IR35 - watertight safety net

[yetanotherone]

Hi,

I think I'm outside IR35 and don't want to risk the revenue coming afterme, BUT, I think the following is a pretty much watertight safety net:

1. Join PCG - this provides free tax insurance into an IR35 investigation if one does occur
2. Send my contract for review to say SJD accounting. They wont charge me unless they believe the contract passes IR35. According to PCGs IR35 document, having the written evaluation of an independent third party shows I have taken good steps in my decision of deciding my IR35 status. The document also implies that the IR only expect you to show that you have taken professional advice as to whether your contract is inside or outside IR35.

If I do the above, I believe the IR will be unable to pursue me if they disagree with my IR35 status. What do you folks think?

Also, regarding salary, I have been paying myself 20k and my accountant advises me to drop this to 8k. Is this wise? I have heard from several people that the salary must reflect the going rate for a job with the required skills. If Hector comes after me for paying myself 8k, do I have a leg to stand on and what will his arguement be.

Thanks,
Justanotherone

[pickle]

Hi,
I have heard from several people that the salary must reflect the going rate for a job with the required skills

And how the hell does paying yourself just 20k do that!? Are you a contracting bus driver or sandwhich maker?

Listen to your accountant.

[boredsenseless]

Hi,

I think I'm outside IR35 and don't want to risk the revenue coming afterme, BUT, I think the following is a pretty much watertight safety net:

1. Join PCG - this provides free tax insurance into an IR35 investigation if one does occur
2. Send my contract for review to say SJD accounting. They wont charge me unless they believe the contract passes IR35. According to PCGs IR35 document, having the written evaluation of an independent third party shows I have taken good steps in my decision of deciding my IR35 status. The document also implies that the IR only expect you to show that you have taken professional advice as to whether your contract is inside or outside IR35.

If I do the above, I believe the IR will be unable to pursue me if they disagree with my IR35 status. What do you folks think?

Also, regarding salary, I have been paying myself 20k and my accountant advises me to drop this to 8k. Is this wise? I have heard from several people that the salary must reflect the going rate for a job with the required skills. If Hector comes after me for paying myself 8k, do I have a leg to stand on and what will his arguement be.

Thanks,
Justanotherone

Oh dear!!!

IR35 is partly to do with contracts, but the real distinction is the actual working practices.

If your client can control how you do the work, has to pay you even if there is no work and expects you to behave the way the permies sat next to you do then you are IR35 and no cleverly worded contract will stop it.

I work a different concept in my head, if I feel I need a review to determine if the work is IR35 then it probably is, contracts that aren't are so obviously not IR35 there is no point wasting your money on a review.

[cojak]

If I do the above, I believe the IR will be unable to pursue me if they disagree with my IR35 status. What do you folks think?

You're wrong.

The IR will pursue you if they disagree with your IR35 status.

Whether they win is another matter, which is why you did all the above in the 1st place, I presume.

[PAG]

Mostly, when IR pursues they will find one or the other way to bring you within IR35.

Also listen to your accountant .. drop your salary to 8K.

[Burdock]

As a newbie, I have been reading most of the threads like this with interest. Especially as I am deciding like 'yetanotherone' about IR35 insurance and contract reviews.

If your IR35 status is governed by working practice, which seems to be the dominant argument in this forum, what are the merits in having a contract review in the first place?

[youngguy]

This may sound like an obvious question but, if you are drawing a salary of 8k then doesn't that mean you are taking home around £666 a month?

How does everyone afford to pay bills etc? Do you live off savings or last yrs divi's?

I am going to start contracting soon (i hope!) and I need a salary of at least 2k a month to be able to pay the mortgage and eat!

[shaftedcontractor]

You can take dividends throughout the current year, they don't have to be from last year's profit just from profit this year (i.e. I guess don't eat in to the amount you'll have to pay in Tax for next year).

[cojak]

Mostly, when IR pursues they will find one or the other way to bring you within IR35

You're wrong too...

[boredsenseless]

As a newbie, I have been reading most of the threads like this with interest. Especially as I am deciding like 'yetanotherone' about IR35 insurance and contract reviews.

If your IR35 status is governed by working practice, which seems to be the dominant argument in this forum, what are the merits in having a contract review in the first place?

because if the contract is badly worded then you can be caught by IR35 even if the actual working practices aren't.