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Tax - Inside or Outside

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    Tax - Inside or Outside

    Just wondered really where people are on the outside vs inside, particularly as there is a lack of clarity over the tax liability if an outside role is deemed inside and who actually pays. To the best of my knowledge this position has not been clarified or resolved.

    I ask for a few reasons:
    1. I’ve seen a few recruiters now asking people to put in writing: ”Confirmation you are happy to operate outside”, this is often along side the happy to represent line you have to send. No detail or SDS at this stage.
    2. I’ve seen recruiters pushing clients to post outside as tough market and only way will get resource. No discussion on if the role is actually inside or outside
    3. I’ve seen a client side stating if wrong its just a small fine
    4. If determination changes, not sure much you can do, IPSE cover and alike won’t help I guess as the decision is made outside your ability to challenge or influence

    I’m doing a small piece of outside work right now (have employed someone to help me on one task, chose how I do the work, etc., so feel pretty safe) but this is in the back of my mind. Particularly as seems to be more outside roles around now.

    I guess the million-dollar question is how do we as a community get the position clarified? As an individual approaching HMRC it seems pointless as they just want to kick off an investigation in order to ‘help’.

    #2
    Are you talking about HMRC finding it inside or you starting work and the status is changed by the client when the SDS appears at the last minute?

    I think that question is pretty irrelevant though. If you've got the money then you have to pay the tax on it. It's highly unlikely you can pass your tax burden on to someone else. You could potentially sue them for something or other but you still pay.

    If you are talking about client/agent telling you outside, you start work and a month in they issue an SDS it inside there is nothing you can do. You just have to tell them you want an SDS before you start. If they issue an SDS for outside and you start, they then re-issue an SDS later inside then you should get paid for the outside period and then you have a choice to leave or carry on working inside.

    Most of those bullet points are for you to bottom before you start and if you aren't satisfied you either work at risk or you just drop the gig.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

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      #3
      NLUK, You've missed out a bit

      SDS is issued that is outside - you start work

      4 months later (monthly billing, 90 day payment terms from agency to end client) an inside SDS is reissued just prior to the first invoice being paid by the end client.

      The entire contract is now inside IR35 and the appropriate tax needs to be paid from Day 0 onwards.

      Now a contractor could at that moment walk away but with (or even without a claw back clause) NI needs to be paid on all 4 months of work that was done.
      merely at clientco for the entertainment

      Comment


        #4
        Originally posted by Keanu2020 View Post
        Just wondered really where people are on the outside vs inside, particularly as there is a lack of clarity over the tax liability if an outside role is deemed inside and who actually pays. To the best of my knowledge this position has not been clarified or resolved.

        I ask for a few reasons:
        1. I’ve seen a few recruiters now asking people to put in writing: ”Confirmation you are happy to operate outside”, this is often along side the happy to represent line you have to send. No detail or SDS at this stage.
        2. I’ve seen recruiters pushing clients to post outside as tough market and only way will get resource. No discussion on if the role is actually inside or outside
        3. I’ve seen a client side stating if wrong its just a small fine
        4. If determination changes, not sure much you can do, IPSE cover and alike won’t help I guess as the decision is made outside your ability to challenge or influence

        I’m doing a small piece of outside work right now (have employed someone to help me on one task, chose how I do the work, etc., so feel pretty safe) but this is in the back of my mind. Particularly as seems to be more outside roles around now.

        I guess the million-dollar question is how do we as a community get the position clarified? As an individual approaching HMRC it seems pointless as they just want to kick off an investigation in order to ‘help’.
        It's a small fine for them but you're the one who has to pay the tax and NI that was missed.
        "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


          #5
          Originally posted by cojak View Post

          It's a small fine for them but you're the one who has to pay the tax and NI that was missed.
          Indeed. But how do you know or protect yourself? its listed as outside, you have SDS before start saying outside, dare I say it even operates as outside. HMRC come along, client rolls straight over, and as it stands right now to the best of my knowledge, no clarity on who pays the delta.

          Comment


            #6
            I'm just trying to figure out how we collectively get an answer to the question so everyone has clarity. Is it something ContractorUK can raise with HMRC / HMT / APPG / etc?

            Comment


              #7
              Originally posted by Keanu2020 View Post
              I'm just trying to figure out how we collectively get an answer to the question so everyone has clarity. Is it something ContractorUK can raise with HMRC / HMT / APPG / etc?
              I'm not sure what you are looking for. The answer is: you are liable for the tax.
              There's no ambiguity, there's nothing that requires clarity.
              {emotionless greeting}

              Three Word Slogan

              Comment


                #8
                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.

                merely at clientco for the entertainment

                Comment


                  #9
                  Originally posted by WTFH View Post

                  I'm not sure what you are looking for. The answer is: you are liable for the tax.
                  There's no ambiguity, there's nothing that requires clarity.
                  Was the whole point of the new legislation not that the tax liability sat with the fee payer so that it changed the behaviour (everyone inside is HMRC wish). If the contractor is still liable why does the whole inside / outside conversation exist, as it makes no difference if the fee payer is not liable.

                  Comment


                    #10
                    Originally posted by eek View Post
                    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.
                    I suspect we have asked the same part and I’ve asked a number of times and never had the same answer.

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