IR35 & Contract Length

[zedAccounts]

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?

Agreed. I tend to go for short contracts with as many different clients for that reason, and because it's more interesting to move around.

ZED.

[Wanderer]

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.

They have a finite amount of resource to investigate these cases and if they want to waste it persuing low value or unwinable cases just to prove a point then that's great news for the rest of the contractors out there innit.

[centurian]

I'm fully aware that you can be caught by IR35 even if your contract's duration is just 1 day.

Correct. However it is hard to become "part and parcel" of an organisation in a single day - although this is just one determination of IR35 status.

I think it's easier to sleep at night due to IR35 if you do lots of short term contracts, but it's certainly not a sliver bullet, so don't get complacent about it..

[BolshieBastard]

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?

Nope. Because HMRC have shown (and I think Im correct in saying its in their latest manual) that even if the money recovered to the tax system is outweighed by the cost of the investigation, the investigation should still be made where its considered iR35 applies to the contract \ contractor.

It doesnt matter whether your contract is 2 months or 2 years, they're still bastards when it comes to IR35.

[Lumiere]

It doesnt matter whether your contract is 2 months or 2 years, they're still bastards when it comes to IR35.

It matters if they investigate only one contract and you will owe the tax from a 2 month's contract rather than 2 years'. Still I believe it is more likely for a 2year contract to be investigated than all 12 x 2 month contracts.

[Not So Wise]

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?

Cost effective?
Nothing to do with it. In majority of cases the basis for an investigation of any type is pretty simple. They do the electronic equivalent of picking a name out of a hat. That's it

Cost effective/ efficient / value for money? They are civil servants, they have never heard of those terms

[SallyPlanIT]

In majority of cases the basis for an investigation of any type is pretty simple. They do the electronic equivalent of picking a name out of a hat. That's it

Yes, but what started out as an aspect enquiry has turned into a full blown IR35 investigation in the past. To minimise the risk of any HMRC intervention, ensure (or make sure your accountant does) all your filing and payment deadlines are met so you're not flagged in their system.

[centurian]

Of the cases HMRC have taken to court - have any of them been for short contracts.

[Wanderer]

It matters if they investigate only one contract and you will owe the tax from a 2 month's contract rather than 2 years'. Still I believe it is more likely for a 2year contract to be investigated than all 12 x 2 month contracts.

Agreed, they are going to go for the big fish.

If they had to argue through 12 contracts with me it would take a seriously long time as I argued each point individually and I would make damn sure that they were losing the will to live by the end of it.