Discussion
The main thing that's changed....
Previously if the Contractor fell into certain category (earning over £220/day, employed for longer than 6 months) then he would have to provide assurances to the PSB that he was going to pay the same tax/NI on his earnings from the PSB as if he had been on their payroll.
The obvious flaw with this was that nobody actually checked whether the Contractor paid or not.
From 1st April - if the Contractor meets the criteria - the PSB deduct tax and NI from his invoice and pay him net,
Previously if the Contractor fell into certain category (earning over £220/day, employed for longer than 6 months) then he would have to provide assurances to the PSB that he was going to pay the same tax/NI on his earnings from the PSB as if he had been on their payroll.
The obvious flaw with this was that nobody actually checked whether the Contractor paid or not.
From 1st April - if the Contractor meets the criteria - the PSB deduct tax and NI from his invoice and pay him net,
alfie2244 said:
daemon said:
Mines coming up as a pass. Not that it matters as the agency i am working for have blanket deemed us all IN IR35, so unless that stance changes i will be jumping ship come 17th March (i'm paid weekly)
From the limited research I have done I think there are various options, notwithstanding certain factors not being covered by the test that could be argued, if included, would support a claim of being outside IR35 (which we genuinely think we are IMO).Also have the added option of not doing Public sector work at all but existing contracts require 28days notice so need to decide where we go before 5th March.
Definitely won't be shutting Ltd co down to work via an umbrella company as has been suggested (not on here).
Dont forget its not just about not working for them via a ltd company after 5th March, but you also need to have all outstanding invoices paid and off their books by that date. If you're working with them in to march and some invoice rolls in to a post april 5th BACS run, youre stuffed.
Also, flipping to an umbrella or on payroll working via the agency WILL put you on HMRCs radar for a potential investigation along the lines of "deemed themselves outside of IR35 but now caught inside it?" Whilst you may well feel you can defend your outside of IR35 stance, you really really dont want those intrusive sociopathic b
ds have forensic accountants comb through your life and all previous contracts too. Not my idea of fun.Edited by daemon on Monday 6th February 22:32
alfie2244 said:
Also have the added option of not doing Public sector work at all but existing contracts require 28days notice so need to decide where we go before 5th March
I've read somewhere (probably contractoruk, might've been ipse) that you really need your invoices paying before April too. Can't remember why, or where, but I'll have a dig tomorrow. Probably something about payments made in April and onwards getting hit for the extra tax.ETA that's what daemon just said. How slow is my typing??
Countdown said:
The main thing that's changed....
Previously if the Contractor fell into certain category (earning over £220/day, employed for longer than 6 months) then he would have to provide assurances to the PSB that he was going to pay the same tax/NI on his earnings from the PSB as if he had been on their payroll.
The obvious flaw with this was that nobody actually checked whether the Contractor paid or not.
From 1st April - if the Contractor meets the criteria - the PSB deduct tax and NI from his invoice and pay him net,
I note the "employed for longer than 6 months"Previously if the Contractor fell into certain category (earning over £220/day, employed for longer than 6 months) then he would have to provide assurances to the PSB that he was going to pay the same tax/NI on his earnings from the PSB as if he had been on their payroll.
The obvious flaw with this was that nobody actually checked whether the Contractor paid or not.
From 1st April - if the Contractor meets the criteria - the PSB deduct tax and NI from his invoice and pay him net,
We only ever undertake 3 months interim contracts whilst full time employees are recruited or specific problems rectified.......without fail they are unable to recruit and extend, sometimes up to a year, or they extend to cover issues not included in the original contract......
For example 3 month interim contract started in Nov, no suitable applicants....fail to appoint.....extend until May....ironically today already asking if prepared to extend for a further 3 months.... unfortunately if not resolved then 28 days notice will be served to end contract prior to 6th April and take up non public sector options.
Posts overlapped..........yes Invoice post April already discussed and they have agreed to pay weekly (without a discount) so will ensure that last invoice / date of work goes in in due time.
Many thanks for your replies.........much appreciated.
Also messes up VAT Flat Rate scheme as well....just all a pain in the backside TBH.
Many thanks for your replies.........much appreciated.
Also messes up VAT Flat Rate scheme as well....just all a pain in the backside TBH.
Edited by alfie2244 on Monday 6th February 22:43
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
https://www.ir35testing.co.uk/
alfie2244 said:
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
Yup. Mines a pass too - just need the PB i'm working for to be convinced, then the agency... https://www.ir35testing.co.uk/
alfie2244 said:
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
Don't think that just because you "pass a test" on the HMRC website means you REALLY are clear of IR35.https://www.ir35testing.co.uk/
HMRC will make their own judgement if necessary.
Eric Mc said:
alfie2244 said:
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
Don't think that just because you "pass a test" on the HMRC website means you REALLY are clear of IR35.https://www.ir35testing.co.uk/
HMRC will make their own judgement if necessary.
I give way too much free advice on this forum.
