Inside IR35 tax Liability

[Keanu2020]

The biggest bit I can’t get my head around is if this is right, then it raises some questions around the IR35 legislation right? End client says what they want, knowing retrospectively they can change their mind and leave you with the larger bill to pay and you have no recourse.

[Fred Bloggs]

Appreciate the quick response. Is it still true when you double checked everything and the error has been owned by other companies?

How does that reconcile with the IR35 changes? Are you saying its meaningless then and companies can just transfer it back to you as its your responsibility?

The outside/inside changes are regrettable for sure, but hardly unique. I am afraid at the end of the day it's you who is responsible for paying the correct tax on your income. The outside/inside merry go round is a sad but predictable outcome of the very poor legislation now imposed on the industry.

[eek]

I think the bulk of the advice they got came from the big recruitment firms inhouse IR35 people. They are one of the household names everyone knows. The smaller recruitment firm used a smaller 14 person accounting firm. Yep, half the reason posting here was to try and find out where to go for help.

Given that a few seconds of reading your last link says

You should give the worker a new starter checklist. This will decide the worker’s tax code. The Income Tax code will often be code ‘BR’, as the worker will have a primary employment with their own intermediary.

You must use the normal National Insurance rates and thresholds on the value of the deemed payment.

I wouldn't trust those inhouse people nor your accountant - as I said go and see if WTT is willing to help, this is potentially a big market for them...

[Fred Bloggs]

The biggest bit I can’t get my head around is if this is right, then it raises some questions around the IR35 legislation right? End client says what they want, knowing retrospectively they can change their mind and leave you with the larger bill to pay and you have no recourse.

Yes, refer to my other comment just made. That's about the measure of it. Thousands of folks have simply given up on the entire industry as a result of the mess. Me included.

[eek]

The outside/inside changes are regrettable for sure, but hardly unique. I am afraid at the end of the day it's you who is responsible for paying the correct tax on your income. The outside/inside merry go round is a sad but predictable outcome of the very poor legislation now imposed on the industry.

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.

[eek]

The biggest bit I can’t get my head around is if this is right, then it raises some questions around the IR35 legislation right? End client says what they want, knowing retrospectively they can change their mind and leave you with the larger bill to pay and you have no recourse.

Nope - if they mess up the determination all the unpaid tax sits with them to pay (remember my comment before, why do you think the Government Department bills were so large).

As I said go and speak to WTT (or I suppose IPSE, if you are a member). This is one of those cases where a lot of people will be interested and it needs to be done correctly so precedent is correctly set.

[Keanu2020]

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.

That is my understanding and what prompted the post.

[Keanu2020]

Nope - if they mess up the determination all the unpaid tax sits with them to pay (remember my comment before, why do you think the Government Department bills were so large).

As I said go and speak to WTT (or I suppose IPSE, if you are a member). This is one of those cases where a lot of people will be interested and it needs to be done correctly so precedent is correctly set.

Yes, it does feel like it could impact a lot of people. Will follow up with WTT.

Whereas now, most companies seem to be putting most work inside, if they legal option exists like this, then I guess we will see more aggressive ones act differently to secure talent. I guess even if you get SDS saying out, doesn’t mean anything if can be changed and the tax bill past back to you via PAYE rules. How do you protect yourself in that situation if you take any work listed as outside? IR35 legislation says one thing (End client is responsible), but when comes down to the actual rules and implementation, it’s a different story.

[jamesbrown]

That is my understanding and what prompted the post.

Your understanding is correct, at least after the point that the first payment is made by the client.

[eek]

Your understanding is correct, at least after the point that the first payment is made by the client.

This is public sector and it's been a few months so it's highly unlikely that no (first) payment has been made by the end client.

Also we know HMRC started to have it's first round of private sector "chats" and investigations 3 weeks ago so it's highly likely they've been having chats with public sector clients who weren't caught in the initial departmental trawl.