IR35 defeat costs IT contractor £99,000

[wantacontract]

hmm, am i right in saying that if i had no money in the company, then its less likely for IR to come after me for IR35 tax???

so big wages are better then, in that theres less risk of forking over ir35 dough???

[xoggoth]

Seem to recall that not being able to substitute was ok if you could point to expertise that was not readily available elsewhere or if the job was of such complexity it was unrealistic for a sub to come in and catch up on a day to day basis. Have had the odd short testing job that a hamster could do but mostly I have had sole responsibility* for a complex task and a sub would have had to sit there reading up on it for three weeks before he could begin to take up where I left off. I would imagine this would apply to the work of many contractors and surprised to never see this defence used.

*I think I am not seen as a team sort, I can't think why

[Ardesco]

hmm, am i right in saying that if i had no money in the company, then its less likely for IR to come after me for IR35 tax???

so big wages are better then, in that theres less risk of forking over ir35 dough???

If you take all your money out as wages and pay PAYE then IR35 doesn't apply. IR35 is forcing you to take your money out this way instead of as dividends.

[wantacontract]

doh!!

SORRY

thanks for enlightening me......

thanks ardesco

[dmini]

I've still got contacts at AA - had a contract there about 18 months ago- so am asking questions - but I believe he has just left there in the last month or two.
And to answer other questions - yes IMO AA contracts are well paid - its the best paid contract I have had - but not to the level in the calculations

[Denny]

I agree entirely. The point of a contract is for when things go wrong. Just because rights have not been exercised does not mean they are not there. Unfortunately the view seems to be inverse to that. i.e. it didn't happen therefore you don't have the right. I find this bizarre.

I don't that is what happened at all. The RoS was put in the lower contract but not the upper contract which was never verified and checked out by the contractor or their reviewers. This was a pointless oversight that could have prevented a successful defence against the RoS being there to begin with.

If a RoS is real and intended by both parties and is not put into effect then this would have not worked against the contractor.

The problem is that most interim managers and IT contractors do not have a genuine right of subsitution, even if it is agreed and put in the lower contract and even if it is also negotiated into the upper contract as well.

The best route to take here if a complete sub is not likely to be agreed as an unfettered rigtht is to occasionally hire your own assistants to do specific little jobs during overspill. Also get them to do them on their own premises, so you don't have to bother asking permission. It is better to have partial sub rights unfettered than to have complete sub rights that are a sham.

[Taita]

[QUOTE=backgetyou;425819]Why if its more than six years ago? My solicitor advised me they have no obligation to hold or return they can destroy after 6 years one day. I checked with companies house and they have stated the same, in fact they stated you only have to produce the evidence if its legally possible for you to do so.

I believe in (the horse racing champion jockey) Lester Piggot's the IR went back nearly 20 years.

[Ruprect]

The best route to take here if a complete sub is not likely to be agreed as an unfettered rigtht is to occasionally hire your own assistants to do specific little jobs during overspill. Also get them to do them on their own premises, so you don't have to bother asking permission. It is better to have partial sub rights unfettered than to have complete sub rights that are a sham.

Interesting idea; do you mean getting this worded into the contract this way? And if so, would this definately put you outside IR35?

[tim123]

Seem to recall that not being able to substitute was ok if you could point to expertise that was not readily available elsewhere or if the job was of such complexity it was unrealistic for a sub to come in and catch up on a day to day basis. Have had the odd short testing job that a hamster could do but mostly I have had sole responsibility* for a complex task and a sub would have had to sit there reading up on it for three weeks before he could begin to take up where I left off.

The point about RoS is that if you have a genuine unfettered RoS to enable you to nominate someone else to do your job for the day/week/month, then case law has established that this single fact stops you being an employee and you have the magic bullet, get out of IR35 card.

The case law was established using basic skilled workers who could easily find a qualified sub.

However, in a technical consulting role, even one of generic skills, there is always that little extra skill that you have that the suggested sub does not have.

So, in order to try and fit an RoS into contracting contracts people have come up with terminology that the client will acept, that pretends to be an RoS but which is often so full of holes that in practice it isn't - by which I mean, it may be a valid right, but not one which is strong enough to be the magic bullet and as an IR35 pointer is as worthless as not haiving one at all.

And when these clauses are presented to the IR, sometimes they accept them as an IR35 get out and sometimes they don't.

I would imagine this would apply to the work of many contractors and surprised to never see this defence used.

*I think I am not seen as a team sort, I can't think why

There is no 'defence' to not having an RoS. If it's impractical, you don't have one, end of.

tim

[VectraMan]

The problem is that most interim managers and IT contractors do not have a genuine right of subsitution, even if it is agreed and put in the lower contract and even if it is also negotiated into the upper contract as well.

What's annoying is that you're selling a product, which is your skill and knowledge. You can go and personally impress a client, but if you have to say "it might not be me doing the work" you've weakened your sales position. They're now concerned that they might not be getting what they think they're getting.

Like the crazy thing about not taking holiday at the worst time for the client, you're acting against the interests of your business in order to be seen as a business. In other words, acting less like a business to be more like a business in the taxman's eyes.

It sense no make.