Accountants (Brooksons) says I'm outside IR35.. is that just sales talk?

[somewebguy]

Hi all,

I've been reading quite a few posts on here about IR35 and am still quite confused. I am currently contracting through an umbrella company. A friend of mine recommended I set up a limited company and use Brooksons. So I called them and told that I wasn't sure if I was inside IR35 or not. They asked me some profile questions and said that it sounded like I was OUTSIDE of IR35. They also said that when I become a customer of theirs, they will review my contract (and future ones) with the agency and rewrite it if necessary.

My question is, should I trust them? Do you think they might just be saying that I am outside of IR35 to get my business? Do they face any legal responsibilty for the advice they give?

My current situation is this:
* Half way through a 1 year fixed term contract
* Paid by the days that I work
* Never worked for the client company before
* Have a couple of smaller clients as well and also work on my own websites (monetised in various ways). I am registered as self employeed for that side of things. How ever, most of my income comes from the client I am contracting with.

I know everyone asks if they are inside or outside IR35 and I know it is a real grey area but I am interested in peoples opions in my case. Especially whether or not I should trust what Brooksons are telling me and if they are in any way liable for the advice they give.

Also, if I go down the Ltd company route and assume that I am outside of IR35 - if the tax man investigates me and says that I am not outside IR35.. am I just liable for the tax that I have not paid? I know criminal charges can be made for tax evasion, but if I am taking my accountants advice in good faith, would they really do that to me?

Sorry for so many questions! I need to make a decision on which way to go, but I am still very much

[badger7579]

Any more questions? I suggest you do some searches on this forum for the answers you are looking for but there is my 2 peneth...

1) When working for an umbrella IR35 is irrelevant you are PAYE
2) I would have your contract checked by a company that specialises in this, not an accountant. e.g Bauer and Cottrell.
3) The accountant would not be responsible if you were investigated and found to be inside IR35. Your working practices have to be reflected in your contract.
4) The only relevant part to IR35 in your question is the fact you work for more than one client. The other points are irrelevant
5) Read more of this forum.

[malvolio]

Pleased to hear you are so much. Always a good place to be...

Yes it is confusing. No, there are no absolute answers. Brooksons are probably to be believed, they do know the subject fairly well. If you do get caught and are one of the lucky 0.3% who actually manage to lose their case, you will owe the back tax and interest. Join the PCG and get the insurances they provide. Read the guides - especially if the acronyms D&C, MOO and RoS don't mean anything

Chances are you are outside by the sounds of it, but until you go LtdCo and get a real contract sorted, you won't know. OTOH, you will gain around 15% income as a minimum, and your SE work can come under the LtdCo as well.

[somewebguy]

Thanks both for your replies. That does help.

I have no idea what D&C, MOO and RoS is, so I will have to do more reading!

I would have your contract checked by a company that specialises in this, not an accountant. e.g Bauer and Cottrell.

I liked the idea that Brooksons would do everything, including checking existing and future contracts, for a fixed fee. But if I should get contracts checked with someone like Bauer & Cottrell, then the fixed fee doesn't look as attractive!

Brooksons are probably to be believed, they do know the subject fairly well.

I have read some not so good things about Brooksons on this forum, so now I am not sure what to think of them! I am slightly worried that they specialise in contractors. This is a good thing in lots of ways as they should know what they are on about. But also, as someone else mentioned on another thread, it also means that they are a good target for the tax man to investigate them and their clients.

If you do get caught and are one of the lucky 0.3% who actually manage to lose their case, you will owe the back tax and interest.

That makes me feel better. I don't mind keeping the saved tax to one side in case I have to hand it over. I wonder how much the interest is though! But it sounds like, form your comment, most people don't get caught out, so maybe I am worry about nothing (assuming I do everything I can to be outside of IR35)

Thanks again for your replies

[LisaContractorUmbrella]

It is OK to have a contract re-written but you should bear in mind that if the contract is not a completely accurate reflection of your working practises it won't be of much use to you in an IR35 case

[Epiphone]

If it's a fixed term contract aren't you PAYE in the client's books anyway?

[The Lone Gunman]

D&C: Direction and control. Does your boss come in and tell you what to do or do they give you a job spec and say do that. Do you have to ask for time off or do you say I wont be available on Monday?
That sort of thing.

MOO: Mutuality of obligation. Do you have to accept any work they offer you or do you have a specific area of work.

RoS: Right of substitution. Is it possible for you to send in a replacement or sub out the work.

Go read up on these subjects they are fundamental to your IR35 status.

About the only thing I got from your original post was that as you have had "expert" advice from Brooksons you would be exempt from IR35 penalty charges were you found to fall inside. HMRC may question Brooksons expertise status.

[Chugnut]

Weren't Brooksons an MSC / MSP? In which case wouldn't any limited company they setup then be seen as an MSC as well since that was their principle business?

Some IR35 insurance becomes invalid if the company you are working through is deemed an MSC.

[malvolio]

Nope. Next...

[Chugnut]

Nope. Next...

Well, they were affected by the MSC rules and they had to change their business model.

So why were all these providers desperately trying to establish their status as non-MSC's post-legislation? Even various accountants were being accused of being MSCs. If they were just providing limiteds from that point forward, they'd be nothing to worry about, no?

Maybe it was just a headless chicken convention.