IR35 loses appeal case

[Lewis]

So how come HMRC stopped at 2 years? I see he changed Ltd company, was this a reason? If so, is that prehaps a reason to not keep the same Ltd running too long?

I think my comment above got lost in the thread. Anyone know why HMRC stopped at 2 years and not the whole time he was there?

[Lewis]

I think my comment above got lost in the thread. Anyone know why HMRC stopped at 2 years and not the whole time he was there?

Now I'm answering my own questions .... how sad!

The answer is that HMRC simply haven't made a claim for the other years (yet). It has taken 5 years for the case started in 2003 to get this far and they haven't extended the period under investigation during this time; but potentially HMRC can start a case for subsequent years at the same end-client as well.

So perhaps a lesson here is that once an investigation is started ... stop that contract and probably best to open a new Ltd as well for the next contract.

[BrilloPad]

Now I'm answering my own questions .... how sad!

The answer is that HMRC simply haven't made a claim for the other years (yet). It has taken 5 years for the case started in 2003 to get this far and they haven't extended the period under investigation during this time; but potentially HMRC can start a case for subsequent years at the same end-client as well.

So perhaps a lesson here is that once an investigation is started ... stop that contract and probably best to open a new Ltd as well for the next contract.

Did this chap open a new limited?

[Lewis]

Did this chap open a new limited?

I think he did. But didn't change end client. From what I understand IR35 is paid from company funds. So no point adding to them whilst under investigation. HMRC can go after personal funds but I understand they can only do so if they can show you deliberately avoided IR35 which is difficult. So changing both client and Ltd seems prudent to me.

[Chugnut]

I think he did. But didn't change end client. From what I understand IR35 is paid from company funds. So no point adding to them whilst under investigation. HMRC can go after personal funds but I understand they can only do so if they can show you deliberately avoided IR35 which is difficult. So changing both client and Ltd seems prudent to me.

But wouldn't changing both client and Ltd then show HMRC that you were attempting to deliberately avoid IR35? After all, it's hassle that you wouldn't otherwise undertake.

[BrilloPad]

But wouldn't changing both client and Ltd then show HMRC that you were attempting to deliberately avoid IR35? After all, it's hassle that you wouldn't otherwise undertake.

IMO not changing is more likely to put you inside IR35. Though as Mal said above - it is more about the tasks you do and the attitude you take than length of contract.

[Chugnut]

IMO not changing is more likely to put you inside IR35. Though as Mal said above - it is more about the tasks you do and the attitude you take than length of contract.

Really? I just don't see that, to me it comes across as a contrived step to attempt to avoid the legislation.

IMO someone who's acting in the best interests of their business wouldn't deliberately close their Ltd., especially if they've been trading a number of years and established the company name.

[BrilloPad]

Really? I just don't see that, to me it comes across as a contrived step to attempt to avoid the legislation.

IMO someone who's acting in the best interests of their business wouldn't deliberately close their Ltd., especially if they've been trading a number of years and established the company name.

I believe that IR35 investigations follow the company only.

[Lewis]

Really? I just don't see that, to me it comes across as a contrived step to attempt to avoid the legislation.

IMO someone who's acting in the best interests of their business wouldn't deliberately close their Ltd., especially if they've been trading a number of years and established the company name.

I didn't mean close it. Just stop working through it.

I have asked before why you can't just take all the profits out of the company after an investigation is started via dividends leaving nothing in there for the tax man. Mal said it wouldn't be allowed.

So if you keep earning through the company (for the 5 years it may take for the investigation to proceed) how much can you take a dividend? Surely the whole company is untenable until the case is resolved.

[malvolio]

I didn't mean close it. Just stop working through it.

I have asked before why you can't just take all the profits out of the company after an investigation is started via dividends leaving nothing in there for the tax man. Mal said it wouldn't be allowed.

So if you keep earning through the company (for the 5 years it may take for the investigation to proceed) how much can you take a dividend? Surely the whole company is untenable until the case is resolved.

Didn't mean to say you wouldn't be allowed to strip the money out but that you wouldn't be allowed to close a company under investigation.

However while I suspect Hector would take dim view of you taking a big dividend before the company's actual financial position was established, I'm not sure what form that would take...