Post-reform IR35 accountability question

[wettowel]

Hi there, please forgive me if this seems like a question that has been done to death, but there seems to be a lot of conflicting information floating around and I was hoping someone will be able to provide me with simple, straight-forward answer.

Putting aside the damage the preform did to the contracting market, speaking strictly from a legal responsibility point of view, it should be a welcome change for the contractor at least, right? My understanding is that the responsibility of the IR35 status determination and the consequences for getting it wrong have been shifted from the contractor to the HMRC, meaning that should HMRC open an inquiry into a contract, the contractor would not be liable for anything. Or am I missing something here? Can HMRC still go after the contractor with the new rules?

Thanks for your input.

[jamesbrown]

Hi there, please forgive me if this seems like a question that has been done to death, but there seems to be a lot of conflicting information floating around and I was hoping someone will be able to provide me with simple, straight-forward answer.

Putting aside the damage the preform did to the contracting market, speaking strictly from a legal responsibility point of view, it should be a welcome change for the contractor at least, right? My understanding is that the responsibility of the IR35 status determination and the consequences for getting it wrong have been shifted from the contractor to the HMRC, meaning that should HMRC open an inquiry into a contract, the contractor would not be liable for anything. Or am I missing something here? Can HMRC still go after the contractor with the new rules?

Thanks for your input.

You are missing several things, yes. The first thing is that contractual liability clauses are common in nominally outside IR35 contracts under Chapter 10 and purport to transfer the liability from the supply chain above the contractor (Fee Payer, in the first instance) to the contractor's company. The second thing is that, in HMRC's opinion, were a liability to arise, the liability could simply be passed down the chain, presumably meaning either through these liability clauses or, ultimately, a correction to PAYE (i.e., directly to the contractor, in the same way an employer can correct PAYE errors, retrospectively). Whether these things would ultimately succeed is debatable, but they exist as concerns. I personally wouldn't touch an outside IR35 contract under Chapter 10 (~ UK clients in general), which is the desired end result.