Working Practices

[escapeUK]

Look at the effort required for Dragonfly - and while it might have set a precedent on some points, HMRC can't simply carte-blanche apply it to every contractor


At the moment, we're kind of in a stand-off situation with HMRC, so I think the measured cautious approach you are using is quite valid.

Thinking about the Dragonfly case. Was the contractor ordered to pay the employee NI, he obviously couldnt be made to pay the employer contributions as he was ruled to be an employee of AA.

[jim2406]

I think a good acid test would be if HMRC asked one of your colleagues at the client company.

If they said: "Ah yeah, bob was a contractor... " happy days.

If the answer was "he worked here - he was part of the furniture" I imagine you've got problems, regardless of what the contract says?

[escapeUK]

I think a good acid test would be if HMRC asked one of your colleagues at the client company.

If they said: "Ah yeah, bob was a contractor... " happy days.

If the answer was "he worked here - he was part of the furniture" I imagine you've got problems, regardless of what the contract says?

Id hate my fate to be in the hand of some of my brain dead colleagues.

[original PM]

Id hate my fate to be in the hand of some of my brain dead colleagues.

be afraid be very afraid

[NotAllThere]

Thinking about the Dragonfly case. Was the contractor ordered to pay the employee NI, he obviously couldnt be made to pay the employer contributions as he was ruled to be an employee of AA.

No. It was ruled that, had it not been for the intermediary, he would have been an employee. There was an intermediary, so he wasn't an employee, but he was caught by IR35. He is therefore required to calculate his company's gross income from the contract, deduct 5%, and pay the appropriate eenic, ernic and income tax, plus interest and penalties.

[centurian]

Thinking about the Dragonfly case. Was the contractor ordered to pay the employee NI, he obviously couldnt be made to pay the employer contributions as he was ruled to be an employee of AA.

He was ruled to be a "diguised employee", which meant that the last structure in the chain of companies to supply him to the AA (Dragonfly) was liable - and as a director of said company, the debt might have been transferrable to him personally if Dragonfly didn't have enough cash.

I'm not sure how much (if any) of the £99K he actually handed over as this was before the transfer of debt rules came in.

But yes, if you lose, your LtdCo is liable for employers NI. That's why they will only deal with us as LtdCo's instead of sole traders.

[centurian]

Id hate my fate to be in the hand of some of my brain dead colleagues.

That's part of the problem. It doesn't matter what your contract says, or what your belief of your working practices are. If your colleagues perceive you as an employee, that's quite a few nails in the IR35 coffin for you.

It was a major consideration in the Dragonfly case. His 'managers' basically contradicted him and the judge latched right onto that.

I don't want to get too negative here. IR35 can be avoided and the odds of being "caught" are very low. But if you're an unlucky bugger and get an HMRC inspector that has got out of bed the wrong side and decides to go after you - and just one of your former colleagues decides to stitch you up - you've got a tough battle on your hands.

[escapeUK]

I don't want to get too negative here. IR35 can be avoided and the odds of being "caught" are very low. But if you're an unlucky bugger and get an HMRC inspector that has got out of bed the wrong side and decides to go after you - and just one of your former colleagues decides to stitch you up - you've got a tough battle on your hands.

Id rather fake my death and or leave the country forever than pay £99k personally, hence my forum name

[cojak]

IR35 - It's not over yet

I would suggest reading this article from Kate Cottrell (of Bauer & Cottrell), it has some interesting conclusions...