New to ltd company and have a few questions

[Dandyman]

IF you do get investigated by the revenue and are deemed to not be IR35 compliant, do you have to pay the difference in tax (between corporation and income tax) within a short period of time, or will you be able to pay the difference over a longer period, say a year or two?

Also do you think the recent problems with the economy will make it more or less likely for the revenue to clamp down on ltd companies for contractors?

[Beefy198]

IF you do get investigated by the revenue and are deemed to not be IR35 compliant, do you have to pay the difference in tax (between corporation and income tax) within a short period of time, or will you be able to pay the difference over a longer period, say a year or two?

Don't forget the fine on top. And I think they'll want any underpayment back quite quickly.

Also do you think the recent problems with the economy will make it more or less likely for the revenue to clamp down on ltd companies for contractors?

I think they'll be more likely to want their tax money, don't you?

[TykeMerc]

As per normal HMRC practice (if you can call it that) you would be expected to cough up the lot pretty much immediately.

• Tax owed
• Penalties applied
• Interest from the date the tax should have been paid until it's fully settled

HMRC aren't nice people to be on thw wrong side of if you're a small business and can't afford some seriously expensive legal assistance, they have rather a lot of power to act which is being increased.

[Dandyman]

And if you can't pay the difference or your circumstances change if you're out of work (a possibility in the current climate) what could happen then?

Could they make you bankrupt or do you for tax evasion? Starting to think this is a risk not worth taking

[xoggoth]

If you have made reasonable efforts to properly check you are outside and are borderline you should not really get penalties.

[Dandyman]

Was also wondering if certain things trigger or raise a flag. For example my accountant thinks it very unlikely (though of course could not guarantee) that I would be investigated in future as my company is non VAT registered, the gross income is under £45k per year, and I also claim minimal expenses (just my accountant monthly fees)

Does this sound right, or is the investigative process entirely random?

[Alan @ BroomeAffinity]

Was also wondering if certain things trigger or raise a flag. For example my accountant thinks it very unlikely (though of course could not guarantee) that I would be investigated in future as my company is non VAT registered, the gross income is under £45k per year, and I also claim minimal expenses (just my accountant monthly fees)

Does this sound right, or is the investigative process entirely random?

I would be inclined to agree: HMRC have to be commercial abour enquiries so IMO given the option of investigating a £100k pa company with large expenses or a £45k pa company with minimal expenses, they are more likely to go after the big one as there is more potential tax recoverable. Although, like your accountant I can't guarantee this and there are other issues which would affect your investigation likelihood but your own accountant would know more about that than me.

[QwertyBerty]

And similarly I would have thought HMRC would tend to go after those contractors who like to stay at a client for years rather than contractors who move from client to client every 3 to 6 months. HMRC have to build a case against each contract which makes the latter situation far less attractive in terms costs versus gains.

QB.

[stingman123]

If you have made reasonable efforts to properly check you are outside and are borderline you should not really get penalties.

The problem here is, where exactly is the line in the sand?

I've shown my contract to 2 small business revenue offices and while one office said I was OK, the other said I wasn't!

[NotAllThere]

Don't show your contracts to the revenue, get a qualified opinion.