Working and paying inside IR35 (Ltd Co)

**Sockpuppet** · 18 March 2008, 20:24

Read some guides, search etc.

Why are you putting your company in Jeopardy? If one contract is inside IR35 and you can't get it changed them pay full PAYE on it if you want the clearance.

Simple.

**ruth11** · 18 March 2008, 21:18

I was thinking that by admitting that this contract is inside IR35 and paying PAYE for just the few months (10-16 at most, possibly only 4) that I will be there, may not look good for my company when I suddenly change to paying myself minimum wage for the next contract. Am I not just waving a big red flag to HMRC saying - "HERE! LOOK AT ME! I'M A CONTRACTOR AND MIGHT BE WORTH INVESTIGATING!" - due to my irregular accounting practices?

Or could it work the other way? Would they think that because I've worked a couple of contracts outside, then one inside, then a couple more outside, that I'm actually being honest and therefore will leave me alone?

**Sockpuppet** · 18 March 2008, 21:43

To be honest I don't think it matters a great deal.

If you tick the box or not tick it then I think the response is the same.

I'd hazard a guess they are looking at companies who are posting massive profits and min salary for one person more than anything.

**thunderlizard** · 19 March 2008, 00:13

I asked Sarah Bauer that very same question - being an ex-tax inspector her guess is as good as anybody's. She reckoned it's a distinct possibility, which is as close as you get to "probably" in the IR35 world.

**Bumfluff** · 19 March 2008, 01:05

Isnt there a new question on the tax return this year about whether ypu have recieved income from a PSC ? I know its been mentioned before on this forum and the argument was there is no legal defintion of PSC so ignore it, what are people going to do tick it or not ?

**Archangel** · 19 March 2008, 07:30

Don't tick the box!

Pay the tax.

**Fred Bloggs** · 19 March 2008, 08:11

The advice I've been given by the "experts" who advise me on contracts is that declaring some IR35 caught work is quite possibly a trigger factor to HMRC. Rather than be caught a few months back, a contract I had was clearly outside but it gradually became clear that the clients expectations were such that the actual role was clearly inside as part and parcel of their day to day management team. Rather than run the risk of an investigation that I knew I would lose, I terminated the contract.

**AZZIK** · 19 March 2008, 08:22

Originally posted by ruth11 View Post

What's the general opinion on here?
Does working one contract inside IR35 and then the next outside IR35 raise immediate alarm bells with HMRC?
I heard something about having to tick a box on the year end accounts if ANY part of your earnings are inside, so presumably that will incur some sort of investigation into the other contracts for the year if you only pay PAYE for a few months on a single contract?
I have an IR35 caught contract. Hopefully I will be able to get it changed, but I was just wondering what people's thoughts are, just in case....
There are lots of professional reasons for wanting to do this contract, the fact that they are putting me through security clearance being one of them. But I want to run a legitimate business and don't want to put my company in any jeopardy by putting any part of my work through as caught by IR35 so am considering walking if nothing can be done...

If you are inside, then pay the tax. If you are outside, then declare you are outside. If you don't like it, then walk...simple. Don't p1ss about with HMRC, cos they will make your life a misery, whether you win or lose!

**ruth11** · 19 March 2008, 09:28

Paying the tax doesn't bother me, should I end up inside. What bothers me is the potential flag I may raising. Despite having PCG insurance and being happy that my other contracts have all been legitimately outside, I don't want to be investigated purely as a result of admitting that this current contract is inside.
I don't suppose anyone really knows what raises the alarm bells for HMRC.
One suggestion from the PCG forum is to just pay myself a larger salary to cover the tax that would be due and not tick the box. Following any investigation, there would be no tax due and apparently therefore no penalties.
But then how would it look when I go back to small salary at the end of the contract? Nice idea, but still not sure of the effect it may have.

Working and paying inside IR35 (Ltd Co)