Tax - Inside or Outside

[Keanu2020]

One problem I have with the article that Cojak quotes is that Caroline Walsh seems to be making a jump in logic that I cannot follow - at no point is HMRC going to be chasing the money - it's going to be agencies chasing people individually.

What if agency just submits a new starter form on your behalf to HMRC, pays the basic 20% and leaves rest for you. Pretty sure HMRC will come chasing then. . .

[eek]

What if agency just submits a new starter form on your behalf to HMRC, pays the basic 20% and leaves rest for you. Pretty sure HMRC will come chasing then. . .

Good catch I completely forgot that was how the agency played the game with you...

But that still leaves the agency paying the Employer NI, Employee NI and the initial 20% tax and that may or may not be possible depending on the size of the bill and the size of the agency.

The reality is that it's just a grade A mess that makes an inside IR35 contract (with suitable uplift) a far safer bet.

[MrC]

Having not really been in the loop with all of this for a year or 2 and now just dipping back in I am totally shocked and dissapointed to discover the the steamrollering of IR35 to the majority of contracts has not even left a silver lining that many were talking of a year or so back where those with outside determinations could just get on (hard working contractor *insert emotive adjective here* families) with their work without the constant threat of retrospective tax action.

F**kiing shocking!

[cojak]

Having not really been in the loop with all of this for a year or 2 and now just dipping back in I am totally shocked and dissapointed to discover the the steamrollering of IR35 to the majority of contracts has not even left a silver lining that many were talking of a year or so back where those with outside determinations could just get on (hard working contractor *insert emotive adjective here* families) with their work without the constant threat of retrospective tax action.

F**kiing shocking!

Not surprised at all. The HMRC Enquiries people said that this would happen. Anyone working in Outside IR35 contracts from this year (2022) will have to keep strict documentation for 6+ years if they don’t want to be hit with retrospective tax demands in the future.

[northernladuk]

Having not really been in the loop with all of this for a year or 2 and now just dipping back in I am totally shocked and dissapointed to discover the the steamrollering of IR35 to the majority of contracts has not even left a silver lining that many were talking of a year or so back where those with outside determinations could just get on (hard working contractor *insert emotive adjective here* families) with their work without the constant threat of retrospective tax action.

F**kiing shocking!

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.

[Keanu2020]

Being honest, I thought that once outside decision was made, you would kind of be left alone as risk transferred to fee payer (and hence the wave of blanket inside determinations). But actually it seems worse. The risk of a later investigation and tax bill is still there, the fee payer can transfer the tax debt to you, HMRC may chase you for it direct in some circumstance, but other options are removed as well.

I may have this wrong, but how do we now fight a HMRC investigation and status change? In the past HMRC would open an enquiry into the ltd and you could fight it. Now your not in the loop at all and can’t challenge or be involved in the decision (HMRC tells fee payer what the answer is). I can see Courts not wanting to unwind a tax determination made elsewhere between fee payer and HMRC, and when fee payer or HMRC chase you for the tax, the decision (inside) is already a fait accompli, hell, you might not even know anything changed retrospectivly until a bill arrives.

It is why I keep wondering if there is not something we as a community can do to get clarity on how it works so people are sighted on the risk and potentially challenge the position. I hear NLUK and others point about this has been coming but I’m not sure any of fully understood the exact shape of it that is now appearing.

[cojak]

So, 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)?

[Fred Bloggs]

We (well I) have had confirmation from HMRC.

It went if a contract starts out as outside IR35 (with an SDS) and is appealed to become an inside IR35 contract (don't ask how that appeal occurs for it makes zero sense) the tax has to be paid. And the suggestion from HMRC was that the fee payer should reclaim the money from the contractor.

Oh my. That's not how the new IR35 regime was intended to work. Is it? Under those circumstances, then all you can do to prevent risk is to down tools and quit the job immediately the second the agency notifies you of the switch to inside IR35?

[eek]

So, 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)?

I will post a longer reply at some point but What documentation?

The issue is that it's now completely outside your control - you have a contract that says you are outside IR35 and an SDS determination that says the same. You then have multiple scenarios that result in the contract being treated as inside IR35 and multiple outcomes from those scenarios.

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.

[cojak]

Well, I’m not sure what documentation apart from the contract TBH. I was just frustrated that many in HMRC Enquiries were coming to us with no documentation whatsoever.