Nudge Letters - IR35 said to apply campaign Nudge Letters - IR35 said to apply campaign
Posts 1 to 6 of 6
  1. #1

    Still gathering requirements...


    Join Date
    Jun 2019
    Posts
    21

    Default Nudge Letters - IR35 said to apply campaign

    This weekend saw thousands of contractors receiving letters from HMRC, stating that it was the opinion that IR35 applies to their contracts and that they should pay employment taxes, i.e. start operating IR35, by the next due date, 19th September.

    If you were one of the unlucky ones, don’t ignore the letter, if HMRC’s insinuation turns out to be fact and you’ve done nothing about it, this will be seen as complacency or a lack of responsibility about your tax affairs, which can tip the balance when HMRC looks at levying penalties on top of tax debts.

    Such letters are designed to nudge taxpayers towards compliance, and if IR35 applies, then operating IR35 at the next due date is the correct response. These letters aren’t even a warning that an investigation is imminent.

    People are taking this campaign the wrong way; the demand to ‘pay up’ immediately, isn’t actually what is being said, although I’m sure some will, particularly if the run up to the IR35 Reform has made them start questioning their contractor status.

    If you believe that IR35 doesn’t apply, tell HMRC, and list the action that you have taken to comply with the intermediaries’ legislation, hopefully that involves having had a professional to review your contract, and you have retained the CEST results relating to the contract.

    If you have done nothing so far to protect your status as a limited company contractor, do it now - like today. The importance of this cannot be underestimated and that goes for anyone, not just recipients of the nudge letters.

    What if you get an ‘Intermediaries’ Legislation Applies’ result? Firstly, get a second opinion, some of the questions are ambiguous and due to the nature of the test, a slightly different answer can tip the balance one way or another. Gather evidence to back up your answers too.

    If it turns out that IR35 applies but you’ve missed the deadline in the letter, don’t panic, it’s not a deadline. It’s merely the proper advice should you discover that IR35 applies. So, say you find that IR35 does applies, but that’s at the end of September, because that’s when an IR35 review into your contract has been completed, then start paying employment taxes from 19th October etc.

    The IR35 calculation is an annual calculation and applies to the whole tax year, and previous ones if the current contract extends that far back. Any taxes paid in the current year will be taken into account in the final calculation in March 2020 by you or your accountant, and the more taxes paid during the year, the less will be due at the end of the tax year.




    Sent from my iPad using Contractor UK Forum

  2. #2

    Some things in Moderation

    cojak's Avatar
    Join Date
    Jul 2005
    Location
    Look to your right...
    Posts
    19,654

  3. #3

    Still gathering requirements...


    Join Date
    Jun 2019
    Posts
    21

    Default

    More on this subject can be found here - 1,500 GlaxoSmithKline contractors hit by HMRC’s new IR35 letters


    Sent from my iPad using Contractor UK Forum

  4. #4

    Some things in Moderation

    cojak's Avatar
    Join Date
    Jul 2005
    Location
    Look to your right...
    Posts
    19,654

    Default

    Quote Originally Posted by cwcsolutions View Post
    More on this subject can be found here - 1,500 GlaxoSmithKline contractors hit by HMRC’s new IR35 letters


    Sent from my iPad using Contractor UK Forum
    Thanks for that....

    <polishes badge>

  5. #5

    Fingers like lightning

    GhostofTarbera's Avatar
    Join Date
    May 2018
    Posts
    946

    Default

    Quote Originally Posted by cwcsolutions View Post
    This weekend saw thousands of contractors receiving letters from HMRC, stating that it was the opinion that IR35 applies to their contracts and that they should pay employment taxes, i.e. start operating IR35, by the next due date, 19th September.

    If you were one of the unlucky ones, don’t ignore the letter, if HMRC’s insinuation turns out to be fact and you’ve done nothing about it, this will be seen as complacency or a lack of responsibility about your tax affairs, which can tip the balance when HMRC looks at levying penalties on top of tax debts.

    Such letters are designed to nudge taxpayers towards compliance, and if IR35 applies, then operating IR35 at the next due date is the correct response. These letters aren’t even a warning that an investigation is imminent.

    People are taking this campaign the wrong way; the demand to ‘pay up’ immediately, isn’t actually what is being said, although I’m sure some will, particularly if the run up to the IR35 Reform has made them start questioning their contractor status.

    If you believe that IR35 doesn’t apply, tell HMRC, and list the action that you have taken to comply with the intermediaries’ legislation, hopefully that involves having had a professional to review your contract, and you have retained the CEST results relating to the contract.

    If you have done nothing so far to protect your status as a limited company contractor, do it now - like today. The importance of this cannot be underestimated and that goes for anyone, not just recipients of the nudge letters.

    What if you get an ‘Intermediaries’ Legislation Applies’ result? Firstly, get a second opinion, some of the questions are ambiguous and due to the nature of the test, a slightly different answer can tip the balance one way or another. Gather evidence to back up your answers too.

    If it turns out that IR35 applies but you’ve missed the deadline in the letter, don’t panic, it’s not a deadline. It’s merely the proper advice should you discover that IR35 applies. So, say you find that IR35 does applies, but that’s at the end of September, because that’s when an IR35 review into your contract has been completed, then start paying employment taxes from 19th October etc.

    The IR35 calculation is an annual calculation and applies to the whole tax year, and previous ones if the current contract extends that far back. Any taxes paid in the current year will be taken into account in the final calculation in March 2020 by you or your accountant, and the more taxes paid during the year, the less will be due at the end of the tax year.




    Sent from my iPad using Contractor UK Forum
    Thanks ipse for your reply


    Sent from my iPhone using Contractor UK Forum

  6. #6

    Still gathering requirements...


    Join Date
    Jun 2019
    Posts
    21

    Default

    Quote Originally Posted by GhostofTarbera View Post
    Thanks ipse for your reply


    Sent from my iPhone using Contractor UK Forum
    ?? I’m not an IPSE representative and their response is likely to differ from mine.


    Sent from my iPad using Contractor UK Forum

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •