HMRC Investigation Protection

[LisaContractorUmbrella]

Yep the PCG has a magic wand that puts the imperius curse on tribunal commissioners so that they don't ever find against them and obviously all other legal representations are just pants

[Lewis]

I'm not sure if we are talking at cross purposes. My understanding is that you were suggesting that you draw out all of your earnings on an arising basis in order to insulate yourself against IR35 liabilities. I am saying that the downside to that course of action is that you will end up paying 25/36/46% on dividends which you could otherwise have left in the company and ultimately get out at somewhere between 0% and 10%.

Given the stats re number of IR35 enquiries, personally I would risk it for a biscuit.

No, we are in total agreement.

[malvolio]

Yep the PCG has a magic wand that puts the imperius curse on tribunal commissioners so that they don't ever find against them and obviously all other legal representations are just pants

Case Law precendents are set by the last case to be tried. If the resultant precendent is perverse, as this appears to be (to my mind, at least, although varius others seem to agree) then it shouldn't be allowed to stand. That means appeals which cost money - from around £15k upwards to around £500k if taken to the extreme. I don't think Mr Spencer will be wanting to spend that money himself.

If the result is appealed and allowed to stand then fine, we then know the rules have changed and we can all throw away our contracts and start again. If the ruling is reversed, we're back where we were. Either way is a result.

So, hands up all the organsiations with the funds, the interest and the willingness to support such an appeal... Ermm...

Or Mr Spencer may well take the entirely sensible line that the case is done and he isn't interested in pursuing it further, even for free; he wouldn't be the first. In which case, RoS and MOO are dead in the water. Whic personally is what I think is going to happen.

[THEPUMA]

No, we are in total agreement.

OK good.

[LisaContractorUmbrella]

Case Law precendents are set by the last case to be tried. If the resultant precendent is perverse, as this appears to be (to my mind, at least, although varius others seem to agree) then it shouldn't be allowed to stand. That means appeals which cost money - from around £15k upwards to around £500k if taken to the extreme. I don't think Mr Spencer will be wanting to spend that money himself.

If the result is appealed and allowed to stand then fine, we then know the rules have changed and we can all throw away our contracts and start again. If the ruling is reversed, we're back where we were. Either way is a result.

So, hands up all the organsiations with the funds, the interest and the willingness to support such an appeal... Ermm...

Or Mr Spencer may well take the entirely sensible line that the case is done and he isn't interested in pursuing it further, even for free; he wouldn't be the first. In which case, RoS and MOO are dead in the water. Whic personally is what I think is going to happen.

Yep totally agree but throwing away your contracts won't change the way that you operate which is what I have been saying all along and this case has kind of proven

[malvolio]

Yep totally agree but throwing away your contracts won't change the way that you operate which is what I have been saying all along and this case has kind of proven

It's a bit more serious than that. Potentially this case has over-ridden the original RMC case that defined what is an employee-like relationship.

Yes the reality and the contract have to be aligned, Dragonfly established that, but that reality does include Mutuality of obligation, rights of substitution and limited control. If these are to be ignored on the basis that I don't otherwise look like a business - which has no bearing on how the work is performed - then I think we kind of need to get it written down.

[prozak]

Seems to me not much change is required at all.

The problem with this case appears to be the 12 month rolling contracts and lack of project work. Before those started the ruling was that he wasn't an employee.

I agree that once those started he looked like an employee.

I'm confident there is no change I need to make in my work practices or contracts.

[northernladuk]

I'm confident there is no change I need to make in my work practices or contracts.

How can you be confident when the findings call substitution a sham and question MOO?? Your two major saftey factors have gone. Even though I have tried to understand IR35 and push the issue hard this still worries me.

[LisaContractorUmbrella]

It's a bit more serious than that. Potentially this case has over-ridden the original RMC case that defined what is an employee-like relationship.

Yes the reality and the contract have to be aligned, Dragonfly established that, but that reality does include Mutuality of obligation, rights of substitution and limited control. If these are to be ignored on the basis that I don't otherwise look like a business - which has no bearing on how the work is performed - then I think we kind of need to get it written down.

I agree, it is serious but this is why I have been saying that you cannot ignore IR35; tax law and employment law should be separate but, somehow, over the years HMR&C have successfully muddled them and what used to be relied on can be relied on no longer.

[prozak]

How can you be confident when the findings call substitution a sham and question MOO?? Your two major saftey factors have gone. Even though I have tried to understand IR35 and push the issue hard this still worries me.

Because the ruling even though it questions a lot of things also said that before he started getting the 12 month contracts he was not a disguised employee.

That was based on the fact that he appeared to be in business of his own accord. The substitution is always a questionable one anyway. And the MOO for Mr Spencer became a sham when he started signing 12 month rolling contracts. Epic Fail on his part really. He should have understood IR35 better.

So I take it that as long as I am doing short term contracts with short term renewals and that the projects I am working on are clearly defined (if not in the actual contract then verbally or emailed with the client) then I am in the same boat as Mr Spencer prior to 2003.