Declare outside IR35 - what the hell, why not!

[kingcook]

Afternoon!

What are the penalties if, say, i declare myself *outside* IR35, and get found out that i'm actually *inside* IR35? Would i just end up paying the extra in tax that i would have paid anyway?

If this is the case, why not just declare *outside* IR35, keep the money in the bank (earning interest - although not much), then *maybe* one day having to pay it back?

Am i being insane?

[Newby]

maybe not

You can get a fine up to 100% of the value of the outstanding tax and NIC. So maybe doesn't look like such a grand plan....

Your thread might spark a debate about the potential demise of IR35, and from the other side you will get folks saying better the devil you know than the devil you don't (oh and be careful what you wish for).

But it is YOUR company - YOUR responsibility - do whatever you fancy!!!

[Mr.Whippy]

Afternoon!

What are the penalties if, say, i declare myself *outside* IR35, and get found out that i'm actually *inside* IR35? Would i just end up paying the extra in tax that i would have paid anyway?

Plus fines and interest I believe...

Why not just declare yourself *inside* and then pay yourself PAYE... Then in 7 years time, take HMRC to court and challenge *them* that you were really *outside* all along and screw them for all that extra tax back, plus fines, plus interest *backdated* for the *whole* 7 year period... see how they like it when the boot's on the *other* foot.

Or, more *seriously*, why don't you get your contract and working practices reviewed by a *professional* and follow *their* advice?

[malvolio]

The few people that have failed an IR35 case have had to recalculate the unpaid taxes "correctly" and pay over the balance, plus any interest on previous years. Nobody has been fined or otherwise penalised. AFAIK that's about four people...

But yes, nothing wrong with believing yourself to be outside IR35, since the decision is fairly arbitrary anyway. As long as you either have the money saved up to repay then in the vanishingly small chance that you get investigated and fail to win your case, or you have decent representation insurance such as PCGPlus membership which will almost certainly get you declared outside.

[kingcook]

I feel that i am outside of IR35, but that's the problem with it all, it's not clear cut. Maybe it's just wishful thinking! I don't think it is, it's making me paranoid!

[ChimpMaster]

The few people that have failed an IR35 case have had to recalculate the unpaid taxes "correctly" and pay over the balance, plus any interest on previous years. Nobody has been fined or otherwise penalised. AFAIK that's about four people...

But yes, nothing wrong with believing yourself to be outside IR35, since the decision is fairly arbitrary anyway. As long as you either have the money saved up to repay then in the vanishingly small chance that you get investigated and fail to win your case, or you have decent representation insurance such as PCGPlus membership which will almost certainly get you declared outside.

Mal , RE: PCGPlus - my agency contract depicts an out-of-IR35 contract but the agency/client contract is not so good from an IR35 point of view. Furthermore, I'm not entirely certain but my working practises might not be entirely compliant (but how would I know, is there a checklist?). So would PCGPlus still accept my contract as being "insurable"?

[Wanderer]

The few people that have failed an IR35 case have had to recalculate the unpaid taxes "correctly" and pay over the balance, plus any interest on previous years. Nobody has been fined or otherwise penalised. AFAIK that's about four people...

So just declare yourself outside, get specialist advice if you get investigated and the worst that will happen is that you have to recalculate the tax and pay up what you would have if you were inside IR35 (albeit plus interest). I can live with that.

I wish I'd been brave/smart enough to do that from the start of IR35, I'd have saved a frightening amount of money. I guess that has been the "success" of IR35 hasn't it. Scaring people into compliance with their vague rules.

The emperor well and truly has no clothes now...

[malvolio]

Mal , RE: PCGPlus - my agency contract depicts an out-of-IR35 contract but the agency/client contract is not so good from an IR35 point of view. Furthermore, I'm not entirely certain but my working practises might not be entirely compliant (but how would I know, is there a checklist?). So would PCGPlus still accept my contract as being "insurable"?

Join PCG and the investigation insurance is unconditional. The only requirement is that you're not already under investigation. As a member you'll also have access to more than enough information to work out your actual position and even if you can't there are plenty of members who will be able to...

[malvolio]

I wish I'd been brave/smart enough to do that from the start of IR35, I'd have saved a frightening amount of money. I guess that has been the "success" of IR35 hasn't it. Scaring people into compliance with their vague rules....

Some of us have been saying that for ten years. Seems people are finally starting to listen!

[northernladuk]

I feel that i am outside of IR35, but that's the problem with it all, it's not clear cut. Maybe it's just wishful thinking! I don't think it is, it's making me paranoid!

Why do you 'feel' you are outisde. You are or you arn't. You are a business with skills that the client needs. MAKE yourself outside. Change the contract, dictate the terms you work on. As someone said it is your business, don't be lead by the client. Take control and make it fit. Ok ok somecases you can't. They won't change the contract, the working practices are obviously inside but if you at least start with the right mind set you can swing some your way. To give up and just slope in to a role you will never get it right. You have some position power as they want you. Use it, don't wimp out or else you might as well sign yourself inside as you have a permie mentality!!!!