Should we be worried about retrospective claims?

[SimonMac]

Erm.....

The very fact he things the contractor's are classing themselves as outside rings alarm bells.

That was my re-wording the post not from him

[northernladuk]

In fairness yes, in fact I'd go as far as saying I've found an honest agent. I know I am as surprised as you!

Honest != knowledgeable

But to be fair I've come across some proper clued up agents in the last few months so they are out there.

Must say I don't completely agree. The low hanging fruit of outside to inside must be very tempting... Once they've done this, or don't at all I am sure they will resume investigating peoples current engagements as they have in the past.

[webberg]

My twopen'th.

In theory where a role has not materially changed in its function, operation or result but pre April 2020 is outside IR35 and post that date "inside", HMRC would have a strong case for opening an enquiry.

In practice would HMRC have the resources to chase individual circumstances?

Probably not.

More likely I think is HMRC going to the end client and asking how many people being paid as employees or inside IR35 contractors in 2020/21 were being paid as contractors in 2019/20.

This gives HMRC a ready made target list.

However, they still need resource, especially if every case is contested.

I think therefore that only the very obvious cases will be selected.

[jamesbrown]

My twopen'th.

In theory where a role has not materially changed in its function, operation or result but pre April 2020 is outside IR35 and post that date "inside", HMRC would have a strong case for opening an enquiry.

In practice would HMRC have the resources to chase individual circumstances?

Probably not.

More likely I think is HMRC going to the end client and asking how many people being paid as employees or inside IR35 contractors in 2020/21 were being paid as contractors in 2019/20.

This gives HMRC a ready made target list.

However, they still need resource, especially if every case is contested.

I think therefore that only the very obvious cases will be selected.

I mean, duh.

Yes, this, of course. They can also glean some of this directly from the intermediaries reporting and the new PAYE RTI flag for deemed payments.

Nudge letters will work too.

[eek]

I mean, duh.

Yes, this, of course. They can also glean some of this directly from the intermediaries reporting and the new PAYE RTI flag for deemed payments.

Nudge letters will work too.

I don't expect a lot of actual full on investigations - but I would be very surprised if we didn't see broad target fishing expeditions attached to nudge letters.

[WordIsBond]

I still think their first target will be clients who give outside determinations.

Simple maths. How much money comes in if they manage to win a case against a contractor who was outside at Client A for a year and has now gone inside or brolly at Client A? PAYE taxes vs CT/Div Tax for 1 person for 1 year. That's if they can collect it, of course, the Contractor Ltd may not even have the money anymore....

How much money comes in if they manage to win a case against a client who has given 25 outside determinations? PAYE taxes vs CT/Div for 25 people, and the client will be suitably chastised and not do so many (or any) outside determinations in future, too.

A historical case win against a contractor is hard to fight, hard to collect, and doesn't gain much. A current case win against a client may be hard to fight but it probably won't be hard to collect, the client is much more likely to have the funds, and gains a lot more.

I think the historical cases become much easier to win if someone has gone inside at the same client, but the other factors don't change. Still hard to collect (those Ltds are going to be closing down and/or emptied of funds pretty quickly), and still wouldn't gain much anyway, unless maybe the guy has been there 6 years. But few Ltd companies are going to have 6 years of PAYE tax sitting in them....

I think their first target is therefore likely to be current cases. That's what I'd do. I might be sending letters saying, "We think you are inside" like they did to GSK and see who rolls over and plays dead, but I doubt they'll do much actual chasing of those cases.

edit: Heh. Just ignore this post and read eek's just above it and save some time. Wasn't there when I started....

[CompoundOverload]

Accepted, but the point is to not wait until that point and challenge an SDS now if it's not worth the paper it's written on. If you receive an SDS and disagree with it, doubting reasonable care and believing that it's worthless but then accept the terms anyway, that feels like it might weaken any future objections!

So what does determine whether an SDS is worth the paper it's written on?

[mondeoman]

I still think their first target will be clients who give outside determinations.

Simple maths. How much money comes in if they manage to win a case against a contractor who was outside at Client A for a year and has now gone inside or brolly at Client A? PAYE taxes vs CT/Div Tax for 1 person for 1 year. That's if they can collect it, of course, the Contractor Ltd may not even have the money anymore....

How much money comes in if they manage to win a case against a client who has given 25 outside determinations? PAYE taxes vs CT/Div for 25 people, and the client will be suitably chastised and not do so many (or any) outside determinations in future, too.

A historical case win against a contractor is hard to fight, hard to collect, and doesn't gain much. A current case win against a client may be hard to fight but it probably won't be hard to collect, the client is much more likely to have the funds, and gains a lot more.

I think the historical cases become much easier to win if someone has gone inside at the same client, but the other factors don't change. Still hard to collect (those Ltds are going to be closing down and/or emptied of funds pretty quickly), and still wouldn't gain much anyway, unless maybe the guy has been there 6 years. But few Ltd companies are going to have 6 years of PAYE tax sitting in them....

I think their first target is therefore likely to be current cases. That's what I'd do. I might be sending letters saying, "We think you are inside" like they did to GSK and see who rolls over and plays dead, but I doubt they'll do much actual chasing of those cases.

edit: Heh. Just ignore this post and read eek's just above it and save some time. Wasn't there when I started....

Isn't the thing though that they can chase the individual, not just the Ltd? If you are now deemed inside, having been outside, aren't you, as the Director, guilty of fraud?

[northernladuk]

Isn't the thing though that they can chase the individual, not just the Ltd? If you are now deemed inside, having been outside, aren't you, as the Director, guilty of fraud?

Fraud?

In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.

No.

[mondeoman]

Why not?

You knew you were an employee really, but decided to declare something different, to obtain a financial advantage.

"In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right."

You deprived HMRC of the NICs and PAYE that were legally theirs.