Contractors: IR35 & general discussion
Discussion
Deep Thought said:
I think the odds of them doing a full investigation on an individual based on the above scenario would be very low. Their ROI in terms of cost / time wouldnt be worth it, so they'd have to have other information to support it being worth their while, rather than doing a speculative investagation to recover a few thousand or tens of thousands (i think a full investigation costs them £20K). There are much bigger fish to fry, for what amounts to a relatively small amount of investigations they can man.
As I've mention before on here several times, the employment intermediaries legislation means that agencies are reporting client/PSC/worker information to HMRC every few months: https://www.gov.uk/government/publications/employm..."Intermediaries must return details of all workers they place with clients where they do not operate Pay As You Earn (PAYE) on the workers’ payments. You must send the report (or reports) to HMRC at least once every 3 months."
I reckon it would be really quite easy for HMRC to write a program/query to pump out IR35 fishing letters to anyone that went from outside IR35 to inside IR35 (or normal PAYE) with the same end client.
Olivera said:
Deep Thought said:
I think the odds of them doing a full investigation on an individual based on the above scenario would be very low. Their ROI in terms of cost / time wouldnt be worth it, so they'd have to have other information to support it being worth their while, rather than doing a speculative investagation to recover a few thousand or tens of thousands (i think a full investigation costs them £20K). There are much bigger fish to fry, for what amounts to a relatively small amount of investigations they can man.
As I've mention before on here several times, the employment intermediaries legislation means that agencies are reporting client/PSC/worker information to HMRC every few months: https://www.gov.uk/government/publications/employm..."Intermediaries must return details of all workers they place with clients where they do not operate Pay As You Earn (PAYE) on the workers’ payments. You must send the report (or reports) to HMRC at least once every 3 months."
I reckon it would be really quite easy for HMRC to write a program/query to pump out IR35 fishing letters to anyone that went from outside IR35 to inside IR35 (or normal PAYE) with the same end client.
ITP said:
If they sent you a fishing letter then I suppose any response to that would be your outside IR35 determination document, which you should have, if you are working somewhere and not being paid on a PAYE basis.
I think the speculative fishing scenario would be around your end client determining you inside and you accepting that, but you had previously declared yourself outside of IR35 for that client.They would then - presumably - ask you to correct your previous tax arrangement / IR35 status or be prepared to provide evidence to why you had deemed yourself outside IR35 when the end client deemed you inside.
Deep Thought said:
ITP said:
If they sent you a fishing letter then I suppose any response to that would be your outside IR35 determination document, which you should have, if you are working somewhere and not being paid on a PAYE basis.
I think the speculative fishing scenario would be around your end client determining you inside and you accepting that, but you had previously declared yourself outside of IR35 for that client.They would then - presumably - ask you to correct your previous tax arrangement / IR35 status or be prepared to provide evidence to why you had deemed yourself outside IR35 when the end client deemed you inside.
Whatever HMRC say, they won’t be able to resist easy pickings this way no doubt.
It’s a problem at the moment with so little work around if you’re client caves to HMRC bully boy tactics and scares them into making every contractor inside.
Deep Thought said:
V8mate said:
Noodle1982 said:
Has anybody tried out the newest CEST tool?
The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
I've not used the 'If the contract is affected by IR35 off-payroll rules' limb, rather the 'Is work classed as employment or self-employment for tax purposes' limb, and every time I just get this at the end:The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
Thats what i'm getting too. Really helpful.
A quiet few days in work has resulted in inputting all sorts of answers out of curiosity and it seems that as long as you answer 2 or more of the financial outlay ones (company expenses, vehicle, materials, equipment) as 'yes' then it deems you outside.
Noodle1982 said:
Deep Thought said:
V8mate said:
Noodle1982 said:
Has anybody tried out the newest CEST tool?
The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
I've not used the 'If the contract is affected by IR35 off-payroll rules' limb, rather the 'Is work classed as employment or self-employment for tax purposes' limb, and every time I just get this at the end:The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
Thats what i'm getting too. Really helpful.
A quiet few days in work has resulted in inputting all sorts of answers out of curiosity and it seems that as long as you answer 2 or more of the financial outlay ones (company expenses, vehicle, materials, equipment) as 'yes' then it deems you outside.
Gad-Westy said:
Noodle1982 said:
Deep Thought said:
V8mate said:
Noodle1982 said:
Has anybody tried out the newest CEST tool?
The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
I've not used the 'If the contract is affected by IR35 off-payroll rules' limb, rather the 'Is work classed as employment or self-employment for tax purposes' limb, and every time I just get this at the end:The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
Thats what i'm getting too. Really helpful.
