Contractors: IR35 & general discussion
Discussion
Listened into the HMRC Webinar today.
Question was asked regarding HMRC investigating a PSC that changes to PAYE with current end user.
Audience Question:
Q: Will PSC be retrospectively investigated if they take a PAYE position with current end user
A: HMRC have issued a committment that contractor's Chapter 8 IR35 affairs will not be retrospectively investigated based on their employment status post-April unless there is a suspicion of fraudulent behaviour.
Extract from enquiry manual:
The general term ‘fraud’ has a wide significance and there is no simple definition which covers the full range of conduct to which it may be applied. Fraud (in relation to HMRC) includes, in its various forms, falsification with an intention to deceive and this may be present even as a mere conscious understatement in, or omission from, a return or accounts.
Any falsification may be consciously planned with the clear intention of deceiving and cheating HMRC by, for example, the omission, manipulation or invention of figures, or other records. This may require consideration by Specialist Investigations (SI), and even, possibly, the institution of criminal proceedings.
In all cases where you suspect fraud, you must consider whether the case must be referred to the Evasion Management Team (EMT).
If you are dealing with an inaccurate return for a period beginning on or after 1 April 2008 which has a filing date on or after 1 April 2009, you will consider whether the behaviour giving rise to the inaccuracy was careless or deliberate, see CH81100+.
CH81150 and CH81160 give further guidance.
Question was asked regarding HMRC investigating a PSC that changes to PAYE with current end user.
Audience Question:
Q: Will PSC be retrospectively investigated if they take a PAYE position with current end user
A: HMRC have issued a committment that contractor's Chapter 8 IR35 affairs will not be retrospectively investigated based on their employment status post-April unless there is a suspicion of fraudulent behaviour.
Extract from enquiry manual:
The general term ‘fraud’ has a wide significance and there is no simple definition which covers the full range of conduct to which it may be applied. Fraud (in relation to HMRC) includes, in its various forms, falsification with an intention to deceive and this may be present even as a mere conscious understatement in, or omission from, a return or accounts.
Any falsification may be consciously planned with the clear intention of deceiving and cheating HMRC by, for example, the omission, manipulation or invention of figures, or other records. This may require consideration by Specialist Investigations (SI), and even, possibly, the institution of criminal proceedings.
In all cases where you suspect fraud, you must consider whether the case must be referred to the Evasion Management Team (EMT).
If you are dealing with an inaccurate return for a period beginning on or after 1 April 2008 which has a filing date on or after 1 April 2009, you will consider whether the behaviour giving rise to the inaccuracy was careless or deliberate, see CH81100+.
CH81150 and CH81160 give further guidance.
I'm in the difficult position that my client have effectively completely outsourced code development to my company, but the thing that prevents (or dissuades) them from outsourcing to a different company is my intimate knowledge of their code and the steep learning curve for anyone else to gain the same level of knowledge.
However, I do not consider myself a disguised employee due to the fact that the work is completely outsourced to me, with no direction or control other than "we need X implemented / fixed / explained".
However, I do not consider myself a disguised employee due to the fact that the work is completely outsourced to me, with no direction or control other than "we need X implemented / fixed / explained".
tighnamara said:
Listened into the HMRC Webinar today.
Question was asked regarding HMRC investigating a PSC that changes to PAYE with current end user.
Audience Question:
Q: Will PSC be retrospectively investigated if they take a PAYE position with current end user
A: HMRC have issued a committment that contractor's Chapter 8 IR35 affairs will not be retrospectively investigated based on their employment status post-April unless there is a suspicion of fraudulent behaviour.
Extract from enquiry manual:
The general term ‘fraud’ has a wide significance and there is no simple definition which covers the full range of conduct to which it may be applied. Fraud (in relation to HMRC) includes, in its various forms, falsification with an intention to deceive and this may be present even as a mere conscious understatement in, or omission from, a return or accounts.
Any falsification may be consciously planned with the clear intention of deceiving and cheating HMRC by, for example, the omission, manipulation or invention of figures, or other records. This may require consideration by Specialist Investigations (SI), and even, possibly, the institution of criminal proceedings.
In all cases where you suspect fraud, you must consider whether the case must be referred to the Evasion Management Team (EMT).
If you are dealing with an inaccurate return for a period beginning on or after 1 April 2008 which has a filing date on or after 1 April 2009, you will consider whether the behaviour giving rise to the inaccuracy was careless or deliberate, see CH81100+.
CH81150 and CH81160 give further guidance.
That statement is such BS, the caveat at the end basically gives them carte blance to investigate anyone they feel like so why say no they won't investigate at the beginning?Question was asked regarding HMRC investigating a PSC that changes to PAYE with current end user.
