Public Sector - Extention offered inside IR35

[DoubleL]

Hi,

I have a contract with a Public Sector body deemed to be outside of IR35 (as determined by the client using CEST in 2018 when my contract started) which runs out in October 2019. I have been told that any extensions will be offered inside IR35 now. I have been told that this will be applicable to all contractors in the organisation - seems as though they are making 'blanket' determinations now (this seems in correct in it's own right, but that's another story).

If I did accept the extension inside IR35 on a higher negotiated day rate, would I be a target for a HMRC investigation due to changing status on the same contract or would any liability reside with the client?

Any guidance or advice would be greatly appreciated.

[cojak]

Hi,

I have a contract with a Public Sector body deemed to be outside of IR35 (as determined by the client using CEST in 2018 when my contract started) which runs out in October 2019. I have been told that any extensions will be offered inside IR35 now. I have been told that this will be applicable to all contractors in the organisation - seems as though they are making 'blanket' determinations now (this seems in correct in it's own right, but that's another story).

If I did accept the extension inside IR35 on a higher negotiated day rate, would I be a target for a HMRC investigation due to changing status on the same contract or would any liability reside with the client?

Any guidance or advice would be greatly appreciated.

There is anecdotal evidence that HMRC are going after contractors who switch from outside to inside IR35 with the same client, but there’s probably a load of contractors like that.

So it’s basically down to your appetite for risk.

Are you feeling lucky?

[WordIsBond]

1. Yes, there's a risk that the previous contract would be targeted by HMRC. Since the determination was based on CEST I suspect the risk is not high at all and that HMRC isn't going to want to oppose CEST in a tribunal.
2. In any event, the liability in that case would rest with the fee payer, and not with you.

So I really doubt you have anything to worry about.

If we were talking a contract from before 'reform', you might have a very high risk. But since we're talking about a contract that the client deemed to be outside, and based on CEST at that, I can't see how it would generate any liability for you.

[cojak]

1. Yes, there's a risk that the previous contract would be targeted by HMRC. Since the determination was based on CEST I suspect the risk is not high at all and that HMRC isn't going to want to oppose CEST in a tribunal.
2. In any event, the liability in that case would rest with the fee payer, and not with you.

So I really doubt you have anything to worry about.

If we were talking a contract from before 'reform', you might have a very high risk. But since we're talking about a contract that the client deemed to be outside, and based on CEST at that, I can't see how it would generate any liability for you.

Only for the tax post April 2020 I would think?

[WordIsBond]

Only for the tax post April 2020 I would think?

Have you overlooked this?

I have a contract with a Public Sector body

[cojak]

Have you overlooked this?

Yep, I had.

[webberg]

Hi,

If I did accept the extension inside IR35 on a higher negotiated day rate, would I be a target for a HMRC investigation due to changing status on the same contract or would any liability reside with the client?

Any guidance or advice would be greatly appreciated.

YES.

You are now 2+ years into IR35 for public bodies and a change now whilst doing the same job is almost certain to bring enquiry - IF THEY SPOT YOU.

Being in a herd is protection of a sort.

You might want to ask why the job suddenly moves to inside after so long outside?

[cojak]

You might want to ask why the job suddenly moves to inside after so long outside?

A very good question. Quiet words in ears perhaps?

[WordIsBond]

YES.

You are now 2+ years into IR35 for public bodies and a change now whilst doing the same job is almost certain to bring enquiry - IF THEY SPOT YOU.

But, 1) CEST was used which should be a high level of protection and 2) the liability isn't his anyway, so why should he care?

[jamesbrown]

But, 1) CEST was used which should be a high level of protection and 2) the liability isn't his anyway, so why should he care?

There’s no harm in completing and recording a supportive CEST determination (accuracy aside), but I wouldn’t rely on HRMC standing by it (i.e., not pursuing further because of it), as there’s already evidence to the contrary