IR35: Planning for April 2021 – should I stay or should I go?

[cojak]

If I was HMRC I would be keeping a very close eye on the companies closing down over the coming months...

I have always had my contracts reviewed and have rejected those that were inside IR35. My working practices for each contract have been logged and evidenced to confirm that I was outside IR35.

While it would not be pleasant, I made those assessments correctly and my IPSE insurance will support me should any investigation takes place. Closing down the company with those contracts did not pose any problems to the liquidator or HMRC.

This was the case in 2000, 2005, 2010, 2015 and today, and it will be the case on 5th April 2020.

Any current contract that flips on 6th April is what is at issue here - that grey area when your decision no longer counts. That's what people have to worry about, not the tail-spinning hysterical 'what-ifs' that have people have been coming up with recently.

That is my view - yours may be different.

[cojak]

I'd hope that HMRC would see any increase in the closing of Ltd Co's as a natural response to the fact there will be no point in having them come April 2020 as opposed to any deliberate evasion technique.

Forever the optimist

As an aside I intend to leave my current position in Dec. Can I start the process of closing down my Ltd now and carry on running it until december whilst the shutdown is in progress? Or do I have to stop completely once the shutdown has been instructed?

Step 1 - cease trading.

Members Voluntary Liquidation Process | MVL Online

[simes]

Basically?

We. Don't. Know.

And running for the hills will depend on knowing if you can run faster than the fella next to you...

(and I closed my company down, FWIW...)

Ok, fair play.

I did laugh here. (With you, not against you)

[sojan]

Information about "April 5" paydate vs "April 30" paydate

We have been offered contract till March 29th, but the invoice of March will be paid end of April (eg April 30th). I pointed out this link saying the payment date has to before "April 5th" and hence can't agree for the contract, but the advisor/lawyer of the company says the April 5th pay-date is a misconception

Any formal/gov.uk link to clarify on this?


The link I saw is: Private sector off-payroll working for intermediaries - GOV.UK but doesn't clarify into this detail

[cojak]

We have been offered contract till March 29th, but the invoice of March will be paid end of April (eg April 30th). I pointed out this link saying the payment date has to before "April 5th" and hence can't agree for the contract, but the advisor/lawyer of the company says the April 5th pay-date is a misconception

Any formal/gov.uk link to clarify on this?


The link I saw is: Private sector off-payroll working for intermediaries - GOV.UK but doesn't clarify into this detail

You didn't investigate that page closely enough.

Read this (the links are on the page you posted...) April 2020 changes to off-payroll working for intermediaries - GOV.UK

[coder]

We have been offered contract till March 29th, but the invoice of March will be paid end of April (eg April 30th). I pointed out this link saying the payment date has to before "April 5th" and hence can't agree for the contract, but the advisor/lawyer of the company says the April 5th pay-date is a misconception

Any formal/gov.uk link to clarify on this?


The link I saw is: Private sector off-payroll working for intermediaries - GOV.UK but doesn't clarify into this detail

Thats not my understanding - certainly wasnt how it worked in public sector. You had to ensure payment of final invoice by end of fin year

Take the renewal but quit end of feb to ensure payment?

[Jolie]

Thanks cojak, you have given a great risk assessment for those found inside.

What I am finding, is there's relatively little commentary on what happens for those where the client has determined the contract to be outside.

You may think that's a weird question, but the client determining a contract to be outside does not remove the risk of IR35, and the past contract investigations that goes with it.

Now, I understand that those found inside will be ripe pickings for an instant boost to the coffers, but once that runs out, surely they will start looking at the clients who determined an outside status?

My client is offering an outside determination, with me continuing to operate through my limited but without the agency involvement.

Although this is largely irrelevant to my intentions, as I am running for the desert and not looking back, I do still need to think about the previous contracts and whether keeping the limited going is going to attract an investigation, or will closing it simply make the problem go away?

[Paralytic]

Although this is largely irrelevant to my intentions, as I am running for the desert and not looking back, I do still need to think about the previous contracts and whether keeping the limited going is going to attract an investigation, or will closing it simply make the problem go away?

I don't see how a client determining a role outside could make any one individual more likely to be investigated.

So, yes, past contracts are always at risk, but I can't see how moving to a client-determined outside role changes that negatively.

Unless you think that HMRC will target client-determined outside roles, and then look back to see if a PSC performed that same role previously? Not sure that will be near the top of HMRCs hit list.

[rogerfederer]

Step 1 - cease trading.

Members Voluntary Liquidation Process | MVL Online

I think this has been sound advice in the past but is unsound advice now.

MVL: Entrepreneur's Relief (ER) is at the point of monetary distribution, this is at least a month if not two months for 75% of money remaining in the Limited Company.

If the forthcoming budget changes ER so as to affect such MVL with ER then a contractor with Limited Co will have started an MVL process but with no benefit realised; they will be stuck in limbo whilst they've commenced a process that they cannot stop yet will not get ER.

My advice is to wait until after the budget in early November before deciding whether to MVL. If you start now it's of no consequence, as you can't get the distributions quickly enough to avoid any new ER restrictions. Sorry.

[Blert596]

I think this has been sound advice in the past but is unsound advice now.

MVL: Entrepreneur's Relief (ER) is at the point of monetary distribution, this is at least a month if not two months for 75% of money remaining in the Limited Company.

If the forthcoming budget changes ER so as to affect such MVL with ER then a contractor with Limited Co will have started an MVL process but with no benefit realised; they will be stuck in limbo whilst they've commenced a process that they cannot stop yet will not get ER.

My advice is to wait until after the budget in early November before deciding whether to MVL. If you start now it's of no consequence, as you can't get the distributions quickly enough to avoid any new ER restrictions. Sorry.

Thanks. The problem I have I suppose is that I have to work up until the end of December so I need to keep it open until then. With the time to close down that will , I believe, take it past April (4-6 months?).