April 5th 2020 and Contract Extension/Renewal

[WordIsBond]

What about, if the client decides not to make a decision if contractors are inside or outside IR35, but instead either doesn't renew contractors or forces contractors to go inside a brolly?

My thinking is I can go brolly(I'm on the list to keep), MVL my limited company, and if the tax man queries it, I have a legitimate reason for doing so. The ER on liquidizing my company means I'll offset some of the loss of income for 2 years before I'm able to start another limited company in the same business.

OR, if I want to start another limited company(on my own or with others) within the 2 year rule for MVL, then again I have an excuse as it couldn't be determined that I closed my business to get a tax advantage. I did so because I had work with a client who insisted on umbrella.

Thoughts please.

My view. Could be wrong.

1. If the client says 'No contractors because we don't want to mess with determinations,' they could go the all-permie route or the all-brolly route. Either would allow them to make no determination.
2. Yes, I think it helps you if they do that. It means there will not be a list of inside determinations handed to HMRC, and therefore the risk of an inside determination throwing your historical contract inside is lessened. Or, perhaps it would be better to say, I think it lessens the risk of HMRC singling you out for historical investigation. No one knows how much they will be doing those historical investigations, of course.
3. Yes, if you become a brolly employee, you can MVL your company, and have legitimate reason to do so.
4. If you start another Ltd within 2 years, I'd say you are likely still at risk. It's not ironclad, your accountant is correct that intent to gain a tax advantage is part of the law. They will say you have to prove there was not such intent. The fact that you voluntarily have taken an employee position that was offered to you (a brolly one, but still employee) rather than looking for another non-employee role does not prove an absence of tax motivation. I think there would be a significant risk you would lose that case, but it is not iron-clad, you might win. The size of your ER claim and the length of time might matter. If your warchest is less than £50K and you start up your new thing after 21 months, you might be in good shape -- it would be hard to argue that you were just having it on for tax. If your warchest is £250K and you start up after 9 months I'd probably rule against you myself, it's a pretty obvious tax dodge.

[CryingSheep]

Interesting point but you'll still be an off payroll worker won't you? Forget the term contractor for now. So they've made a decision that all off payroll workers are inside hence take those options. If they have any off payroll people they should be following the rules. In the case above it looks like it's blanket inside and hence your options.

You comment is putting the cart before the horse. They no longer have contractors because the rules were applied first.

I do think even if big clients go down this route from April it will change further down the line. The same happened in the Public Sector and many (not all) have gone back to taking some outside guys so they will have to apply to rules to these outside guys as the inside ones.

If you push these types of clients for their response I am sure eventually you'll get an inside response.

I'm surprised companies are going down this route so, in a kind of perverse way, we need quite a few to do it and then there is more ammo to take it back to HMRC and point out the unintended consequences and it gets addresses. Won't be a quick process though I imagine.

I think some big clients will get those options before making a determination, precisely to not have to make that decision.

They will mention informally they are thinking on deeming everyone inside, someone proposes those options (before a formal determination is made).

I agree with you, if they made a formal determination of being inside before, I can't see how those solutions will avoid problems!

[Paralytic]

Interesting point but you'll still be an off payroll worker won't you? Forget the term contractor for now. So they've made a decision that all off payroll workers are inside hence take those options. If they have any off payroll people they should be following the rules. In the case above it looks like it's blanket inside and hence your options.

(my bolding)

No, that's the point. There's no decision to make as there's no off payroll workers for whom a determination is required.

(though I admit I've not fully though through whether there could be a managed service/umbrella scenario where the client might be regarded as the fee payer and therefore has to make the determination)

[northernladuk]

(my bolding)

No, that's the point. There's no decision to make as there's no off payroll workers for whom a determination is required.

(though I admit I've not fully though through whether there could be a managed service/umbrella scenario where the client might be regarded as the fee payer and therefore has to make the determination)

Isn't someone in a client via an agent still an off payroll worker? They way they are remunerated is determined by the clients determination.