Overthinking IR35? Overthinking IR35?
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  1. #1

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    Default Overthinking IR35?

    Hi Guys,

    Currently working on a contract outside IR35, working Practices & written contract reviewed says & running multiple clients etc...
    As of April, the end client will be deeming all contractors inside IR35 offering the roles on a perm basis, fixed-term contract or for the special few inside IR35 with Day rate.

    When April 2020 comes if I decide I want to take the role (Inside IR35 - Brolly) would it be likely to get the attention of HMRC?

    I'm caution that HMRC have said they will not carry out targetted campaigns on individuals but that doesn't mean investigation won't happen.

    If the new role (inside ir35) started before April 2020 and was different in terms of Job Title and some daily activities but the ultimate end-client was the same would this open oneself up for retrospective tax or is this very unlikely?

    I'm of the annoyance that ultimately even though I can evidence with the new CEST tool is outside of IR35 the company isn't willing to take the risk on its contract workforce so therefor we are being penalized by the risk evasion of companies.

    I have spoken to a tax advisor who wasn't the greatest of help, so coming to the wider audience of their experiences and knowledge.

    Thank you

    Disgruntled Contractor

  2. #2

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    Sticky at the top covers this, however some people would suggest that HMRC have enough on their plate. The question is how lucky do you feel?

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    HMRC has said no targeted IR35 investigations.

    Do you believe them?

    I'm a tax adviser and I don't.

    I predict rather than enquiries will be made. A burst in Q1 next year and then more which are claimed to be part of "normal activity".

    Balancing that however is the fact that resources are limited. So whilst the risk of a status enquiry has risen, perhaps not by too much.
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    Quote Originally Posted by webberg View Post
    HMRC has said no targeted IR35 investigations.

    Do you believe them?

    I'm a tax adviser and I don't.

    I predict rather than enquiries will be made. A burst in Q1 next year and then more which are claimed to be part of "normal activity".

    Balancing that however is the fact that resources are limited. So whilst the risk of a status enquiry has risen, perhaps not by too much.
    I don't see a lot of investigations but I do see a lot of fishing trips similar to GSK to scare people into paying.
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    Quote Originally Posted by eddie1507 View Post
    different in terms of Job Title and some daily activities but the ultimate end-client was the same
    Sounds like you're moving around within the organisation like any permy would. Can you justify to yourself that you're not simply a disguised employee? If not, then you own the risk.

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    Quote Originally Posted by webberg View Post
    HMRC has said no targeted IR35 investigations.

    Do you believe them?

    I'm a tax adviser and I don't.

    I predict rather than enquiries will be made. A burst in Q1 next year and then more which are claimed to be part of "normal activity".

    Balancing that however is the fact that resources are limited. So whilst the risk of a status enquiry has risen, perhaps not by too much.
    Is there anyways to mitigate the risk of investigation? How would HMRC tie up the fact of working outside via a Limited Company to working inside via a Brolly what information would they link the individual?

    Would taking a month break between the outside vs inside along with different duties reduce exposure of an investigation?

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    Quote Originally Posted by Si666 View Post
    Sounds like you're moving around within the organisation like any permy would. Can you justify to yourself that you're not simply a disguised employee? If not, then you own the risk.
    I can see your point, the CEST Tool for both worker and company does state outside... The reason why I'm being forced inside if I accept is due to the risk-averse nature of the organization...

    But from a HMRC prospectice i can see how the evidence would lead to ... You worked outside for the same orgsaniation you are now inside you therefore must have always been inside however that decision has been removed from myself / business and decided by an organization that can't be bothered to access contractors correctly as they know alot of contractors won't think twice and go inside.

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    Thousands of contractors are in the same boat; I'd imagine almost all of them. No one can give you an answer.

    Some are willing to take the risk and just go inside, others are totally oblivious and just go with the flow regardless (permie, inside, whatever - so long as the money keeps rolling in) - personally, I wouldn't as you're basically admitting you are inside all along. Then there are those that accept the crappy situation and are prepared to walk as the terms have changed. Due to large clients being lazy and making blanket inside determinations there's literally thousands that are about to take large pay cuts (no one seems to be willing to up the rate to cover inside costs); contractors are effectively being forced into employment terms they wouldn't have originally agreed to.

    No one knows what HMRC will do; at this stage I don't think they know. A lot of people do not trust HMRC as they seem to make it up as they go along - when the money isn't there for them or they shake a few trees and realise "hey, this is a great way to bring in extra cash" then what's stopping them from retrospectively seeking additional payments they think should have been made and making individual lives hell. They've done it before.

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    Quote Originally Posted by Anubis View Post
    A lot of people do not trust HMRC as they seem to make it up as they go along
    That's my position: I may accept a perm role or work through a brolly in future, but not with a client I've already worked Outside with. I don't trust HMRC not to take that as proof I should have been Inside all along.

    I'm currently waiting for my client to decide how they are going to proceed. They are heavily reliant on contractors, and none I have spoken to are willing to go perm/brolly/inside. The business could well collapse if they don't offer a reasonable solution.

    One thing I am considering suggesting is a mini-SoW setup, whereby we give quotes on Jira tickets and bill when complete (with no contractual requirement for a specific individual to do the work). To me, that seems clearly outside, although I would need to take advice on that (as would the client, I expect).

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    Quote Originally Posted by eddie1507 View Post
    Is there anyways to mitigate the risk of investigation? How would HMRC tie up the fact of working outside via a Limited Company to working inside via a Brolly what information would they link the individual?

    Would taking a month break between the outside vs inside along with different duties reduce exposure of an investigation?
    Something like this? Your UTR / NI number tells them where you've been...
    https://www.contractoruk.com/forums/...ml#post2688472

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