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

[drob1984]

2) regarding HMRC seeking back taxes the concern is usually related to the Agency report which would show:-

March - your NI number, your PSC, little NI collected
April - your NI number, a different (umbrella) company. a lot of NI collected

One concern I have is that the agency are looking to link the current ltd co. engagement with the new "umbrella" engagement. I have concerns of this and my instinct is to walk away, but I'd hate to walk away from 6-12 months of pay and then be out of work for months, hopefully not the case but have to prepare for it.

It really is quite clear. If your client has gone with no PSCs and no determinations, you are not inside. Period, as our North American friends like to say.
You're most certainly more at risk than if you leave the client completely

That is my interpretation, however... reading this thread you can see there are varying answers. Sure staying on and operating under a model potentially introduces some risk, but if I am not officially switching to "Inside IR35", just using an Umbrella company, is that a real red flag? Many contractors have worked through Umbrella companies previously rather than through a Ltd Co.

For the avoidance of doubt, this means that although you have not been been deemed as inside, you will be taxed as if you are. The agencies will insist that you go PAYE or use an umbrella to ensure that full taxes are paid because they won’t trust you to pay those taxes via your Ltd.

So does this actually put the time under a Ltd Co at risk from a retro tax inspection? I'd understand if my role was deemed "inside", but the client have chosen to avoid making determinations.

[eek]

So does this actually put the time under a Ltd Co at risk from a retro tax inspection? I'd understand if my role was deemed "inside", but the client have chosen to avoid making determinations.

As I've repeated multiple times - the report that is likely to be used does not know if you are inside or just working for a company that no longer works with PSCs. It just sees

1) a change in company receiving money and
2) a large increase in NI received.

Question is will HMRC trigger investigations off that, or will HMRC send "shake tree" letters to see if it can get people to pay or will HMRC do nothing. We don't know but most people on here are too risk adverse to assume HMRC will do nothing.

[jamesbrown]

That's different though - it's for a very different system to the Agency reports.

That flag kicks off a separate set of routines within the PAYE consolidation reports i.e. look on that table rather than the usual one (I know too many people at HMRC)..

Sure it’s different. My point is that they don’t need to faff about with differences in NI. There is a direct record in RTI for whether a payment is a deemed payment. The agency reporting gets them the prior situation.

[eek]

Sure it’s different. My point is that they don’t need to faff about with differences in NI. There is a direct record in RTI for whether a payment is a deemed payment. The agency reporting gets them the prior situation.

What happens when the agency / contractor uses an umbrella - does the agency use deemed payments or does it pass the whole amount (without any deductions) to the umbrella?

[jamesbrown]

What happens when the agency / contractor uses an umbrella - does the agency use deemed payments or does it pass the whole amount (without any deductions) to the umbrella?

The umbrella is the contractor's employer and operates PAYE RTI. There is no deemed payment nor a situation of moving from "outside" to "inside", rather from outside to employment (which HMRC will be interested in too, but that is different). Where a contractor moves from outside to inside with the same agency and end client, HMRC has a direct record of both the change in circumstances (via the intermediaries report) and the deemed payment itself (via RTI).

[drob1984]

The umbrella is the contractor's employer and operates PAYE RTI. There is no deemed payment nor a situation of moving from "outside" to "inside", rather from outside to employment (which HMRC will be interested in too, but that is different). Where a contractor moves from outside to inside with the same agency and end client, HMRC has a direct record of both the change in circumstances (via the intermediaries report) and the deemed payment itself (via RTI).

This sounds as though Umbrella certainly is the "safer" option? This lack of clarify for me is another reason why IR35 reforms just aren't ready yet.

[jamesbrown]

This sounds as though Umbrella certainly is the "safer" option? This lack of clarify for me is another reason why IR35 reforms just aren't ready yet.

If you're doing roughly the same thing in roughly the same way, previously self-employed, now employed, then the risk exists, regardless of the trail of breadcrumbs. If you believe HMRC guidance, then the risk is small (I don't).

[drob1984]

If you're doing roughly the same thing in roughly the same way, previously self-employed, now employed, then the risk exists, regardless of the trail of breadcrumbs. If you believe HMRC guidance, then the risk is small (I don't).

Ridiculous how this is playing on people's lives and minds. Appreciate the input. I have decided the risk is too great, so I am now working till 28th Feb and then come the new FY, will look for a new opportunity.

allatsea - what are you going to do?

[Spoiler]

Well, I was going end of Feb, but due to a small delay to a deliverable it looks like I'll be extending till end March.
Thanks to HMRC for the recent change to the off-payroll working rules, allowing me to work up to 5th April now

[HeathcotePursuit]

Hi - Thanks for all the input and advice on this thread (the original post and subsequent answers)

I’m hoping someone could offer their thoughts on the below situation.

I’ve been working with my current end client for 2 years over several contracts. I’ve been through the CEST tool and had an independent review which both place me outside of IR35 due to not being subject to SDC. I also have IPSE membership in place.

My end client has conducted an SDS on the role I perform and has been deemed it inside of IR35 post April 6th despite the above. I have chosen not to appeal this decision and leave at the end of the contract, which is the end of Feb, in an attempt to minimise any risk of a retrospective investigation.

The end client has now asked me to extend until the end of March however due to them using an intermediary agency, they will only offer a 6 month extension, which would take me through to August, and then have stated I can terminate the contract at the end of March.

Question - If the role has been determined by the end client as Inside IR35, and I have not appealed, do you think taking this extension until the end of March increases any risk?

Thanks in advance.