What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
Eric Mc said:
alfie2244 said:
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
Don't think that just because you "pass a test" on the HMRC website means you REALLY are clear of IR35.https://www.ir35testing.co.uk/
HMRC will make their own judgement if necessary.
HMRC will make a decision based on their skewed interpretation of the IR35 legislation. It doesnt make it a fair or valid decision, and their decision can (and should) be challenged.
If you've a contract formally audited by say, QDOS, and shown to be IR35 compliant, then in the event of an HMRC investigation that concluded you should be inside IR35 you would be very within your rights to fight it out in court, where, when backed by the likes of QDOS (via buying IR35 insurance), HMRC are unlikely to win.
Personally - i'm stuffed. My agency - Reed - have just said that the only "evidence" they will accept of being outside of IR35 is the HMRC skewed online test.
So its a goodbye from me. No mission i am having all my details put through the test to end up on HMRCs radar.
Eric Mc said:
I give way too much free advice on this forum.
What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
Sorry but, on here at least, you come across as a bit bristly but that may be me or the media used.What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
In circa 40 yrs of running companies or being S/E I have never fallen foul of HMRC, Customs & Excise, or my accountants so must have been doing something right.
I am 100% confident we are outside IR35 but as I understand it the decision will now be made by the PSB or Agency if used. In that scenario I guess they will rule everybody in to err on the easy / safe side.......I have not yet seen any info on the appeals process or how to reclaim deductions (tax / NI) if incorrectly deducted and very little time in which to resolve any queries as it goes live Apr 6th.
We don't wish the way we operate to be dictated by an agency or PSB (already tried to get us to dissolve Ltd Co and join their "recommended" umbrella company) so on that basis we shall stop doing PSB work and take up some of the private we are, increasingly, being asked to undertake although I do realise it could well be extended to this sector also.............a bridge we will cross when we come to it.
True about the courts - when a case is contested. Obviously, HMRC would like every contractor using an intermediary to operate under IR35.
HMRC will sometimes contend that a contract falls within IR35 whilst the contractor (naturally) doesn't.
That's where the courts will get involved. In the Dragonfly case, it went all the way to the High Court - and cost the contractor almost £100,000 in unpaid taxes and NI.
The danger I'm pointing out is that relying on fairly simple tests does not ensure that a contractor can sleep certain in the knowledge that IR35 doesn't apply.
HMRC will sometimes contend that a contract falls within IR35 whilst the contractor (naturally) doesn't.
That's where the courts will get involved. In the Dragonfly case, it went all the way to the High Court - and cost the contractor almost £100,000 in unpaid taxes and NI.
The danger I'm pointing out is that relying on fairly simple tests does not ensure that a contractor can sleep certain in the knowledge that IR35 doesn't apply.
Eric Mc said:
The danger I'm pointing out is that relying on fairly simple tests does not ensure that a contractor can sleep certain in the knowledge that IR35 doesn't apply.
Not sure I have indicated relying solely on the simple test but thanks for the warning.Clearly I am doing my own research, have an appointment with our friendly accountant next week, will do the "test" and, if we stay outside and do PSB work (doubtful at the moment), will take out insurance which I assume is tax deductible.
Perhaps not.
Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
Eric Mc said:
Perhaps not.
Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
Why else would we have business specific insurances? would probably be my flippant reply. (our professional accountant wouldn't let us claim it either if it wasn't)Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
We already carry Professional indemnity, Public Liability etc so will add this kind of thing:
https://www.qdoscontractor.com/insurance/tax-ir35-...
Edited by alfie2244 on Tuesday 7th February 18:20
Even if the cost relates to the business, it doesn't relate directly to the TRADING activity of the business. In fact, it's an insurance against adverse tax decisions. HMRC could (and probably would if they were being bloody minded) that such insurance has no bearing on the trade and is purely a tax matter - which makes it ineligible for tax relief.
Of course, I would put it through as a business costs too - but I am aware as to how the HMRC mind can work if they are being nasty.
Of course, I would put it through as a business costs too - but I am aware as to how the HMRC mind can work if they are being nasty.
Eric Mc said:
Even if the cost relates to the business, it doesn't relate directly to the TRADING activity of the business. In fact, it's an insurance against adverse tax decisions. HMRC could (and probably would if they were being bloody minded) that such insurance has no bearing on the trade and is purely a tax matter - which makes it ineligible for tax relief.
Of course, I would put it through as a business costs too - but I am aware as to how the HMRC mind can work if they are being nasty.
In my experience it always pays to deliberately leave things for inspector type people to find so they feel good about themselves and can justify their existence. Otherwise they will just keep looking deeper and deeper until they find / fabricate something anyway. Of course, I would put it through as a business costs too - but I am aware as to how the HMRC mind can work if they are being nasty.
Eric Mc said:
Perhaps not.
Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
IR35 insurance isnt that expensive to worry about the implications if the tax man finds out.Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
If theres an HMRC man forensically examining your accounts to find that, you're already having a VERY bad day.
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