New PCG IR35 Questionnaire

[JohnDoe]

I got medium risk. The questions are stupid though. The one where it asks in the same question whether you have a business bank account (yes) and a business plan (no). So I answered no to be on the conservative side. They should have split it into two questions. There were several questions where there were two possible opposing answers within one question. FAIL!

[northernladuk]

I got medium risk. The questions are stupid though. The one where it asks in the same question whether you have a business bank account (yes) and a business plan (no). So I answered no to be on the conservative side. They should have split it into two questions. There were several questions where there were two possible opposing answers within one question. FAIL!

Then you fail the whole question. That is the idea. Having a business bank account proves absolutely squat. Anyone can have one of those. A business plan however is lost on most people so the answer is no. The fact you don't understand the question means you fail.

[psychocandy]

Maybe slightly off topic but what happens if someone appears on HMRC's radar, goes to the PCG and the applicants position is indefensible due to them not attempting to get contracts reviewed etc. Do the PCG just advise it can't be won or with they fight it to the death? Would PCG advise they pay up at all?

I want to know that too....

[Kate Cottrell]

Question for Mal

While I totally agree with your point about case law and the number of HMRC wins at appeal, the fact remains that of several thousand IR35 cases started, only 10 have been found in favour of HMRC. The vast majority have been dropped, effectively in favour of the taxpayer (or, to be precise, the taxpayer's company).

That is why we have problems with using Case Law to define the in-business tests. Engineering the tests to match a 60:40 win ratio when the empirical evidence is that the ratio is actually vanishingly small does not seem like a fair way forward, but that is what HMRC are obviously trying to do. The objective was to take out of scope of expensive, time-wasting and ultimately destructive investigations those contractors working as genuine businesses, not determine who is or who may be a disguised employee.

Mal I think it will be helpful to everyone if you can explain all the figures you are always quoting.
You say that PCG has won 1600 of its member's cases without any tax/NIC being recovered. You also say that only 10 cases have been found in favour of HMRC. How does this sit with the actual figures? As you know the HMRC figures for IR35 cases taken up between 6 April 2000 to 5 April 2011 is 4208 (FOI) so if we take off 1600 PCG cases we have 2600 cases which yielded £10,696,214. How do the 2600 amount to the no yield you claim for HMRC? How do you base the ratios you are suggesting on the facts? Oh and what about all the tens of thousands who just pay up under IR35 each year? How can you possibly "engineer" a ratio based on totally inaccurate figures? Perhaps this is why many, including HMRC are not even considering any pre-determined statistical outcome but will be measuring the results from all the new investigations you have effectively pushed for.
Kate Cottrell

[malvolio]

Mal I think it will be helpful to everyone if you can explain all the figures you are always quoting.
You say that PCG has won 1600 of its member's cases without any tax/NIC being recovered. You also say that only 10 cases have been found in favour of HMRC. How does this sit with the actual figures? As you know the HMRC figures for IR35 cases taken up between 6 April 2000 to 5 April 2011 is 4208 (FOI) so if we take off 1600 PCG cases we have 2600 cases which yielded £10,696,214. How do the 2600 amount to the no yield you claim for HMRC? How do you base the ratios you are suggesting on the facts? Oh and what about all the tens of thousands who just pay up under IR35 each year? How can you possibly "engineer" a ratio based on totally inaccurate figures? Perhaps this is why many, including HMRC are not even considering any pre-determined statistical outcome but will be measuring the results from all the new investigations you have effectively pushed for.
Kate Cottrell

I'm only working with published numbers. PCG aren't the only ones defending IR35 cases, after all, inclusing, I suspect, more than a few who don't have representation. I'm more than happy to go away and see if I can get some better figures, if they are available.

The 10 cases won is your figure, not mine, being the losses at tribunal/specials appeals stage. And we really shouldn't take into account people paying IR35 out of fear or uncertainty of horribly imprecise, subjective legislation, nor those using umbrella companies who have other reasons than IR35 for doing so.

What I do agree with is let's see what comes out of the next year's results and then we can have a reasoned argument. Right now it's all supposition, on both sides.

And as an aside, £11m total income from a measure supposed to produce £900m a year isn't really a good success indicator, is it?

[mudskipper]

Also 'medium'.

I would have thought the majority of people who are aware enough to join the PCG are those who are more inclined to be thinking like a business (i.e. not the numpties who NLUK deals with so patiently), so would have expected a higher than average 'low' score if it was truly a reflection of whether you are a business.

Re: business plan - really? You might have one in your head, but are you really going to document it as a 1-man limited company? If that's a factor, I'll knock one together in my lunch break.

[LisaContractorUmbrella]

Are the IR35 cases that are 'settled' with HMR&C published? I would guess not and I would have thought there would be a considerable number

[LisaContractorUmbrella]

Also 'medium'.

I would have thought the majority of people who are aware enough to join the PGC are those who are more inclined to be thinking like a business (i.e. not the numpties who NLUK deals with so patiently), so would have expected a higher than average 'low' score if it was truly a reflection of whether you are a business.

Re: business plan - really? You might have one in your head, but are you really going to document it as a 1-man limited company? If that's a factor, I'll knock one together in my lunch break.

I think the point of a business plan is that HMR&C consider it would be reasonable to assume that a company that starts as a one man band intends to grow and develop in the future to a point where it has more than one customer and provides employment to others and therefore it would have a documented strategy to achieve this.

[northernladuk]

Also 'medium'.

I would have thought the majority of people who are aware enough to join the PGC are those who are more inclined to be thinking like a business (i.e. not the numpties who NLUK deals with so patiently), so would have expected a higher than average 'low' score if it was truly a reflection of whether you are a business.

An excellent point. The real deal is with the people that are not savvy enough or care enough to join the PCG. Using PCG numbers is like preaching to the converted.

Re: business plan - really? You might have one in your head, but are you really going to document it as a 1-man limited company? If that's a factor, I'll knock one together in my lunch break.

Another good point but the whole idea is to try and lean on the 1 man companies who HMRC don't believe are a business in their own right. My gripe here is that even 'proper' business's don't have plans. Granted it is more likely these companies can go under but even when there is a plan in place it doesn't meant the company is being run properly. I am sure the scoring plan will take this in to account though as it isn't the be all and end all.

[JohnDoe]

I'm only working with published numbers. PCG aren't the only ones defending IR35 cases, after all, inclusing, I suspect, more than a few who don't have representation. I'm more than happy to go away and see if I can get some better figures, if they are available.

The 10 cases won is your figure, not mine, being the losses at tribunal/specials appeals stage. And we really shouldn't take into account people paying IR35 out of fear or uncertainty of horribly imprecise, subjective legislation, nor those using umbrella companies who have other reasons than IR35 for doing so.

What I do agree with is let's see what comes out of the next year's results and then we can have a reasoned argument. Right now it's all supposition, on both sides.

And as an aside, £11m total income from a measure supposed to produce £900m a year isn't really a good success indicator, is it?

I agree. IR35 does achieve its objective by acting as a detterant. Many people will err on the side of caution and assume they are inside IR35 even if not. That is why umbrella companies do such good business.