IR 35 Next steps

[Mikeeelawson]

At the advice of a friend! I had the IR review my contract to state whether it is within the bounds of IR 35 or not.

The IR naturally have said it is despite me writing back to point out the error of their ways. All of this despite my agency stating that I have the most IR35 freindly contract seen. I am now puzzled what to do and would like to seak advice from others:

Option 1: Gain Legal Advice
Go to an IR35 lawyer and get them involved with fighting my case. One firm I have spoken to wants £100 to start the ball rolling and then £140 per hour there after.

Option2: Ignore the situation
Carry on as I am at the moment claiming dividends and a small salary. Possibly put enough money aside if they come back to me. I am guessing somewhere on their systems they have now marked me down as being within IR35.

Option 3: Gain IR35 Insurance
Highly unlikely as the IR have already stated that I am within IR 35

Option 4: Go umbrella (current thought)
Accept that I am under IR35 and go with Umbrella set-up and avoid all of the hassles associated with Ltd company. I am not sure what I do with the old company and my VAT status relating to this

Option 5: Go permanent
Let's not go there. Done it for 15 years hated the politics.

Option 6: Kill my bloody mate for suggesting it in the first place!!!

Option 7: get another contract
Get another contract and this time get the IR35 insurance

Reading through some of the Forums it seems to suggest that I cannot even claim expenses if I am IR35 caught. Anyone got any thoughts?

Regards,

Mike

[Mailman]

Sorry but you are an idiot if you asked the IR to tell you whether your contract was IR35 bound or not!

I mean honestly..what the hell were you thinking? Thats like saying to a fat chick to hold your smarties while you go and do something else!

Mailman

[Mikeeelawson]

Friend

Hence the comment re my freind. But thanks for the support!

[s2budd]

Join the PCG and ask them.
or
Give this one to hector and do not renew / leave now for another contract.

[planetit]

You need to show that you have reasonable grounds to doubt the IR opinion. You should get your contract reviewed by one of the specialist IR35 people (e.g. Accountax, Lawspeed, SJD etc.)

If they say it’s OK, then get some investigation insurance by joining the PCG.

Just ignoring it is a bad idea.

[XLMonkey]

Mike,

what an arse. Of your options
1) Is not the most awful idea, but it's pretty bad. In order to continue treating your contract as outside IR35, you would need an independent, preferably legal, opinion that contradicts the IR. Therefore, you could pay them for a contract assessment. However, that doesn't mean that you have to then use them to fight your case -- you can simply write back to the IR saying "I don't agree, and I've got independent advice to support it".
2) is a bad idea. If you have sought an opinion, and received a negative assessment, then you will be liable not just to the tax, but also to a penalty (usually 30% extra on top) if you continue as you are. The penalty applies if the IR can prove that you did not take "reasonable steps" to assure yourself of your situation. In this case, you did by asking their opinion, and having been told no you would be committing an offence (tax evasion) by continuing. This is why most people have stopped asking the IR -- the very act of asking can catch you out.
3) No go, historic position wouldn't be covered
4) Looks good. Note that any work that you've previously done under the same contract will still be treated by as under IR35, so you may have some liabilities under the work you've done to date.
5) No
6) Yes, he/she has let you down big time
7) Maybe, but be careful -- if the contract is substantially the same as the one the IR have just rejected, then the odds are that the insurance would exempt it (after all, you knew that it was negative before you took out the insurance).

You would be better advised to renegotiate the contract itself to make clearer the nature of the relationship between the client and the your company, then subject the revised contract to an independent (not IR) assessment. Then put that assessment on file, and get your insurance.

The only silver lining on this rather large cloud is that the IR assessment does not mean that you are more likely to be audited than before. The PCG negotiated agreement from the revenue that the assessment service had to be independent from their audit activities (i.e. they can ask for the assessment results if they audit you, but they won't audit you because you asked for an assessment).

[planetit]

Option 3: Gain IR35 Insurance
Highly unlikely as the IR have already stated that I am within IR 35

The fact that you have had a fail assessment from the IR does not of itself exclude you from the insurance offered by the PCG (unless you have already received a Notice of Enquiry letter), but you do need to get your contract reviewed by an expert.

[malvolio]

Quite right - you are covered on joining for any investigations that have not already started. Bear in mind that if this does kick off, most people seem to have two or three years wait and on average the costs are around £50k. Insurance would appear to be a good option in your case!

[BlasterBates]

At the advice of a friend! I had the IR review my contract to state whether it is within the bounds of IR 35 or not.

You didn't sleep with his wife did you ?