How much money to put aside for IR35?

[kijon]

Hello,

Small question. I have already closed my company, but in case of investigation/status assessment (foreign client, Chapter 8).
How much money to put aside to pay the tax back?

I ran through a calculator and considering the dividend tax paid (both shareholders) + the corporation tax, during the 3 years that would amount to about 30k.
So is enough to have that money + whatever interest is charged put aside, or do I need way more?

Asking cause I found some threads where people say they may not offset corporation and dividend tax, or that interest/penalties are applied to the full PAYE amount before taking into consideration any offsets, in which case this can triple or quadruple the 30k figure and make me bankrupt

[ladymuck]

Did your foreign client truly have no presence at all in the UK? Is that why you're worried you might be deemed inside IR35? Surely the insurance you're going to take out will cover this as you got the contract and working practices reviewed by an IR35 expert before you signed it?

Sounds like you've just realised that your foreign client isn't so foreign after all and you're now worried that you'll also need to buy shares in Vaseline.

[northernladuk]

Hello,

Small question. I have already closed my company, but in case of investigation/status assessment (foreign client, Chapter 8).
How much money to put aside to pay the tax back?

I ran through a calculator and considering the dividend tax paid (both shareholders) + the corporation tax, during the 3 years that would amount to about 30k.
So is enough to have that money + whatever interest is charged put aside, or do I need way more?

Asking cause I found some threads where people say they may not offset corporation and dividend tax, or that interest/penalties are applied to the full PAYE amount before taking into consideration any offsets, in which case this can triple or quadruple the 30k figure and make me bankrupt

IMO no where near. Rule of thumb is we lose 35% or so going outside to inside and that will go up siginificantly if you are on a good rate so they'll want that 35% cut (minus what is already paid). There is likely to be a penalty of 100% tax not paid plus costs.

Not much anecdotal evidence but the old JLJ partial win, the guy got caught for 3 years and had 1 £140,000 tax bill
https://www.contractorcalculator.co....1810_news.aspx

[northernladuk]

IMO no where near. Rule of thumb is we lose 35% or so going outside to inside and that will go up siginificantly if you are on a good rate so they'll want that 35% cut (minus what is already paid). There is likely to be a penalty of 100% tax not paid plus costs.

Not much anecdotal evidence but the old JLJ partial win, the guy got caught for 3 years and had £140,000 tax bill
https://www.contractorcalculator.co....1810_news.aspx

If IR35 tax penalties were only £30k over three years I don't think they'd have bothered even drafting the IR35 legislation and we certainly wouldn't have cared a jot about it.

[Protagoras]

Regarding penalties, further reading
https://www.gov.uk/guidance/penaltie...-is-calculated