Need advice on IR35

[humucagir]

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[Protagoras]

At this stage, you have two realistic options. Terminate this relationship and move on (hoping for the best) or consider this contract to be inside IR35, both now and in the past. Naturally, this will be expensive, but it is only getting more expensive as you continue. Having a professional review against you is unfortunate because, essentially, any avoidance from now on is deliberate behaviour, were that information to come to light.

+1
Now that OP has obtained 'inside' status advice, there are two obvious steps

(a) Consider the retrospective liability if this contract was to be investigated and found 'inside' to date and put aside funds to settle the liability. The basis of the calculation is in ITEPA Ch8.

(b) Operate the contract going forward as if it was 'inside', so that LtdCo income on this contract is paid out as salary and pension.

It's true that this contract won't then be able to fund expenses or the running costs of the LtdCo, but one could at least contain liabilities and carry on for a while, pending deciding what to do regarding the contract.

[northernladuk]

Sorry I don't understand this part. If I genuinely can send a substitute. By definition I'm outside, since that's legally one of the three clauses that determines the status.

On another note, reading that forum. How likely I am actually getting into trouble and getting investigated? Assuming I close my company ASAP?

Its actually unlikely you can. RoS is defense because the potential/abilitiy to do it in the contract but it's been called out as a sham clause in other IR35 cases before so just being in the contract actually carries very little weight when push comes to shove.

If you ask your client to invoce the RoS it's more than likely they'll say no and you've just shafted yourself.

So you say 'If I genuinely can send a substitute.' That's a very big IF.

[humucagir]

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[northernladuk]

Ok, and if they say yes then what?

Then you find someone else, train them up, pay them while you are training them up, all in your time so can't be billing the client while you are training them and let them go.

But it's very unlikely they will say yes.

[humucagir]

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[northernladuk]

I mean, would that be 100% outside then?

Nothing is 100% but if you've properly exercised unfettered RoS you are going to have a strong defence.. but you won't be on the gig anymore so why would it matter?

[humucagir]

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[northernladuk]

Well if I can send a substitute that will allow me to work for the client a little bit longer and have a good night's sleep?

But you have to actually send one, and do it properly so it doesn't look like a thinly veiled attempt to avoid IR35. If you are doing this to get a tick in the box so you can work longer then you start falling in to the thinly veiled camp and could fail at an investigation. Many people come up wiht this idea of sending someone in for a week or some other tiny portion of the contract thinking that is enough. Nope, still sham territory. It has to be done properly.

On other note, regarding the advice of keeping money aside. Found this thread here:

https://forums.contractoruk.com/ir35...deterrent.html

Is that true that the odds are too small to lose my head over it or that guy doesn't know what he's talking about? I checked online and seems like there are 2 cases a year or something on that scale.

But you don't see all the ones where the contractor folds before it goes to court, or the ones where people switch and pay up etc.

[humucagir]

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