HMRC IR35 contract review service

[DGA]

I am contracting for a public sector client (via my own LTD) and was requested last year to prove my IR35 status. I obtained a review for Qdos and was deemed outside IR35. Now the client has informed me they no longer accept 3rd party reviews and I have to obtain a HMRC review. So basically they are forcing my to use HMRC´s service...

If I do not provide them with the HMRC review within 20 days(!), the client has stated they will terminate my contract..

If the HMRC review states I am inside, I need to provide evidence to the client I have made the deemed payments.

I have contacted the PCG for advise, but has anybody actually used the HMRC service?

In terms of the contract, it is IR35 friendly and my working practices are own equipment, project work, no fixed hours, work from home, no client control.

Any advise would be very welcome..

[TheCyclingProgrammer]

Is your client in the public sector? If not, I can't understand why your IR35 status is any of their business.

[TestMangler]

Is your client in the public sector? If not, I can't understand why your IR35 status is any of their business.

According to the first few words of the post, yes, they are

[TheCyclingProgrammer]

According to the first few words of the post, yes, they are

I'm clearly having problems reading posts properly today.

[jamesbrown]

I don't know whether you can realistically push-back on this (i.e. whether they really mean what they say). However, I can't see how this is going to work in practice, as the HMRC review service fails to offer an opinion in a large fraction of cases (for example, see the latest IR35 Forum minutes). Indeed, if you're working through an agency, I believe they will only offer an opinion if they can see the upper contract (between the agency and the end client), as a bare minimum. Aside from that, I expect your contract and working practices would need to be either emphatically inside or outside for them to offer an opinion. Based on your brief description, you seem to be in a very strong position, but I wouldn't be surprised if HMRC came back unable to form an opinion. So, what are they going to do in that scenario?

Certainly, I'd be interested to hear what IPSE say, so please keep us updated.

[malvolio]

I don't know whether you can realistically push-back on this (i.e. whether they really mean what they say). However, I can't see how this is going to work in practice, as the HMRC review service fails to offer an opinion in a large fraction of cases (for example, see the latest IR35 Forum minutes). Indeed, if you're working through an agency, I believe they will only offer an opinion if they can see the upper contract (between the agency and the end client), as a bare minimum. Aside from that, I expect your contract and working practices would need to be either emphatically inside or outside for them to offer an opinion. Based on your brief description, you seem to be in a very strong position, but I wouldn't be surprised if HMRC came back unable to form an opinion. So, what are they going to do in that scenario?

Certainly, I'd be interested to hear what IPSE say, so please keep us updated.

IPSE say that any review that puts you outside IR35 is acceptable to HMG, which is the reality. Sadly some departments haven't listened to their own guidance, which was revised in the light of the Alexander debacle.

The most recent statement on this is here, but needs slight updating in the light of the BETs being binned recently. The bit on assurance still applies as far as I know.

[jamesbrown]

IPSE say that any review that puts you outside IR35 is acceptable to HMG, which is the reality. Sadly some departments haven't listened to their own guidance, which was revised in the light of the Alexander debacle.

The most recent statement on this is here, but needs slight updating in the light of the BETs being binned recently. The bit on assurance still applies as far as I know.

Interesting, thanks. One would hope that a pointer to this quote from HMRC would be sufficient:

"There is no requirement for any public body to see any document from HMRC, or to come to a 'definitive view' on the application of IR35. The focus of the advice to public bodies is in terms of due diligence and the need to satisfy themselves in general terms, that the engaged contractor is complying with their tax obligations."

I'll be interested to hear how this one pans out. Ultimately, there's probably little the OP can do if they're not willing to listen (some departments routinely ignore guidance in other areas too, such as SC).

[DGA]

Many thanks. I will send over the IR35 forum meetings and highlight the contract review statement. Makes very interesting reading.
At the moment all I have done is contract HMRC and ask what information they require for a review...

[malvolio]

Many thanks. I will send over the IR35 forum meetings and highlight the contract review statement. Makes very interesting reading.

Which is why IPSE membership is about a hell of a lot more than IR35 protection insurance...

At the moment all I have done is contract HMRC and ask what information they require for a review...

Don't hold your breath. One major criticism of their review service - quite apart from the natural fears about impartiality of the result - is that it takes 3-4 weeks for an answer, which is utterly useless in any contract negotiation. Stick with the professionals

[BlasterBates]

Isn't this an invitation to be investigated. I can't imagine HMRC giving a quick review to confirm you're outside IR35. I would have thought it would be very complicated and longwinded process with HMRC trying to put you inside IR35 and perhaps investigating all your previous contracts as well.

I would be tempted to terminate and bugger off, unless you really are absolutely certain. Is your substitution clause feasible for example ?