HMRC wins first IR35 case in 9 years

[BlasterBates]

I think there’s some merit to this, but it isn’t a major factor. In practice, HMRC won’t know the length of an engagement upfront and, once opened, they seem to pursue a case without much regard to cost effectiveness. Also, the case law is clear about the absence of a mechanistic relationship with length of engagement. I think the main thing “protecting” contractors is the sheer volume of contractors. As others have said, this is why they want to shift the policing and liability to clients.

Most IR35 enquiries end after the first request for information, that's why everything depends mainly on your first response.

[jamesbrown]

Most IR35 enquiries end after the first request for information, that's why everything depends mainly on your first response.

Genuinely curious about your evidence for that....? The anecdotal evidence I've over the years seen suggests that they rake over all the details and do not conclude an investigation quickly, even when it might appear clear-cut to the average bystander (e.g. a valid substitution clause demonstrably invoked). I appreciate that it's difficult to understand their strategy, and it's likely to change over time, but I don't recognize what you're describing.

[BlasterBates]

Genuinely curious about your evidence for that....? The anecdotal evidence I've over the years seen suggests that they rake over all the details and do not conclude an investigation quickly, even when it might appear clear-cut to the average bystander (e.g. a valid substitution clause demonstrably invoked). I appreciate that it's difficult to understand their strategy, and it's likely to change over time, but I don't recognize what you're describing.

OK I was mistaken, you're right they go further than one exchange but the fact remains that of the several thousand enquiries which involves a number of exchanges, most don't get to a tribunal.

https://www.qdoscontractor.com/ir35/...gation-process

Lets face it if you've been in one place for 6 years it is far more worthwhile chasing it up than one 6 month contract or trying to build evidence from multiple contracts.

I very much suspect that a key objective in the to-ing and fro-ing is the hope that the contractor puts his foot in it.

[Fred Bloggs]

The IR35 is a corporate liability, not a personal one. HMRC need to run though another set of hoops to make it a personal liability, and its not a forgone conclusions they will be successful - we've had Accountax negotiate away personal liability on an IR35 fail case, albeit about 15 years ago, on grounds that director had reasonable belief that the outside IR35 decision was accurate.

However if the PSC is stuffed full of asset / warchest then HMRCs task is easier.

Its common sense - keep investment and trading separate. Short term cost on drawing funds as dividend, but long term protection of assets.

PS - relying on HMRC not being able to prove personal liability isn't first line planning. Its a backup. Do due diligence on every contract, which is what the guy I refer to above had done and could prove.

Thank you, clarification is appreciated.

[piebaps]

Wise advice from the report

"This case should serve as a reminder to contractors to carry out their due diligence before and during a contract. Lip service from an end client, or assurances from anybody other than a legal IR35 expert, won’t be enough to guarantee safety from IR35.”

[Scary]

Curious if they offset any reversed Corporation tax and dividend tax payments before they arrive at 419,151 owed.

[mudskipper]

Since when did the interview process have any bearing on IR35??

Arguably an arduous interview process could mean that an unfettered RoS is unlikely.

[jamesbrown]

OK I was mistaken, you're right they go further than one exchange but the fact remains that of the several thousand enquiries which involves a number of exchanges, most don't get to a tribunal.

https://www.qdoscontractor.com/ir35/...gation-process

Lets face it if you've been in one place for 6 years it is far more worthwhile chasing it up than one 6 month contract or trying to build evidence from multiple contracts.

I very much suspect that a key objective in the to-ing and fro-ing is the hope that the contractor puts his foot in it.

Right, I agree with that. Most do not go as far as tribunal, but I think the evidence (especially recent evidence) points to their keeping cases open for quite some time, and pursuing them aggressively. I expect they lose a significant amount of money on almost all cases, i.e. they see their enforcement activity as primarily a deterrent, especially these high profile ones that involve TV personalities (which are also tougher to defend, of course, given the degree of editorial control over a presenter).

[northernladuk]

Arguably an arduous interview process could mean that an unfettered RoS is unlikely.

Hmmm. But conversely how arduous is it for a supplier to sell their service for a bid to a client. That has multiple touch points and reams of paperwork. No supplier got a gig off the back of one interview.

If what you say could be true then any gig that requires a technical test as part of the interview should be inside. In fact any gig that is won off the CV of the applicant would be a problem.

Anyway, interview process has never been mentioned in any case or IR35 article so best to say it's a misunderstanding by the OP that mentioned it.

[Jessica@WhiteFieldTax]

Curious if they offset any reversed Corporation tax and dividend tax payments before they arrive at 419,151 owed.

Maybe, maybe not. Thats largely by negotiation, or at least was last time I had to deal with it which was a few years back. You kick up a stink if they don't.

Of course how anything offset fits in with £419k, you won't know as it will be taxpayer confidential.