Audience Question:
Q: Will PSC be retrospectively investigated if they take a PAYE position with current end user
A: HMRC have issued a committment that contractor's Chapter 8 IR35 affairs will not be retrospectively investigated based on their employment status post-April unless there is a suspicion of fraudulent behaviour.
Extract from enquiry manual:
The general term ‘fraud’ has a wide significance and there is no simple definition which covers the full range of conduct to which it may be applied. Fraud (in relation to HMRC) includes, in its various forms, falsification with an intention to deceive and this may be present even as a mere conscious understatement in, or omission from, a return or accounts.
Any falsification may be consciously planned with the clear intention of deceiving and cheating HMRC by, for example, the omission, manipulation or invention of figures, or other records. This may require consideration by Specialist Investigations (SI), and even, possibly, the institution of criminal proceedings.
In all cases where you suspect fraud, you must consider whether the case must be referred to the Evasion Management Team (EMT).
If you are dealing with an inaccurate return for a period beginning on or after 1 April 2008 which has a filing date on or after 1 April 2009, you will consider whether the behaviour giving rise to the inaccuracy was careless or deliberate, see CH81100+.
CH81150 and CH81160 give further guidance.
It's this kind of wooliness that has caused us to end up in this mess in the first place. You'd almost think HMRC were doing it on purpose to create an atmosphere of fear and uncertainty.
Guvernator said:
It's this kind of wooliness that has caused us to end up in this mess in the first place. You'd almost think HMRC were doing it on purpose to create an atmosphere of fear and uncertainty.
Surely, a Govt organisation wouldn't dream of such behavior......... 
The fact that its clear the vast majority of firms are taking the easy way out of blanket decisions IMHO is based entirely on this HMRC statement, and the belief that all contractors will roll over and take one for 'their' team with a tub of Vaseline and just continue inside....'cos HMRC say all is OK.
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
HMRC must be positively rubbing their hands together.
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
Once HMRC has a list of outside to inside at same client they will send a mailshot out like with GSK last year. HMRC must be positively rubbing their hands together.
https://www.google.com/amp/s/amp.ft.com/content/3d...
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
HMRC must be positively rubbing their hands together.
Same where I am.....with similar percentages I'd say.
Tim330 said:
Out of interest where do you currently contract? I heard about Worleys decision for outside. I'm currently at Fluor and all contractors have completed an assessment with QDOS but Fluor hasn't announced the determinations yet.
I heard KBR has said outside as well so it's looking better on the O&G contractor side rather than the operators (BP, Shell, INEOS inside, Chevron not issued determinations yet)
having worked at one of the organisations that have blanketed all contractors ‘inside’, I reckon it’s only going to take 6-12 months, struggling with resources for a project or 2 and suddenly the likes of wood/ jacobs etc..... will be used to get people back in. passing the risk onto them, and making them write the contractor friendly contracts. I heard KBR has said outside as well so it's looking better on the O&G contractor side rather than the operators (BP, Shell, INEOS inside, Chevron not issued determinations yet)
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
I think a lot will depend on how the contractor run their company, if they were blatantly flouting the tax then no doubt there should be worry in being investigated. HMRC must be positively rubbing their hands together.
If you ran your company "sensibly" and paid your fair share of tax, ie not paying wife salary, pension etc and paying a decent amount of Corporation Tax I doubt there should be too much to worry about.
Hence why they are keeping it very "wooly
tighnamara said:
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
I think a lot will depend on how the contractor run their company, if they were blatantly flouting the tax then no doubt there should be worry in being investigated. HMRC must be positively rubbing their hands together.
If you ran your company "sensibly" and paid your fair share of tax, ie not paying wife salary, pension etc and paying a decent amount of Corporation Tax I doubt there should be too much to worry about.
Hence why they are keeping it very "wooly
g7orge said:
tighnamara said:
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
I think a lot will depend on how the contractor run their company, if they were blatantly flouting the tax then no doubt there should be worry in being investigated. HMRC must be positively rubbing their hands together.
If you ran your company "sensibly" and paid your fair share of tax, ie not paying wife salary, pension etc and paying a decent amount of Corporation Tax I doubt there should be too much to worry about.
Hence why they are keeping it very "wooly
Countdown said:
g7orge said:
tighnamara said:
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
I think a lot will depend on how the contractor run their company, if they were blatantly flouting the tax then no doubt there should be worry in being investigated. HMRC must be positively rubbing their hands together.
If you ran your company "sensibly" and paid your fair share of tax, ie not paying wife salary, pension etc and paying a decent amount of Corporation Tax I doubt there should be too much to worry about.
Hence why they are keeping it very "wooly
Tax avoidance is not paying the tax on tobacco by choosing not to smoke.
