Small Company Exemption

[jammer]

Hi All,

First post so hello and I'm just doing some more reading around this subject.

I just had a conversation with a recruiter about some work and he was claiming that if the clients turnover is less than £10.2 million it is automatically outside IR35.

The three possible exemption clauses are:

Annual turnover is no more than £10.2 million
Balance sheet total is no more than £5.1 million
No more than 50 employees.

To my mind this doesn't automatically make it outside IR35, it means my client doesn't have to do the SDS, I do.

Surely then I can just ensure the contract is sound in terms of being outside IR35 and life goes on as normal?

Or am I being overly simplistic here?

BTW Guys, thank you for a brilliant resource on this subject. I've been reading this forum for a few days on and off now and it's really good stuff in here.

Thanks,

James

[northernladuk]

You are correct and quite right to question the garbage agents come out with.

Just be aware thst the small business exemption could be the next thing that is removed in future.

[Lance]

Hi All,

First post so hello and I'm just doing some more reading around this subject.

I just had a conversation with a recruiter about some work and he was claiming that if the clients turnover is less than £10.2 million it is automatically outside IR35.

The three possible exemption clauses are:

Annual turnover is no more than £10.2 million
Balance sheet total is no more than £5.1 million
No more than 50 employees.

To my mind this doesn't automatically make it outside IR35, it means my client doesn't have to do the SDS, I do.

Surely then I can just ensure the contract is sound in terms of being outside IR35 and life goes on as normal?

Or am I being overly simplistic here?

BTW Guys, thank you for a brilliant resource on this subject. I've been reading this forum for a few days on and off now and it's really good stuff in here.

Thanks,

James

You are correct in that it isn’t automatically outside. It’s you that makes the determination.
For this there is no change to the status quo.

[LondonManc]

It's very simple. Where the end-client meets two or more of the above criteria, responsibility for determining the IR35 status of a contract remains with ContractorCo and the changes do not apply.
This doesn't mean that IR35 doesn't apply at all, simply that the new changes do not apply - you may still be inside if you're simply a project admin type doing the bidding of a few PMs.

[GigiBronz]

Don't want to scare people but despite the exclusion hmrc might put more effort into looking if someone is truly outside. Client and agent conveniently, might not care, as the responsibility has shifted.

[NeedTheSunshine]

Don't want to scare people but despite the exclusion hmrc might put more effort into looking if someone is truly outside. Client and agent conveniently, might not care, as the responsibility has shifted.

HMRC are going to be busy dealing with the inside to umbrella/permie people for the time being. I'd go with a small company for a while but be fully aware that the exemption will be going soon

[ladymuck]

I can't help but think that there's a heck of a lot of scaremongering going on. A friend mine was messaging me, stressing over everything they're reading about all the companies making blanket declarations, HMRC sending threatening letters to companies etc.

Some of it is true. Some of it is heresay. There's a very fine line between causing panic and being informative.

[NeedTheSunshine]

I can't help but think that there's a heck of a lot of scaremongering going on. A friend mine was messaging me, stressing over everything they're reading about all the companies making blanket declarations, HMRC sending threatening letters to companies etc.

Some of it is true. Some of it is heresay. There's a very fine line between causing panic and being informative.

Ask the loan charge folk how their dealings with HMRC are going. There's a reason HMRC have been collecting data. Anyone changing client is fine. Anyone going from outside to umbrella/perm at the same client is going to be on the list. Generic letter going out in brown envelopes sooner or later. And HMRC aren't fast acting. It's easy money from low hanging fruit. Remember how lots of people were optimistic that the public sector rules wouldn't be rolled out to the private sector? It was inevitable.

[GigiBronz]

Sorry about that I should rephrase:
There will be a small pool of people, self declared outside. If they want to take action, with same allocated resource it is a higher probability to reach those individuals.
Caution should be the word, working practices, contract reviewed etc insurance if still available.
Until we see someone pioneering an outside contract, more widespread adoption we don’t know how hmrc will react post April.

If they decide to look into the ones ouside-inside in same role, that should be an easy fight as client is serving them on a platter. Round of letters and it’s all sorted.

[ladymuck]

Ask the loan charge folk how their dealings with HMRC are going. There's a reason HMRC have been collecting data. Anyone changing client is fine. Anyone going from outside to umbrella/perm at the same client is going to be on the list. Generic letter going out in brown envelopes sooner or later. And HMRC aren't fast acting. It's easy money from low hanging fruit. Remember how lots of people were optimistic that the public sector rules wouldn't be rolled out to the private sector? It was inevitable.

That wasn't what I said.

Never mind.