IR35 Hell - Am I going to lose everything

[IR35Hell]

Hi everyone, first post here and it borne out of desperation!!!

I have had an IR35 investigation ongoing for 14 months, and it is starting to make me feel ill. Recently after ignoring HMRC for almost a year, my previous end client responded to the IR35 investigator with details completely contradicting what my contract says and what was the case when I was working there. To be fair the person who responded is based in LA and was only in the UK 4 weeks a year so he pretty much doesn't really know what went on etc.

If my case ends up that I am deemed inside IR35, what do I do if I cannot pay? I am just about to start a permie role as the worry of IR35 is giving me sleepless nights. If I am deemed to be inside IR35 then my company will have made a loss for the 2 and half years I was contracting at the end client, what happens to the corporation tax that I paid during those years? Do I get a refund to be able to put them to the IR35 payment?

Also who actually owes the IR35 tax, myself personally or the company? If I take the permie role I have been offered I will take such a high paycut that I'll be struggling to make ends meet as it is.

Its basically going to ruin me!!!

[BrilloPad]

Did you have IR35 insurance? Were you part of PCG/IPSE? Did you get your contract IR35 checked? Was an agent involved.

[TheFaQQer]

If I am deemed to be inside IR35 then my company will have made a loss for the 2 and half years I was contracting at the end client

I'm struggling to see how this can be right. You take the invoices, knock off expenses, and then pay the rest out as salary, so I don't see how even restating the accounts you would have made a loss in the trading years.

You need to speak to a professional advisor about what to do and to help you through your investigation - most are lost by not taking professional advice, so get help now.

[jamesbrown]

Hi everyone, first post here and it borne out of desperation!!!

I have had an IR35 investigation ongoing for 14 months, and it is starting to make me feel ill. Recently after ignoring HMRC for almost a year, my previous end client responded to the IR35 investigator with details completely contradicting what my contract says and what was the case when I was working there. To be fair the person who responded is based in LA and was only in the UK 4 weeks a year so he pretty much doesn't really know what went on etc.

If my case ends up that I am deemed inside IR35, what do I do if I cannot pay? I am just about to start a permie role as the worry of IR35 is giving me sleepless nights. If I am deemed to be inside IR35 then my company will have made a loss for the 2 and half years I was contracting at the end client, what happens to the corporation tax that I paid during those years? Do I get a refund to be able to put them to the IR35 payment?

Also who actually owes the IR35 tax, myself personally or the company? If I take the permie role I have been offered I will take such a high paycut that I'll be struggling to make ends meet as it is.

Its basically going to ruin me!!!

I take it you don't have professional representation(?) That's the first thing you need to do; it's fine to seek input here, but this isn't something to be messed with. You need professional representation now. It probably goes without saying that it's best to have that representation from the start, but it's also better to have it late than never.

[jamesbrown]

I'm struggling to see how this can be right. You take the invoices, knock off expenses, and then pay the rest out as salary, so I don't see how even restating the accounts you would have made a loss in the trading years.

You need to speak to a professional advisor about what to do and to help you through your investigation - most are lost by not taking professional advice, so get help now.

Depends on the level of extrapolation going on here; there's the potential for fines and interest.

[IR35Hell]

Hi thanks for the replies

Yes I had my contract reviewed it passed the IR35 check
Yes my case is being handled through my IPSE/PCG subscription
I am waiting for my advisor to get back to me but hes away at the moment and I really am having sleepless nights which is why I have come here to ask for some guidance.
The main issue the end client has come back completely contradicting what I said, there are some other points where the terminology has been mis read and HMRC has jumped on that but I think we can get that explained.
WHat I want to know is, if deemed inside IR35 and I have already taken a permie job (I have an offer on the table now) Am I going to be made bankrupt, lose my house etc if I cannot pay. Taking the permie role is already putting me under some pressure financially but it is a good move in the long term for my career,

regarding making a loss, maybe the company wouldnt have made a loss but it wouldnt have made a profit either. I travelled a weekly commute from the north west to london and rented a room from Monday to Friday. I paid for my own training etc

Thanks for replies

[VectraMan]

You can count 5% of your income as expenses under IR35, so if your expenses come under that amount you won't have made a loss.

[jamesbrown]

Hi thanks for the replies

Yes I had my contract reviewed it passed the IR35 check
Yes my case is being handled through my IPSE/PCG subscription
I am waiting for my advisor to get back to me but hes away at the moment and I really am having sleepless nights which is why I have come here to ask for some guidance.
The main issue the end client has come back completely contradicting what I said, there are some other points where the terminology has been mis read and HMRC has jumped on that but I think we can get that explained.
WHat I want to know is, if deemed inside IR35 and I have already taken a permie job (I have an offer on the table now) Am I going to be made bankrupt, lose my house etc if I cannot pay. Taking the permie role is already putting me under some pressure financially but it is a good move in the long term for my career,

regarding making a loss, maybe the company wouldnt have made a loss but it wouldnt have made a profit either. I travelled a weekly commute from the north west to london and rented a room from Monday to Friday. I paid for my own training etc

Thanks for replies

I'm sure it's difficult psychologically, and I'm sure you're picturing the worst case scenario, but you need to put this into perspective and act calmly. You need to wait and talk to the person handling your case, presumably at Abbey Tax. They're good at what they do and can offer you far better advice, specific to your situation, than you'll get from us. Remember that IR35 is a company liability, not a personal liability (since it's the responsibility of the company to manage PAYE/NICs for its employees and directors). There's a high bar for transferring liability to a director personally. If you had a contract review, this is evidence of due diligence. If you have professional representation, they'll know how best to handle misleading information from the client. The worst case scenario you're picturing is likely different from the worst case scenario in practice.

[IR35Hell]

I'm sure it's difficult psychologically, and I'm sure you're picturing the worst case scenario, but you need to put this into perspective and act calmly. You need to wait and talk to the person handling your case, presumably at Abbey Tax. They're good at what they do and can offer you far better advice, specific to your situation, than you'll get from us. Remember that IR35 is a company liability, not a personal liability (since it's the responsibility of the company to manage PAYE/NICs for its employees and directors). There's a high bar for transferring liability to a director personally. If you had a contract review, this is evidence of due diligence. If you have professional representation, they'll know how best to handle misleading information from the client. The worst case scenario you're picturing is likely different from the worst case scenario in practice.

Thank you for your response, its much appreciated as is everyone elses.

[IR35Hell]

You can count 5% of your income as expenses under IR35, so if your expenses come under that amount you won't have made a loss.

Its way over 5% the truth is the financial reward for contracting at this particular place was not that great, the daily rate wasn't the best for the kind of work (bottom of the market) I would have been better working permie at home, but the contract meant I could use my skills on specific technology and increase my experience meaning a better contract in the next place.