IR35 letters going out to GlaxoSmithKline contractors

[Hobosapien]

The main source of worry will be threads like this, looking backwards.

Maybe a new market will emerge for the IR35 investigation insurance providers affected by loss of business from contractors post April 2020, when the client makes the determination and liability rests with them, so no need for contractor to have insurance when it's the client that will need it. The new market will be to offer retrospective contract insurance where they review old contracts (if not already reviewed as outside IR35) and offer insurance in case HMRC start looking into historic cases.

HMRC have said they are going to focus on business compliance about IR35 rather than historic cases, but that can easily change if the tax take post April is lower than they project so the pool of historic cases will become tempting to pursue.

If HMRC don't put significant resource into historical cases then the insurance companies have an easy money maker where they are insuring something that will be low risk.

[cojak]

HMRC have said they are going to focus on business compliance about IR35 rather than historic cases, but that can easily change if the tax take post April is lower than they project so the pool of historic cases will become tempting to pursue.

Only until HMRC are up to strength and can do both.

[Maslins]

Being honest I was of the view that the April 2020 changes were effectively HMRC admitting that they can't deal with things as they are (huge number of contractors, no easy way to pick out which might be inside IR35, and proving it also a tough battle). I therefore figured Ltd Co contractors could pretty much keep their heads down and would be highly unlikely to be challenged for the 2017-18/2018-19/2019-20 tax years. These mass GSK letters suggest I was wrong

Still, I do wonder whether as some others have suggested maybe if HMRC do get a modest number who roll over and pay up, they may consider that a fairly good win for the cost of sending out 1,500 letters. Ie they won't bother to spend the much larger resources required to challenge those who argue their case. Not a good precedent though IMHO.

[BrilloPad]

Still, I do wonder whether as some others have suggested maybe if HMRC do get a modest number who roll over and pay up, they may consider that a fairly good win for the cost of sending out 1,500 letters. Ie they won't bother to spend the much larger resources required to challenge those who argue their case. Not a good precedent though IMHO.

This!

[LadyPenelope]

Being honest I was of the view that the April 2020 changes were effectively HMRC admitting that they can't deal with things as they are (huge number of contractors, no easy way to pick out which might be inside IR35, and proving it also a tough battle). I therefore figured Ltd Co contractors could pretty much keep their heads down and would be highly unlikely to be challenged for the 2017-18/2018-19/2019-20 tax years. These mass GSK letters suggest I was wrong

Still, I do wonder whether as some others have suggested maybe if HMRC do get a modest number who roll over and pay up, they may consider that a fairly good win for the cost of sending out 1,500 letters. Ie they won't bother to spend the much larger resources required to challenge those who argue their case. Not a good precedent though IMHO.

I'm no tax expert, but that was what I thought also, i.e. that as they consider IR35 to be more or less unenforceable, and were changing the regulations, they wouldn't bother with many investigations this year, especially since they keep losing. Bit of a shock to find out that not the case


However, they were plotting this GSK challenge in May, and waited till August, to catch people on the back foot by timing letters to go out at the start of a Bank Holiday weekend. If they were planning a lot of similar challenges to other companies, they might have fired them off concurrently. Even they can only go after so many people at once for a full investigation.

There could maybe be another challenge around the Christmas period, if you're of a pessimistic and wary point of view. Not sure whether they tend do that or not.

[BrilloPad]

There could maybe be another challenge around the Christmas period, if you're of a pessimistic and wary point of view. Not sure whether they tend do that or not.

Its a very common tactic. Ask the DTAers.

[cojak]

Yep, they will absolutely pick the 20th December for a mass mailout.

[SuperLooper]

Forgive my ignorance. Why would the time of year (bank holiday or Christmas) when sending these letters make a difference?

[BlueSharp]

Forgive my ignorance. Why would the time of year (bank holiday or Christmas) when sending these letters make a difference?

Cuts the time available to get professional representation to respond and also ruins people's holidays as the letter plays on peoples minds and some might be inclined to settle as they can't be done with the hassle and having future holidays ruined.

[jamesbrown]

Maybe a new market will emerge for the IR35 investigation insurance providers affected by loss of business from contractors post April 2020, when the client makes the determination and liability rests with them, so no need for contractor to have insurance when it's the client that will need it. The new market will be to offer retrospective contract insurance where they review old contracts (if not already reviewed as outside IR35) and offer insurance in case HMRC start looking into historic cases.

HMRC have said they are going to focus on business compliance about IR35 rather than historic cases, but that can easily change if the tax take post April is lower than they project so the pool of historic cases will become tempting to pursue.

If HMRC don't put significant resource into historical cases then the insurance companies have an easy money maker where they are insuring something that will be low risk.

I don't really care what happens to the IR35 cottage industry in insurance products or product providers

That said, insurance is always "retrospective" in the sense that you must purchase it in advance. There are basically two models AFAIK. The first is insurance on the basis of "claims made". This means the insurance covers you when a claim is made, regardless of whether you were insured when the disputed status occurred. I think this is pretty normal; I know TLC35 is factored that way. The second is insurance that applies to fixed periods and contracts, rather than claims made, in which case you are covered indefinitely for the insured periods and contracts (no ongoing premiums). I don't think either of these models routinely place a restriction on a contract being "live" at the time of purchase, so I don't think there will be a new product or market...

But the contractor-focused insurance products (and probably IPSE ) will all die out, eventually, and will need to focus on clients, if anyone, as you suggest in your first para.