Tax evasion is smoking black market cigarettes which have not had duty paid.
I'm sure that the term "tax avoidance" is a term coined by HMRC to make it sound like it is bad, when "tax mitigation" is probably a more accurate term.
Tax evasion is smoking black market cigarettes which have not had duty paid.
I'm sure that the term "tax avoidance" is a term coined by HMRC to make it sound like it is bad, when "tax mitigation" is probably a more accurate term.
g7orge said:
tighnamara said:
Guvernator said:
At my current client, those few who are switched on and know the risk are all planning to leave to avoid HMRC knocking. However at least 60% of the contractors at my workplace are blindly oblivious to this danger and the company is positively encouraging them to stay on, even after an inside assessment and this is repeated across many organisations.
HMRC must be positively rubbing their hands together.
I think a lot will depend on how the contractor run their company, if they were blatantly flouting the tax then no doubt there should be worry in being investigated. HMRC must be positively rubbing their hands together.
If you ran your company "sensibly" and paid your fair share of tax, ie not paying wife salary, pension etc and paying a decent amount of Corporation Tax I doubt there should be too much to worry about.
Hence why they are keeping it very "wooly
I would say those that have run their company sensibly, have had the correct contracts and insurance in place should have a lot less to worry about that those who have being "taking the mickey"
Only an opinion...........................
CzechItOut said:
g7orge said:
I assume you do understand the difference between avoidance and evasion?
Is paying your son who is a university student, £12,500 per year from your limited company in order to use up his personal allowance avoidance or evasion?Was he doing work for the company? If not then why would it be justifiable to pay him from the Ltd co? If the answer is no he isn't, it's just a way to avoid paying tax, then yea think you got your answer there, but you knew it already
Clockwork Cupcake said:
Tax avoidance is not paying the tax on tobacco by choosing not to smoke.
overly simplistic analogy there i think. I mainly say that because there is no way to beat the system when it comes to tobacco and duty... however when it comes to work and income, the system is so complex and diverse that there are whole industries devoted to beating the system. The system catches up though, eventually. It then comes down to in that 'gap' the difference between morality and the law, and morality is very much not a black and white, universally defined thing. It becomes harder to judge the moral ideas of "yea but you knew you were doing something wrong" or "spirit of the rules"in your tobacco smoking analogy, you actually defined a far closer similarity to the permie PAYE worker - the only way you can avoid tax is not to work.
Blown2CV said:
overly simplistic analogy there i think. I mainly say that because there is no way to beat the system when it comes to tobacco and duty... however when it comes to work and income, the system is so complex and diverse that there are whole industries devoted to beating the system. The system catches up though, eventually. It then comes down to in that 'gap' the difference between morality and the law, and morality is very much not a black and white, universally defined thing. It becomes harder to judge the moral ideas of "yea but you knew you were doing something wrong" or "spirit of the rules"
in your tobacco smoking analogy, you actually defined a far closer similarity to the permie PAYE worker - the only way you can avoid tax is not to work.
are you sure? - https://www.gov.uk/tax-relief-for-employeesin your tobacco smoking analogy, you actually defined a far closer similarity to the permie PAYE worker - the only way you can avoid tax is not to work.
g7orge said:
Blown2CV said:
overly simplistic analogy there i think. I mainly say that because there is no way to beat the system when it comes to tobacco and duty... however when it comes to work and income, the system is so complex and diverse that there are whole industries devoted to beating the system. The system catches up though, eventually. It then comes down to in that 'gap' the difference between morality and the law, and morality is very much not a black and white, universally defined thing. It becomes harder to judge the moral ideas of "yea but you knew you were doing something wrong" or "spirit of the rules"
in your tobacco smoking analogy, you actually defined a far closer similarity to the permie PAYE worker - the only way you can avoid tax is not to work.
are you sure? - https://www.gov.uk/tax-relief-for-employeesin your tobacco smoking analogy, you actually defined a far closer similarity to the permie PAYE worker - the only way you can avoid tax is not to work.
tighnamara said:
What part is rubbish, the part that you shouldn't have much to worry about if you ran the limited company sensibly or the part that you should worry if you didn't run your limited company sensibly.
I would say those that have run their company sensibly, have had the correct contracts and insurance in place should have a lot less to worry about that those who have being "taking the mickey"
Only an opinion...........................
What do you mean by "worry"? I would say those that have run their company sensibly, have had the correct contracts and insurance in place should have a lot less to worry about that those who have being "taking the mickey"
Only an opinion...........................
A tax investigation, even when you are pretty certain you are squeaky clean and in the clear, can be very stressful and is in itself a worry.
Whilst it is true that HMRC are less likely to investigate a squeaky clean company, it is a constant worry for all PSCs operating outside of IR35.
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