Cost of a losing an IR35 case?

[northernladuk]

Following a couple questions about the liability amounts of a reto inspection..

Have we ever run the numbers on a year's worth of liabilities?

Extra tax owed minus what's been paid plus potential interest type thing?

[GhostofTarbera]

Cost of a losing an IR35 case?

Must be around the 20% (of gross rate) mark with no expenses and no div splits etc a lot more if expenses taken or paying the wife (up to 40%)


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[jamesbrown]

Well, it depends on which year and whether penalties are involved.

Under the absolute best case scenario, with no penalties and only interest (I think they apply 3% simple interest from the day on which it would've become due), then you can take PAYE plus ErNI plus EeNI for that year, add the simple interest, and subtract any tax actually paid.

But HMRC's starting point will probably be that you cannot offset any CT paid because you've passed the time limit to amend your CT600 (but then probably won't sustain that position).

In short, difficult to say, but somewhere considerably north of full PAYE plus Ee/ErNI.

[sim2kuk]

Well, it depends on which year and whether penalties are involved.

Under the absolute best case scenario, with no penalties and only interest (I think they apply 3% simple interest from the day on which it would've become due), then you can take PAYE plus ErNI plus EeNI for that year, add the simple interest, and subtract any tax actually paid.

But HMRC's starting point will probably be that you cannot offset any CT paid because you've passed the time limit to amend your CT600 (but then probably won't sustain that position).

In short, difficult to say, but somewhere considerably north of full PAYE plus Ee/ErNI.

So if a company asked you to sign a contract that is deemed outside IR35 (and they told you the role was outside IR35), and then later deemed you inside, who should be liable for the ERNI, and is there a legal claim to be had that the job was misrepresented by the client?

[jamesbrown]

So if a company asked you to sign a contract that is deemed outside IR35 (and they told you the role was outside IR35), and then later deemed you inside, who should be liable for the ERNI, and is there a legal claim to be had that the job was misrepresented by the client?

After April?

The supply chain above. Never the contractor's PSC, except in cases of fraud. So they aren't going to backtrack on your status, because it's all on them. They could lose under investigation though. Unlikely.

Before April, it's all on the contractor's PSC, not the contractor (unless the individual was really, extremely, silly).

[northernladuk]

So if a company asked you to sign a contract that is deemed outside IR35 (and they told you the role was outside IR35), and then later deemed you inside, who should be liable for the ERNI, and is there a legal claim to be had that the job was misrepresented by the client?

Which isn't really going to happen is it.

Back to your own thread foul knave.

[Old Greg]

Would PC have to repay his tax credits?

[jamesbrown]

Would PC have to repay his tax credits?

Not PC himself, no. His legal guardian, probably.

[northernladuk]

Oii. Piss off you lot. This is the best question that's been asked on the forums this year. Please show it, and the OP the professional respect they deserve!

[sim2kuk]

After April?

The supply chain above. Never the contractor's PSC, except in cases of fraud. So they aren't going to backtrack on your status, because it's all on them. They could lose under investigation though. Unlikely.

Before April, it's all on the contractor's PSC, not the contractor (unless the individual was really, extremely, silly).

So, investigation is started post April. Pre-April client says role is outside IR35, supplies an outside IR35 contract, and then 3 weeks later supplies an inside IR35 determination on role.

That's misrepresentation from the client. In that circumstance surely the contractor has a case against the client.