IR35 & Contract Length

[wurzel]

I'm fully aware that you can be caught by IR35 even if your contract's duration is just 1 day. My question really is about the realities of doing a large number of short term contracts and what bearing that would have on likelihood of a full blown investigation.

I only ask the question because over the last year or so I've done four separate three month stints with different clients and am now about to start my fifth. For the revenue to do a full blown investigation, they'd have to invest resources in investigating 5 separate contracts. Wouldn't they be likely to think that it's not worth it & better go and investigate someone who has been with the same client co for 2 years?

[malvolio]

I'm fully aware that you can be caught by IR35 even if your contract's duration is just 1 day. My question really is about the realities of doing a large number of short term contracts and what bearing that would have on likelihood of a full blown investigation.

I only ask the question because over the last year or so I've done four separate three month stints with different clients and am now about to start my fifth. For the revenue to do a full blown investigation, they'd have to invest resources in investigating 5 separate contracts. Wouldn't they be likely to think that it's not worth it & better go and investigate someone who has been with the same client co for 2 years?

No. Next...

[Fred Bloggs]

Based on potential return to HMRC, I'd say yes. Surely, it is not cost effective to investigate 6 or 8 x 3 month jobs when the next contractor along has 1 x 24 month job?

[wurzel]

Based on potential return to HMRC, I'd say yes. Surely, it is not cost effective to investigate 6 or 8 x 3 month jobs when the next contractor along has 1 x 24 month job?

My thoughts entirely. ISTR reading somewhere that the amount of money recouped by HMRC is relativaly low given the small number of cases won and the costs incurred in carrying out the investigations.

[Qdos Contractor]

Based on potential return to HMRC, I'd say yes. Surely, it is not cost effective to investigate 6 or 8 x 3 month jobs when the next contractor along has 1 x 24 month job?

This makes perfect sense, but not many inspectors are that business minded. It doesn't really matter what the potential yield is - they will just want to prove their point.

[northernladuk]

Based on potential return to HMRC, I'd say yes. Surely, it is not cost effective to investigate 6 or 8 x 3 month jobs when the next contractor along has 1 x 24 month job?

I would say no. I wasn't aware that they used cost effectiveness as decision as to who to investigate. Look at examples of the police spending stupid amounts of time on minor issues and so on. I would sincerly hope if someone needs investigating he will be investigated fairly regardless of situation.

HMRC don't seem to be in the business of common sense either so would quite expect them to spend more on an investigation than they would recover tbh.

[Clare@InTouch]

My thoughts entirely. ISTR reading somewhere that the amount of money recouped by HMRC is relativaly low given the small number of cases won and the costs incurred in carrying out the investigations.

True - but the amount they gain by people going brolly because they are too worried to go limited must be quite large.

[Fred Bloggs]

This makes perfect sense, but not many inspectors are that business minded. It doesn't really matter what the potential yield is - they will just want to prove their point.

Point taken, but can you show this is really the case? If you can, then a formal complaint should be made to whichever Gov't Dept is responsible for the cretins who do that. Afterall, it is public money we're talking about being wasted here. It must be close to criminal being that reckless.

[VectraMan]

HMRC don't seem to be in the business of common sense either so would quite expect them to spend more on an investigation than they would recover tbh.

Hopefully in the current cost-cutting climate, pressure will be brought on HMRC to act a bit more sensibly. I hope that's not blind optimism.

[malvolio]

True - but the amount they gain by people going brolly because they are too worried to go limited must be quite large.

I did the sums a while back - it's a few hundred million, which in UK PLC terms is trivial. Philip Green avoids more than all by himself.

Just to put things in context, the defence side of the Arctic case was around £400k in total, and probably the same again on HMRC's side (not that they look at costs, of course). The actual amount in dispute was £6000... It's more about establishing case law than recovering money.