Potential IR35 investigations in the current climate

[gingerjedi]

Slightly different scenario... are they likely to pursue someone who's only managed to turnover £35k pa for the past 2 years?

Surely the cost to potential gain would make this unviable?

[poppy01]

Like us? We're still confident in our ability to defend contractors successfully. The insurance is provided on the back of our expertise and I'm sure we'll continue to win cases. If not the TLC policy will pay out.

just because hmrc may instigate more ir35 cases, doesnt mean they'll be any more capable of winning them. Dragonfly was pretty cut and dried after all wasnt it, HMRC would have had to even crapper than anyone imagined to have lost that case. Guy sits at same desk for five years, under total control... duh

also its my belief that the 1bn extra will primarily go on chasing off-shore type schemes where the big money is (banks, investment capital etc) , not ir35 which is still pretty much a dead duck..

[Qdos Contractor]

Slightly different scenario... are they likely to pursue someone who's only managed to turnover £35k pa for the past 2 years?

Surely the cost to potential gain would make this unviable?

It's unlikely that they would pursue it with as much aggression as they might with a £100k+ p.a. contractor, but it depends on the individual inspector involved. Some forget about the money and just want the kill.

[Qdos Contractor]

just because hmrc may instigate more ir35 cases, doesnt mean they'll be any more capable of winning them. Dragonfly was pretty cut and dried after all wasnt it, HMRC would have had to even crapper than anyone imagined to have lost that case. Guy sits at same desk for five years, under total control... duh

also its my belief that the 1bn extra will primarily go on chasing off-shore type schemes where the big money is (banks, investment capital etc) , not ir35 which is still pretty much a dead duck..

But the way HMRC handle enquiries has changed over the years. Now they will put a lot of effort into attacking the upper level contract and obtaining damaging statements from the end client. It makes life very difficult for contractors and their representatives.

[centurian]

Dragonfly was pretty cut and dried after all wasnt it, HMRC would have had to even crapper than anyone imagined to have lost that case. Guy sits at same desk for five years, under total control

I'm not sure that Dragonfly was that unique though. I think about 40%+ of contractors will have elements of the Dragonfly case - and HMRC will pick and choose the bits to use as precedent in future cases.

[ChimpMaster]

I'm not sure that Dragonfly was that unique though. I think about 40%+ of contractors will have elements of the Dragonfly case - and HMRC will pick and choose the bits to use as precedent in future cases.

I agree.

I think the only way to get out of this scenario is to close your Ltd and move abroad! Take your earnings elsewhere and pay your taxes in a country that appreciates you as a professional and doesn't persecute you for trying to further yourself.

[NotAllThere]

I'm not sure that Dragonfly was that unique though. I think about 40%+ of contractors will have elements of the Dragonfly case - and HMRC will pick and choose the bits to use as precedent in future cases.

True. But on the bright side... they're public employees, therefore on relatively low pay. Low paying jobs tend not to attract the brightest sparks in the firework factory. We, on the other hand, have money grabbing tax experts, like QDOS who have a really incentive to win, because that way they personally make wads of cash.

When I rule the world, I'll ensure that tax inspectors get 50% of the profit of any tax investigation.

[NickNick]

I agree.

I think the only way to get out of this scenario is to close your Ltd and move abroad! Take your earnings elsewhere and pay your taxes in a country that appreciates you as a professional and doesn't persecute you for trying to further yourself.

If you like it so much....

[BlasterBates]

I agree.

I think the only way to get out of this scenario is to close your Ltd and move abroad! Take your earnings elsewhere and pay your taxes in a country that appreciates you as a professional and doesn't persecute you for trying to further yourself.

You'll find that everywhere else has an "IR35" equivalent, including the US & Switzerland. Some countries have a much a higher tax take than the UK, and in other countries there is mandatory health insurance on top. The US health insurance is very high, so the tax is low, but just look at your health insurance.

I'm in Switzerland and I pay about 33% NI & Tax, and that doesn't include mandatory health insurance, which could cost you several hundred pounds, in Germany going foward the equivalent of the Ir35 rule is a bit more lenient, as they usually don't request the employers contribution; the German authorities are more systematic in their enquiries these days. In Lux. and Switzerland you can't really avoid it without some illegal offshore scheme.

Basically we're in a credit crunch and there is a worldwide clamp down on tax avoidance.

[Hex]

But the way HMRC handle enquiries has changed over the years. Now they will put a lot of effort into attacking the upper level contract and obtaining damaging statements from the end client. It makes life very difficult for contractors and their representatives.

If you have a direct contract does that make it less likely they'll investigate further (presuming the contract itself passes IR35)?