HELP LTD Company VS Umbrella

[THEPUMA]

the penalties for getting it wrong can be huge - see Dragonfly Consultancy v. HMRC

How much were the penalties in that case then? I thought he got away without paying anything over and above what he would have paid had he not been caught by IR35.

PUMA

[Wanderer]

Wanderer you are far too nice

Thanks for your kind comments, sir. To be honest, I don't know why I do it. May I'm just bored and boredom is a terrible thing. Or maybe because I'm a bit of a noobie poster here, I still have the patience and enthusiasm to answer people and I get a kick out of seeing how clearly and concisely (and hopefully correctly) I can answer a question. I'm sure that will fade in time and when I grow up, I'll be as grumpy as you.

Even after contracting for ~10 years (with a 5 year permie break in the middle) I've learned a lot from here and got the confidence to take some important steps I may not have done otherwise so I'm trying to give a bit back. I remember when I was a noobie, I didn't have a clue. You can get yourself in deep really easy in this business (been there, done that) and there's a lot of conflicting information on the internets. Even accountants don't necessarily give you the best advice.

You're all right mate. We can do the good cop - bad cop routine.

[malvolio]

Amateurs, the pair of you. The real trick is to answer the question while still being a grumpy old git...

[SallyPlanIT]

How much were the penalties in that case then? I thought he got away without paying anything over and above what he would have paid had he not been caught by IR35.

PUMA

John Bessell wasn't charged penalties. Luckily.

HMRC can charge up to 100% maximum for deliberate errors.

[northernladuk]

and the heavens opened releasing a cascade of light down up on the unworthy flock and a great voice did come forth and say....

Amateurs, the pair of you. The real trick is to answer the question while still being a grumpy old git...

(cant seem to find the praying icon anymore!)

lol

[THEPUMA]

John Bessell wasn't charged penalties. Luckily.

HMRC can charge up to 100% maximum for deliberate errors.

I don't think he paid the additional tax either.

[malvolio]

I don't think he paid the additional tax either.

WE never found ouit if he did or not, actually. Jon Bessell kind of stopped talking once the case was done, quite understandably. The oft-quote £90k was the total tax and interest due on the IR35-caught contract, which would have been reduced by whatever personal and corporate taxes had already been paid. A rough guess put that at around £7k per year. Certainly there was no imposition of additional penalties.

[THEPUMA]

WE never found ouit if he did or not, actually. Jon Bessell kind of stopped talking once the case was done, quite understandably. The oft-quote £90k was the total tax and interest due on the IR35-caught contract, which would have been reduced by whatever personal and corporate taxes had already been paid. A rough guess put that at around £7k per year. Certainly there was no imposition of additional penalties.

My understanding is that he didn't. If he did, it would have been on a "voluntary" basis as the company certainly had insufficient funds to pay.

[malvolio]

My understanding is that he didn't. If he did, it would have been on a "voluntary" basis as the company certainly had insufficient funds to pay.

Which, if true, supports the contention that HMRC pursue these cases to set precedents, not to recover taxes. You will recall that the Arctic case - which ended up costing everyone involved around £1m - was actually chasing a debt of a shade over £7k. Most contested investigations run out at £15-20k and as we have seen the recovered amounts are unlikely to cover that cost, even if they win.

All of which rather strengthens the idea that Hector's master plan is to scare as many people as possible into paying taxes they don't actually owe...

[LisaContractorUmbrella]

How much were the penalties in that case then? I thought he got away without paying anything over and above what he would have paid had he not been caught by IR35.

PUMA

I was using the term loosely, rather than the HMR&C definition, trying to convey the seriousness, in financial terms, of losing an IR35 case