Inside IR35 tax Liability

[Keanu2020]

Yes, I was paid in full for the months worked outside. The fees are in my ltd. But this backing them out and paying a nasty tax bill. No opportunity to push to pension or anything like that either.

[eek]

Yes, I was paid in full for the months worked outside. The fees are in my ltd. But this backing them out and paying a nasty tax bill. No opportunity to push to pension or anything like that either.

That's right if you are receiving deemed payments but you haven't been - until today all payments you received were (in good faith) outside IR35.

As I said you need decent advice from someone who can back it up. Given that your accountant seems to be useless and I can't think of anyone else to turn to WTT would be my recommendation - IPSE may be of use but I very much doubt they can help in the way that would be required.

[Keanu2020]

Yeah, will call WTT in the morning. Thanks.

[Fred Bloggs]

Sorry but in this case that isn't true - an incorrect SDS determination has been made which means the tax is not supposed to come from the contractor but should be being paid in its entirety by the people in the chain who screwed up the determination.

But that isn't true either because some outside IR35 payment was already made. It's the contractor who has to sort out the tax on that. Nobody else.

[Fred Bloggs]

Yes, I was paid in full for the months worked outside. The fees are in my ltd. But this backing them out and paying a nasty tax bill. No opportunity to push to pension or anything like that either.

You have the opportunity for your Ltd Co to make pension contributions on your behalf with that money.

[eek]

You have the opportunity for your Ltd Co to make pension contributions on your behalf with that money.

No you don't if it's deemed payments - the employer NI is deducted by the agency and the employee NI and income tax deducted by the agency on behalf of your limited company...

So yes you could pay into a pension and reclaim the income tax but not the NI.

The ability to pay money into a pension that would otherwise be lost to an Employer NI payment is the sole reason why umbrella companies serve any sane purpose for contractors

[eek]

But that isn't true either because some outside IR35 payment was already made. It's the contractor who has to sort out the tax on that. Nobody else.

Yes under the old rules - but not in the new post April 2021 rules (or in this case the post April 2017 rules).

[Fred Bloggs]

Yes under the old rules - but not in the new post April 2021 rules (or in this case the post April 2017 rules).

Same reply as previous post too.

So - You are saying that the OP's Ltd Co has to pay every penny received gross back to the agency and the agency will then process that back into their system, followed by PAYE or payment to an umbrella company? I doubt any agency has the mechanism for such things.

I think that's an unrealistic expectation myself. But who knows in the brave new world. Much more likely the Ltd Co accounts for the months already paid as inside IR35. That's far more manageable set of circumstances.

[jamesbrown]

Same reply as previous post too.

So - You are saying that the OP's Ltd Co has to pay every penny received gross back to the agency and the agency will then process that back into their system, followed by PAYE or payment to an umbrella company? I doubt any agency has the mechanism for such things.

I think that's an unrealistic expectation myself. But who knows in the brave new world. Much more likely the Ltd Co accounts for the months already paid as inside IR35. That's far more manageable set of circumstances.

Actually, the Fee Payer (or possibly the client) is liable, not the OP. The Fee Payer should've been operating deemed payments, but failed. That isn't to say the OP won't have a fight on their hands, but ultimately the supply chain above the OP's company screwed this up and they are responsible and liable.

[eek]

Same reply as previous post too.

So - You are saying that the OP's Ltd Co has to pay every penny received gross back to the agency and the agency will then process that back into their system, followed by PAYE or payment to an umbrella company? I doubt any agency has the mechanism for such things.

I think that's an unrealistic expectation myself. But who knows in the brave new world. Much more likely the Ltd Co accounts for the months already paid as inside IR35. That's far more manageable set of circumstances.

Again nope - it is up to the appropriate part of the chain to pay the appropriate tax on all the money sent to the limited company.

so if the limited company has received £30,000 the amount of tax owed is all the tax required on a take home pay (I.e what ends up in your bank account) of £30,000 (or approximately £25,000) and it is not up to the OP to pay any of it (as JamesBrown) points out, the money needs to come from the chain.

example 3 of https://www.gov.uk/hmrc-internal-man...anual/esm10012 seems to relevant here.