Service Company Question in Personal Self assessment

[Ashwin2007]

the difference is for "yes" they charge you penalties for not paying IR35, say "no" then they charge penalties for not saying "yes" plus the IR35.

You are saying either way is risky.
Do you think filling up the Service Companies Section in the self assessment, would automatically put the candidate under the risk of being caught by IR35?

[malvolio]

You are saying either way is risky.
Do you think filling up the Service Companies Section in the self assessment, would automatically put the candidate under the risk of being caught by IR35?

No. It might make some Hector try and earn his bonus by investigating you for a few years. Or it might not.

Hey, this is IR35: you want certainty?

[Lewis]

You are saying either way is risky.
Do you think filling up the Service Companies Section in the self assessment, would automatically put the candidate under the risk of being caught by IR35?

I have been told by advisors that HMRC don't have the resources to up the number of IR35 investigations and that so many people will be answering yes/no (on P35) that you are not going to stand out. That said, they may look at people more closely if they have a large figure in that box on the SA form as clearly there is more money to be gained from that person.

But ... like I said before, if you are doing your SA now then you had to make this decision a long time ago when you completed your P35. The P35 Qu 6 and SA box are linked. What did you answer for Qu 6 (a) on you P35?

[ChimpMaster]

Looking at the requirements again:

• you performed services (intellectual, manual or a mixture of both) for a client (or clients), and

• the services were provided under a contract between the client(s) and a company of which you were, at any time during the tax year, a shareholder, and

• the company’s income was, at any time during the tax year, derived wholly or mainly (that is, more than half of it) from services performed by the shareholders personally.

Reading the second point closely, I would be inclined to avoid this section on a technicality - my Ltd Co does not have a contract with the client directly, only the agency does.

[Lewis]

Looking at the requirements again:

• you performed services (intellectual, manual or a mixture of both) for a client (or clients), and

• the services were provided under a contract between the client(s) and a company of which you were, at any time during the tax year, a shareholder, and

• the company’s income was, at any time during the tax year, derived wholly or mainly (that is, more than half of it) from services performed by the shareholders personally.

Reading the second point closely, I would be inclined to avoid this section on a technicality - my Ltd Co does not have a contract with the client directly, only the agency does.

The agency *is* your client.

[shoes]

Looks like an obvious IR35 trap to me, answer NO if you have spent the entire financial year working on contracts where you declared yourself outside IR35. I don't give a stuff about the definitions or the application of logic to their supplied definitions, I ain't paying it, I'm answering no.

[PhilAtBFCA]

shoes,

Thats an interesting view, but to be clear for other readers, the guidance and legal definitions says that inside or outside ir35 the answer would be fill in the boxes on the tax return - it is not a yes or no question.

Your view sounds like the person driving 80 in a 60 zone and when caught says, I know it says 60 but I was driving safely whats the problem ? We all know what the answer is to that one.

Phil

[ChimpMaster]

Interesting too that they ask for the numbers, so giving them worthwhile targets to aim for.

[Maslins]

Looking at the requirements again:

• you performed services (intellectual, manual or a mixture of both) for a client (or clients), and

• the services were provided under a contract between the client(s) and a company of which you were, at any time during the tax year, a shareholder, and

• the company’s income was, at any time during the tax year, derived wholly or mainly (that is, more than half of it) from services performed by the shareholders personally.

Those requirements catch far more people than IR35.

For example (assuming they trade via Ltd Cos) the below should in theory fill it in:

One man band plumber who is called out to several different jobs a day (clients not obliged to find the plumber work, and the plumber never obliged to do it).

One man band small practice accountant (does work for clients how, when, and where they like).

As Phil says, there are therefore lots of people who meet those criteria and hence in theory should fill the box in, but clearly are outside IR35...so I wouldn't assume it'll immediately lead to an investigation.

From what I understand, the vast majority of people at HMRC don't even know who should be filling in this box.

I imagine it is, as suggested by TazMaN, the reason for it is to give HMRC an idea of the amount of additional tax they possibly could get in future, if they somehow managed to write legislation that actually made all people within the criteria have to pay PAYE and/or National Insurance.

[shoes]

shoes,
Your view sounds like the person driving 80 in a 60 zone and when caught says, I know it says 60 but I was driving safely whats the problem ? We all know what the answer is to that one.

'Good point fair enough off you go then' ?