Legaly outside IR35 ?

**rootsnall** · 30 March 2005, 12:23

I'm not as clued up on it as some but I'd say you can never be certain if you are in or outside IR35. If you choose to say you are outside IR35 on any particular contract you just have to take as many 'outside' IR35 steps as possible and be prepared to battle the IR if they come to get you and possibly pay up tax and penalities if you lose. Have a look through the masses of debate on this and other similar websites and you may come to the same conclusion. I was certain it was a lost cause in the end but looking at the figures produced by the PCG on cases they have been involved with and maybe it isn't !?

**ASB** · 30 March 2005, 14:17

I mean, without question or ambiguity ?

Don''t own or control more than 5% of the shares in your company or
Don't do any work from it. Just profit from others.

Other than that you are totally stuffed. There is ambiguity. Down to your Hector to come and have a go really.

**IR35 Avoider** · 30 March 2005, 15:50

Don''t own or control more than 5% of the shares in your company

That isn't enough to get you out, it also has to be the case that the non-PAYE income you receive cannot reasonably be considered to be the proceeds of caught contracts.

**ASB** · 30 March 2005, 16:12

True

True, but what does that catch in practice (other than if the other shareholders have signed dividend waivers)?

**IR35 Avoider** · 31 March 2005, 08:55

Re: True

what does that catch in practice

Arguably, every avoidance scheme dreamed up. What reasonable means is of course interpreted differently by the people setting up various off-shore schemes to the way the Inland Revenue would interpret it.

I once heard that lawyers scan every new piece of legislation for the word "reasonable" and when they find it they know they've found a loophole...

**opticalraceltd** · 31 March 2005, 09:03

Hmmm .... looks like there is no real way around it, so lets look at it from another angle. Does anybody have any experience of these tax consulting companies (eg. Accountax Ltd, www.accountax-ltd.com) ? Is it worth having one of these companies review and fix your contract to keep you outside IR35 ? Is it worth paying insurance on this, so these companies will fight your case for you should you be investigated? And is it worth taking out the insurance so if you loose the case then the insurance pays the tax due ?

Does anyone do this, or have any experience of this ?

**rootsnall** · 31 March 2005, 09:22

I'm just doing my accounts normally and saying I'm outside IR35 so paying low salary and the rest in dividends. I have just joined the PCG ( www.pcg.org.uk ) and in the basic membership you get a form of insurance. If the figures they quote are correct the insurance is proving effective when the IR come calling. IMHO this uncertainty is unavoidable and just part of contracting that you have to live with !

**ASB** · 31 March 2005, 10:36

Reasonable

I wasn't really considering schemes, since I was thinkging in terms of a "normal" operation.

I must admit to be generally slightly baffed by the various schemes on offer. Some utiulising EBTs, some utilising depreciated currency loans, some using EITs.

I mean if you get infront of a commissioner the story seems to go something like this:-

So you got a contract and assigned it to this new enterprise.
Then they paid you a small salry.
Then they gave you a huge great gift/loan/whatever.

It does seem reasonable to tie the payment into the work.

But, what I don't understand is why with, for example, Dignatio, they didn't attack the beneficieries of the failed scheme. Obviously it can't be that clear cut to be able to attack them.

Too much unknow for me.

**opticalraceltd** · 31 March 2005, 11:02

Re: Reasonable

Rootsnall - just what is covered by the PCG insurance, its not clear from their website. Also, who do you get to IR35 proof your contracts ? DIY or use company ?

Legaly outside IR35 ?