A quiet few days in work has resulted in inputting all sorts of answers out of curiosity and it seems that as long as you answer 2 or more of the financial outlay ones (company expenses, vehicle, materials, equipment) as 'yes' then it deems you outside.
Deep Thought said:
Gad-Westy said:
bing said:
Gad-Westy said:
bing said:
I thought HRMC said that IF you stayed with existing client and then went inside IR35 they wouldn't chase for any back dated taxes from before April 2021? Or am I getting this wrong?
You are right. But whether you should trust that statement is highly debatable. BUT it wouldnt surprise me if they poke people in this scenario with formal letters asking them to explain the determination, or an opportunity to "ensure your previous years taxation is correctly aligned".
https://www.gov.uk/government/publications/off-pay...
Deep Thought said:
Gad-Westy said:
Noodle1982 said:
Deep Thought said:
V8mate said:
Noodle1982 said:
Has anybody tried out the newest CEST tool?
The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
I've not used the 'If the contract is affected by IR35 off-payroll rules' limb, rather the 'Is work classed as employment or self-employment for tax purposes' limb, and every time I just get this at the end:The client I'm currently contracting too has dismissed any QDos determinations and is only accepting the government's CEST result.
Every contractor I know here has answered it honestly and everyone is showing as being outside.
Job done.
Thats what i'm getting too. Really helpful.
A quiet few days in work has resulted in inputting all sorts of answers out of curiosity and it seems that as long as you answer 2 or more of the financial outlay ones (company expenses, vehicle, materials, equipment) as 'yes' then it deems you outside.
Gad-Westy said:
That's interesting. I don't know about others but I more or less pay for everything I use and always have for every contract. Laptop, software, all travel, hotels, PPE etc. There have been times when I've needed to use a client's software for some specialised areas but pretty unusual.
Exactly the same here.I buy and use my own laptop, software, phone, insurance, equipment, PPE, for every job. All hotels, travel, miscellaneous expenses are all mine to pay as well.
They pay me a day rate to deliver a project, and pretty much every expense associated with me delivering my end of the work comes out of my Ltd Co.
My quoted day rate on any particular job reflects what I think I may have to pay out for. I may increase it by £100 a day (for example) if I know I'm going to be away in a hotel a lot or travelling a lot.
V8mate said:
Point 2 on this page, chaps. I don't think you should avoid doing the right thing now because you're worrying about the past.
https://www.gov.uk/government/publications/off-pay...
IF that point 2 is to be believed you can stay where you are and move from PSC to PAYE without worrying regardless of how long you've been with the client right?https://www.gov.uk/government/publications/off-pay...
I think the big get out clause right in the middle of that page tells you all you need to know.
"The only reason HMRC will open an enquiry using information acquired through the off-payroll working rules changes is if there is reason to suspect fraud or criminal behaviour".
A fishing letter to everyone who went from outside to inside at the same company saying you're employment status has changed so we suspect fraudulent behavior, please pay us any back tax you owe us would be a very easy exercise.
Do you really trust HMRC? I told my client if they were going to do blanket assessments that put me inside when I know I am outside, then not to bother at all and I'd be leaving. They saw sense, completed the CEST assessment properly and low and behold, I am outside. Many just capitulated though and accepted the blanket assessment, many people don't really want to be contractors I think.
"The only reason HMRC will open an enquiry using information acquired through the off-payroll working rules changes is if there is reason to suspect fraud or criminal behaviour".
A fishing letter to everyone who went from outside to inside at the same company saying you're employment status has changed so we suspect fraudulent behavior, please pay us any back tax you owe us would be a very easy exercise.
Do you really trust HMRC? I told my client if they were going to do blanket assessments that put me inside when I know I am outside, then not to bother at all and I'd be leaving. They saw sense, completed the CEST assessment properly and low and behold, I am outside. Many just capitulated though and accepted the blanket assessment, many people don't really want to be contractors I think.
Lord Marylebone said:
Gad-Westy said:
That's interesting. I don't know about others but I more or less pay for everything I use and always have for every contract. Laptop, software, all travel, hotels, PPE etc. There have been times when I've needed to use a client's software for some specialised areas but pretty unusual.
Exactly the same here.I buy and use my own laptop, software, phone, insurance, equipment, PPE, for every job. All hotels, travel, miscellaneous expenses are all mine to pay as well.
They pay me a day rate to deliver a project, and pretty much every expense associated with me delivering my end of the work comes out of my Ltd Co.
My quoted day rate on any particular job reflects what I think I may have to pay out for. I may increase it by £100 a day (for example) if I know I'm going to be away in a hotel a lot or travelling a lot.
