IR35 Business Entity Test

[northernladuk]

Well it's definitely NOT acting like an employee.

And that's the whole point, isn't it?

It is acting like two people trying to duck responsibility which is exactly what HMRC are after. We are talking business test here as well, not just IR35.

[SueEllen]

Well it's definitely NOT acting like an employee.

And that's the whole point, isn't it?

Nope the point is to act like a "proper" business.

Does your plumber swap with his mate for a day on a large job for no real reason?

If you worked out a swap with your mate because he had better knowledge in one area and you had it in another on your particular company projects and you could work it out so it took a day or two, then fair enough.

[northernladuk]

Threads like this do us more damage than good IMO... HMRC reads them.... must be laughing in the aisles and HMRC HQ.

[Contreras]

Nope the point is to act like a "proper" business.

Except that if you are a "proper" business then there's no need to act.

Does your plumber swap with his mate for a day on a large job for no real reason?

As long as the job gets done to the same standard and carries a warranty covered by the contracted individual/company then they wouldn't need to provide a reason, "real" or not.

On the other hand if they were my direct employee then you can be sure that it would not happen. Mainly because if they cock up then it becomes my problem.

For the record I'm not a supporter of the business tests in their present form specifically because some of the (other) tests can so easily be circumvented as suggested.

Remember that the idea was to have a set of 'binary' tests and if you exceed a defined threshold then you 'pass' and HMRC will look no further, without qualification, and without any grey areas for debate.

If it needs HMRC to take a view on whether certain actions are genuine business or sham behaviour then that brings no certainty whatsoever and the whole exercise is a monumental fail - for everyone.

[private123]

As someone who is hopefully starting thier first contract and LTD in the next couple of weeks, this list leaves me even more confused and concerned than I was before about IR35.
For a start, most of the higher scoring ones refer to things happening in the last 12 or 24 months. As a new contractor, by definition you would score zero on these.
With this proposal, are MoO and Control out of the window ? According to the new list I can be working from home, on a contract with little or no notice period, working when I want, fulfilling the contract using my own professional judgement, with no one telling me how or when to work, providing my own equipment, choosing to provide my own PII, with no corporate benefits or protection, whilst doing some small "fix/install" work for other customers (with the intention of building up a business for when the contract ends). And yet I might do well to scrape maybe 6 or 8 points=high risk, so presumably "not a business"=inside IR35. Presumably it would be hard to get investigation insurance as well.

[Contreras]

As someone who is hopefully starting thier first contract and LTD in the next couple of weeks, this list leaves me even more confused and concerned than I was before about IR35.
For a start, most of the higher scoring ones refer to things happening in the last 12 or 24 months. As a new contractor, by definition you would score zero on these.
...
I might do well to scrape maybe 6 or 8 points=high risk, so presumably "not a business"=inside IR35.

Nope. The law hasn't changed. Failing the business tests does not put you inside IR35.

[BoredBloke]

Has your business been unable to recover payment for work done during the last 24 months in excess of 10% of annual turnover?

What a stupid question. So I can only earn these points if I've managed to lose 10% of my turnover. Agencies can and do go bust, but many do not. The fact that we have to work through an agecy, where we are unaware of their ability to pay should be enough to show a degree of risk. I had the situation once where an end client owed be £30,000 - I got it back, but it took months.

Has your business invested over £1,200 on advertising, excluding entertainment in the last 12 months?

There is a business opportunity - set up a service that advertises your hundreds of limited companies for £100 a month. 2 points please!

[Sockpuppet]

Anyone else thinking that renting a place near your contract of work will get you some points. As long as you have another home you're sorted - so if your renting somewhere anyway instead of a hotel then quids in.

[northernladuk]

Anyone else thinking that renting a place near your contract of work will get you some points. As long as you have another home you're sorted - so if your renting somewhere anyway instead of a hotel then quids in.

Care to elaborate a little further so I can judge whether it is as ill thought through as first appears?

Let me quote the comment so you can work it out...

Does your business own/rent separate business premises which are separate from your home and client’s premises?