Need advice on IR35

[jamesbrown]

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?

You are confusing legislation with case law. There are no references whatsoever to D&C, RoS and MoO in Chapters 8 or 10 of Part 2 of ITEPA 2003. This is all you get:

the circumstances are such that, if the services were provided under a contract directly between the client and the worker, the worker would be regarded for income tax purposes as an employee of the client.

The rest is established through (mostly very old) case law, largely employment case law.

Notionally, any one of the three pillars you mention should put you outside. However, there is considerable latitude at tribunal to probe the real relationship between you and the end client and to establish the facts, in the round. What I'm saying is that I wouldn't be surprised to see any actual substitution cast aside, especially if you and/or the end client are trying to engineer an outcome, given the relationship looks so firmly like employment in other regards. The context for any substitution will be examined at tribunal.

Why do you think that your status review found against you? As you said yourself, if wasn't any one thing - and indeed, RoS is about a not unreasonably fettered right, not whether it's used - the reason they found against you is that they looked at your relationship in the round and considered it to be one of employment (for tax purposes).

It sounds to me as though you've partially embraced the situation you're in, but not yet fully embraced it.

No one can tell you exactly what would happen under investigation because we simply don't have all the facts, but I would trust (and, if it helps you, verify) the review you were given. From what you've said, the review sounds totally accurate to me. You can try to invoke the substitution clause and hope for the best, but I would not be confident, given the broader context.

[jamesbrown]

Oh, and, yes, of course the risk of being caught is quite small, but I think you knew that already. In the history of IR35, I'm sure many people have operated firmly inside IR35 and treated the income as outside, and have never been caught. There are many, many clueless contractors out there. This forum is not representative in that regard. Still, the risk isn't zero and you said yourself you're risk averse and worried. That worry isn't going to disappear, it's only going to amplify for as long as you continue knowing that your real status is inside (and you have the professional review to confirm it). Furthermore, in that scenario, you're at risk of the avoidance being considered deliberate. The first thing you'll be asked is what measures you took to establish your status and lying about that would not be a good idea.

[humucagir]

---

[jamesbrown]

Best of luck to you, but being able to compute a mathematical expectation will help you about as much as your CEST result in this scenario.

[gables]

Does the US company you've contracted with have any presence in the UK at all? That's a very important question.

No, no UK presence at all.

Is IR35 even relevant in this case?

[jamesbrown]

Is IR35 even relevant in this case?

Yes.

[gables]

Does the US company you've contracted with have any presence in the UK at all? That's a very important question.

Yes.

Ta James..... working for a US firm directly is not something I've ever considered so was curious why Fred asked the question.

[Fred Bloggs]

Ta James..... working for a US firm directly is not something I've ever considered so was curious why Fred asked the question.

Given your answer to my question I'm a bit surprised at what's been the general opinion by responders in the thread. I'll leave it at that.

[jamesbrown]

Ta James..... working for a US firm directly is not something I've ever considered so was curious why Fred asked the question.

It's really only the difference between Chapter 8 and Chapter 10. As a UK tax payer, there's no scenario in which IR35 can be ignored, one way or another (well, there are some low % situations, like having less than 5% share capital), and the rest is just about responsibility and liability (who is responsible for what, who is liable when a mistake is made).

[Andy2022]

* Just go and find another client and forget or close the company and go perm (unfortunately my mom is ill and I'm very short on finances at the moment).

How long do you plan to continue working for them for?

Would it be an option to switch to being an employee and operate your own personal payroll via the DPNI scheme?

The US company would pay you gross and you’d be responsible for UK Income Tax, and Employees NI (AFAIK there’s no Employers NI as the employer is not in the UK but you should check with a professional)