Originally posted by eek
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Tax - Inside or Outside
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Originally posted by cojak View PostSo, eek, paralytic, jamesbrown, we are in a position to warn people before HMRC start sending out brown envelopes in 1 - 3 years time.
What do we tell them (apart from save ALL your documentation because you are going to need it)?
If you must take Chapter 10 outside contracts, then there are some things you can do to mitigate. Absent fraud, the risk is not primarily from HMRC/brown envelopes in this situation, rather from the supply chain itself and from claw back clauses in contracts.
Thus: 1) avoid any possibility of being accused of fraudulent behaviour; in other words, respond to all questions from the supply chain w/r to the SDS process (if any) and retain that correspondence and ensure that you retain the SDS; 2) document your working practices, as you would with Chapter 8 contracts (this may help when a client or fee payer attempts to rewrite history); 3) avoid very long contracts; 4) look for short payment terms (so there is little outstanding at any given time from which they can withhold money); 5) over a longer period, consider closing your company to mitigate risk (but do not do this for tax avoidance purposes); and, most importantly, 6) avoid contracts with claw back clauses, because there is a non-trivial chance they will succeed (e.g., there are parallels in PAYE employment that succeed).Comment
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Well, I’m going to unstick this thread https://forums.contractoruk.com/acco...ould-i-go.html because it is now out of date.
So we need a replacement.
PS. Not necessarily written by me, btw…"I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
- Voltaire/Benjamin Franklin/Anne Frank...Comment
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Originally posted by cojak View PostWell, I’m going to unstick this thread https://forums.contractoruk.com/acco...ould-i-go.html because it is now out of date.
So we need a replacement.
PS. Not necessarily written by me, btw…Last edited by eek; 18 February 2022, 12:27.merely at clientco for the entertainmentComment
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Well, I can write something from the combined posts of you and JB here, then you and he can edit it and I’ll update."I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
- Voltaire/Benjamin Franklin/Anne Frank...Comment
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Originally posted by northernladuk View Post
I'm surprised you've only just discovered it. It's been delayed twice and the application of it to the Public Sector was a couple of years in the making before that as well. If you've only been out even 2 years you should have been well aware it was coming.Last edited by MrC; 18 February 2022, 17:25.Comment
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Originally posted by eek View Post
I'm not joking when I say that if you want a risk free live take the better paying inside contract and throw things into your pension.
Of course adopting this mentality means that after decades of back n forth HMRC have now all but won the IR35 war
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Originally posted by jamesbrown View PostHonestly, avoid Chapter 10 outside contracts because the risks are greater than any risks associated with outside contracts prior to April 2021 (Chapter 8 and public sector reforms) and you also have less control.
ESM10010 - Employment Status Manual - HMRC internal manual - GOV.UK (www.gov.uk)
Where a person enters into a contract for a fully contracted out service, they will not be the client. This is because the worker’s true client is the party who the work has been contracted out to; the ‘service provider’. The service provider is the party most akin to the worker’s employer. The person receiving the fully contracted out service has not meaningfully entered into a contract for the supply of the worker.
A person who receives a fully contracted out service does not need to apply the off-payroll working legislation, as they will be above the client in the contractual chain and will have no obligations under Chapter 10, Part 2 ITEPA 2003 in relation to that contract. The service provider providing the fully contracted out service must consider if it is a public authority or medium or large-sized entity to see if it is within scope of the off-payroll working rules.
* There's no SDS from company X to me, regardless of their size, because MyCo is the service provider.
* There's no SDS from MyCo to me, because MyCo is a small company and therefore exempt.
* So, there's no SDS at all, just a scope of work.
The alternative would be:
* Company X comes to MyCo.
* I disclose to Company X that MyCo is a PSC (because I have a material interest), so they'll need to fill in an SDS.
* Company X takes their business elsewhere, so that they can skip the paperwork.
I know that this is an edge case, compared to what most people here do, and arguably it doesn't count as contracting at all. However, the risks seem fairly low, because MyCo's client never gets a vote, so I don't have to worry about them changing their mind later (e.g. during an HMRC investigation).Comment
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Originally posted by hobnob View PostHow do fully contracted out services fit into this?
There is always an end client. Sometimes, there is a Fee Payer, other than the end client.
Let's assume that Company X fully contracts out a service and that service is delivered by Company Y, meaning that Company Y provides a service to Company X at arms length and does not provide a supply of labour to Company X.
Let's further assume that Company Y contracts with Company Z (YourCo) to help deliver that service.
In that situation, the client of YourCo for the purposes of Chapter 10 is Company Y and Company Y will be responsible for the SDS. If there is a Fee Payer, such as an agency, between YourCo and Company Y, then the Fee Payer would be liable in the first instance, otherwise Company Y.Comment
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