Mechanics of an IR35 Investigation

[malvolio]

Looked at from the perspective of people with a genuine LtdCo it is a personal tax that is paid by the person's company.

That's where the confusion arises, but if you think about it the concept of IR35 is that the company is a sham and is merely a vehicle for receiving monies paid in return for work done. Of course that falls apart as soon as you start to think about people getting caught on only some contracts (even concurrent ones, would you believe) but IR35 is not a logical beast.

Umbrellas users needn't bother. They are employees anyway so there's no argument over IR35 status. They only get into trouble if they start doing clever things to reduce their tax liability, like claim for money they haven't spent, or take out usecured loans. But that's evasion, not IR35.

Ex-MSC users - well they've been milking the system and causing political problems for real small businesses, so actually I could care less if they are caught or not!

[mjshrimpton]

Ex-MSC users - well they've been milking the system and causing political problems for real small businesses, so actually I could care less if they are caught or not!

Yeah - cheeky gits.

Oh.

[IR35 Avoider]

HMRC ought to be able to reclaim income tax and employees NI from a worker if they can't get it from the company, as these are personal taxes, but only the employer/company can be held responsible for the employer's NI. However there are restrictions on the circumstances under which they can go after the employee for the employee taxes. I think these restrictions were designed to protect naive employees who don't understand the tax system from unscrupulous employers who fail to make the right deductions. These restrictions were cited in the justification for the MSC legislation. HMRC said they were unable to recover tax from MSC employers or employees under current law, even when it was proven to be due.