From what I can gather vehicle costs would be something along the lines of, albeit an extreme example, a client specialising in eco friendly products insisting you turn up in an eco friendly car instead of a V8. So you then go out to buy said eco friendly car specifically for that contract.
Simply leasing/purchasing a vehicle through the company for daily use or commuting costs don't come into play.
HMRC define fraud as any tax claim they disagree with, there was a link published previously in this thread where they state as much, so those statements are meaningless. The law hasn’t changed so if you’re up in front of a judge then waving that link at then won’t help, it’ll be decided on the same things it always has with the random factor added in.
The problem is that by the time you get infront of a judge, you’ve spent years being investigated by HMRC with a massive potential bill hanging over you the whole time.
Was beyond my risk appetite.
The problem is that by the time you get infront of a judge, you’ve spent years being investigated by HMRC with a massive potential bill hanging over you the whole time.
Was beyond my risk appetite.
bing said:
I thought HRMC said that IF you stayed with existing client and then went inside IR35 they wouldn't chase for any back dated taxes from before April 2021? Or am I getting this wrong?
That’s not what they said. They said they wouldn’t investigate unless they had reason to consider the need to do so !Deep Thought said:
Gad-Westy said:
bing said:
Gad-Westy said:
bing said:
I thought HRMC said that IF you stayed with existing client and then went inside IR35 they wouldn't chase for any back dated taxes from before April 2021? Or am I getting this wrong?
You are right. But whether you should trust that statement is highly debatable. BUT it wouldnt surprise me if they poke people in this scenario with formal letters asking them to explain the determination, or an opportunity to "ensure your previous years taxation is correctly aligned".
Gazzab said:
£700 a day is a terrible rate for a senior role. If it’s then inside and eNI discounted then it’s akin to £500 a day. If you work 6 months a year only then that’s a rubbish income v’s perm.
100% agreed with this.I managed my team of BAs who charged that; and a mid-tier workstream PM who charged £1k.
Last major programme I was on (IFRS9) the programme director was a contractor and she was raking it in at £2.4k a day - for 2 years!
Having worked on an internal project at the same company, I know for a fact each country Head of Finance (all perm roles) was on a base of just over £300k, and 100% cash bonus + 100% RSU awards depending on performance.
£700 day rate is BA money in that market.
Clockwork Cupcake said:
The trouble with India is that there is an ingrained culture of always saying yes, never admitting that you can't actually do something, never admitting failure, and always saving face. And that is not some prejudiced sweeping generalisation; I mean it's as ingrained as queuing, apologising, and moaning about the weather is to us.
I've had some absolutely lovely Indian colleagues, very knowledgable, and competent, but sadly they have been the exception to the norm.
Totally agreed. In my experience I find they need an incredible amount of guidance and hand-holding with detailed instructions so long, we may as well have just done the work. Hardly surprising that now all my clients have offshore centres in Poland, Bulgaria, Hungary and the Czech Republic, with others operating on-shore centres in lower cost regions.I've had some absolutely lovely Indian colleagues, very knowledgable, and competent, but sadly they have been the exception to the norm.
Greenmantle said:
We certainly should not be feeding the notion of cheaper and cheaper and big business should not be "loopholing" the situation by sourcing from abroad "daffodils or talent" just because they can as well as ignore the social injustices from abroad.
Also agreed. Additionally I feel the issue could largely be fixed and the economy stimulated, by lowering income tax! (Hello Laffer curve)aeropilot said:
In my industry, £250 a day INSIDE is the current norm.........which puts me back to 2004/5 levels of net pay.
I wonder how many of the a
holes in HMRC would like it if they were told to take a pay cut back to what they were earning 15 odd years ago.
They'll probably push for CPI + 3%. They're certainly not a helpful bunch, let alone objective or fair.I wonder how many of the a
holes in HMRC would like it if they were told to take a pay cut back to what they were earning 15 odd years ago.Edited by Mr_Megalomaniac on Tuesday 9th March 20:46
Gazzab said:
bing said:
I thought HRMC said that IF you stayed with existing client and then went inside IR35 they wouldn't chase for any back dated taxes from before April 2021? Or am I getting this wrong?
That’s not what they said. They said they wouldn’t investigate unless they had reason to consider the need to do so !The link says "The only reason HMRC will open an enquiry using information acquired through the off-payroll working rules changes is if there is reason to suspect fraud or criminal behaviour."
Gazzab said:
I fully expect hmrc to go for the goolies. They will know who has ‘switched’ and will send letters and will go after people in a similar fashion to how they have hounded those with the silly off shore no tax deals. They may take your house and car. Feel lucky punk ?
Can they though?It is not you, the individual they pursue for the tax, its your limited company.
https://www.contractorcalculator.co.uk/ir35_taxes_...
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