Queries regarding Renewal and options going forward (inside ir35 or permanent)

[freelancelife]

I'm currently in a short contract that ends Dec 31st this year. My concern is if the contract is renewed but they are unable to tell me if they determine me inside or outside at the renewal date.

Currently I'm thinking if I'm offered a renewal I should request a renewal until the end of February or middle of March 2019. This would allow for payments to hit the company bank account prior to April. The end of March is cutting this a bit fine even on a weekly payment schedule.

So my current options if I'm offered an extension on 31st December are

1) Advise I can extend until mid-march at the latest unless they can confirm in writing that I will be determined as outside when the new rules take effect in April 2020
2) Advise I can extend until mid-march and while working this contract potentially approach client and ask if they are able to advise if the contract would be inside or outside if any future renewals are offered
And what happens if the client advises you will be determined inside for next renewal. Is it better not to ask and just leave?

I'd be interested what others are doing with their renewals.

Also with the way things are going there may be limited outside IR35 positions available in the future.

If I decided to take an inside-ir35 contract or permanent role in the future but to work via an Umbrella rather than through my Limited company. Would this mean HMRC would make the assumption that all my previous contracts through the company were inside? Or does moving to the Umbrella model mean you are safer?

I'd like to keep the Ltd Company running regardless in 2020 as I also generate a small income via Ecommerce online sales through the Ltd company (separate stream to my consulting business).

[northernladuk]

I'm sure we have a sticky covering exactly this type of question.

If not we've a stack of threads asking exactly the same mounting up.

[cojak]

The wrinkle here is the Ltd running a sideline.

I would still leave as per the thread but keep IR35 insurance for your company.

[webberg]

My view based on the above is that if you are so uncertain that the role is outside IR35 or conversely certain that the end client will assess it as inside, then what has the situation been in the last 4 years?

Accepting that some employers will have reasons other than tax at the forefront of their mind in assessing "in/out" IR35, if you are concerned that an enquiry TODAY would expose an incorrect IR35 decision that YOU have made, you should stop - immediately.

Alternatively you could decide that actually since 6th April 2019 you have incorrectly determined IR35 status and your PSC should calculate and pay over the required tax/NIC.

If you are certain that your present outside IR35 assessment is correct, then you have nothing to worry about and the term of the next contract doesn't really matter.

[WordIsBond]

If you are certain that your present outside IR35 assessment is correct, then you have nothing to worry about and the term of the next contract doesn't really matter.

This ignores the following facts:
1. IR35 is not clearly defined in law such that one can say, 'Here's all the evidence, bang, game over, go away.' It is possible for HMRC to take a different view on it even for cases when the outside assessment was correct, as much case law has demonstrated.
2. Clients may make an inside determination not based on the facts but based on self-protection. There is an un-quantified but not-negligible risk that a later inside determination would be used against a contractor for historical contracts. In such a case the contractor would be at much higher risk of losing his case even if the facts were on his side, due to #1.
3. Even if a later inside determination did not result in a contractor losing his case on historical contracts, it would be sufficient for HMRC to feel justified in dragging the contractor through a nightmare before he actually won. Who wants to get dragged into defending an IR35 case? This is not like VAT where the rules are almost always crystal clear....

[webberg]

This ignores the following facts:
1. IR35 is not clearly defined in law such that one can say, 'Here's all the evidence, bang, game over, go away.' It is possible for HMRC to take a different view on it even for cases when the outside assessment was correct, as much case law has demonstrated. Agreed. Hence the phrasing of "you are certain". Absolute pre ordained certainty is impossible. Thus each individual has to make an assessment and the best way to do that is by either subjecting what the role is to one of the AI tools out there or - better - speak with somebody who has more knowledge or experience. All you can do is answer the questions honestly and as objectively as possible and if you are certain you are inside or outside, then decide from there.
2. Clients may make an inside determination not based on the facts but based on self-protection. There is an un-quantified but not-negligible risk that a later inside determination would be used against a contractor for historical contracts. In situations where the role has not changed but one is outside and one inside, the risk of an enquiry rises significantly even allowing for the low start point of risk. In such a case the contractor would be at much higher risk of losing his case even if the facts were on his side, due to #1. I disagree. In this situation a case going to Tribunal would be judged on its merits. If the previous outside role (actual activities) was no different from the later inside role AND it can be shown that the employer had non tax considerations in mind, these would be put aside. I accept that HMRC will make a lot of noise about this but ultimately who is to say that the present or later assessment is correct without examining the facts.
3. Even if a later inside determination did not result in a contractor losing his case on historical contracts, it would be sufficient for HMRC to feel justified in dragging the contractor through a nightmare before he actually won. Who wants to get dragged into defending an IR35 case? This is not like VAT where the rules are almost always crystal clear....

(I assume the comment about VAT is tongue in cheek? Even if not, I'm not sufficiently expert in VAT to argue the point).

HMRC will almost certainly - and in contravention of their own litigation policy - raise spurious IR 35 challenges simply to intimidate and bully people. However, as I suggested, if you are sure as you can be that you are outside IR35, then aside from some legal fees and time (which over a career in contracting are minimal) you should do what is right and not what HMRC want you to do.

[WordIsBond]

(I assume the comment about VAT is tongue in cheek? Even if not, I'm not sufficiently expert in VAT to argue the point).

HMRC will almost certainly - and in contravention of their own litigation policy - raise spurious IR 35 challenges simply to intimidate and bully people. However, as I suggested, if you are sure as you can be that you are outside IR35, then aside from some legal fees and time (which over a career in contracting are minimal) you should do what is right and not what HMRC want you to do.

For the things the average contractor has to deal with, VAT is very straightforward, with clear rules. IR35 is not straightforward, which is why we have to get contract reviews, and there is so much subjectivity.

You can be very sure you are outside and yet recognise that a thoughtless 'inside' determination by a client could throw a huge spanner into the works of your defence. It is possible to know you are outside, be outside, and have such an action after the fact make it impossible to sufficiently prove you are outside. IR35 is not sufficiently black and white for this confidence of yours that someone outside is immune to problems if a client unfairly drops a boulder on the wrong side of the balance.