountant I only arrived back in the UK on 1st Dec ))

I am getting the idea on IR35 though thanks for your help.

Can a contract be both within IR35 and without ? - for example if I taken on to write a report and make specialised recommendation which is consultancy but do some day to day work to cover an absent team member which I would consider a PAYE'd role. I could invoice both aspects separately and charge different rates etc.

[northernladuk]

Thanks - I don't yet have the Ltd company nor an accountant I only arrived back in the UK on 1st Dec ))

I am getting the idea on IR35 though thanks for your help.

Can a contract be both within IR35 and without ? - for example if I taken on to write a report and make specialised recommendation which is consultancy but do some day to day work to cover an absent team member which I would consider a PAYE'd role. I could invoice both aspects separately and charge different rates etc.

Yes. It's per contract. One can be inside, one could be outside. As long as they are dealt correctly tax wise not an issue.

That said, even small pieces of work as you say could be outside if the contract and working practices are right.

[technobabble]

Working practices

That said, even small pieces of work as you say could be outside if the contract and working practices are right.

This thread has been very helpful. I have specialist knowledge within a specific area of IT which my clients are almost always unfamilar with or have only a hazy knowledge of which is why my skills are in demand.

What I am now trying to understand is how that interacts with one of the pillars

"a lack of Direction and Control (D&C)"

Ordinarily a staff member would be under the control of someone who knows how to undertake a task and delegates that to get work done. In my area the client can't direct and control my work as they don't have any understanding of it, only that it needs to be done but not how etc.

If I am asked to help cover a non-specialised task then I would see that as clearly IR35 and that part of my work I would need to put through PAYE. But if I am doing my consultancy work then that is for the client but only I can undertake or know how to etc. Am I approaching this correctly?

[WatkinG]

There is no such proportion. Theoretically you could have a one day/month contract that was inside IR35. Part time employees don't stop being employees just because they're part time.

In practice the less time you work for a given company the less likely it is to be deemed inside IR35, but don't fall into the trap of thinking just because a contract is less than full time hours it can't be inside IR35.

That’s pretty much what I thought. I have been working for the same company for a few years, in the same place doing the same thing which puts me firmly within IR35. That’s about to change. I will be taking work from the same company but will be working in different places unsupervised. Also, I will be able to send someone else to do the work if I need to. The wording of what you are doing is as important as the way you do it. I think I will be outside the IR35 remit with what I will be doing next year.

[ladymuck]

I was shown a contract today, by the consultancy I work via, for a piece of work they're doing elsewhere. The clause we discussed is moot for them because the person they placed is an employee.

I don't recall the exact wording but it was essentially saying the consultancy is liable for all taxes, etc should the determination by the client be wrong and they haven't already made the 'right' deductions. Essentially, it read like the client is passing the liability buck.

I can't see how that's legal or enforceable when the law is clear (is it?) that the liability rests with client.

[eek]

I was shown a contract today, by the consultancy I work via, for a piece of work they're doing elsewhere. The clause we discussed is moot for them because the person they placed is an employee.

I don't recall the exact wording but it was essentially saying the consultancy is liable for all taxes, etc should the determination by the client be wrong and they haven't already made the 'right' deductions. Essentially, it read like the client is passing the liability buck.

I can't see how that's legal or enforceable when the law is clear (is it?) that the liability rests with client.

It's probably not enforceable but these are early days and people will try things on.

Equally the consultancy signed it so without push back these things will continue.