Amending last years P35

[the4thamigo_uk]

I was looking at the P35 for last year (2010-2011) and I noticed that I filled in the declaration incorrectly regarding operating the IR35 rules. I am outside the rules but I wrongly put 'yes' to this question last year. If I correct this, is it a red flag to an investigation? Especially with such a late amendment? Should I amend and will there be a late amendment penalty?

Thanks

Andy

[malvolio]

I was looking at the P35 for last year (2010-2011) and I noticed that I filled in the declaration incorrectly regarding operating the IR35 rules. I am outside the rules but I wrongly put 'yes' to this question last year. If I correct this, is it a red flag to an investigation? Especially with such a late amendment? Should I amend and will there be a late amendment penalty?

Thanks

Andy

Which question? Yes/No is optimum, No/No is fine but someone may ask you to justify it, Yes/Yes is suicide unless your SAR agrees you've paid under IR35, No/Yes is just silly.

[BolshieBastard]

Which question? Yes/No is optimum, No/No is fine but someone may ask you to justify it, Yes/Yes is suicide unless your SAR agrees you've paid under IR35, No/Yes is just silly.

My accountant never fills ths in. Their legal dept advice is never fill it in. Never had an investigation over it either.

[malvolio]

My accountant never fills ths in. Their legal dept advice is never fill it in. Never had an investigation over it either.

Thre was a complicated court case over whether or not the question on the P35 is permissable and/or mandatory (do a Google for " if it’s a notice under TMA 1970 Section 8 which, as ony fule kno, is not a notice under FA2008 Schedule 35 paragraph 1"...). It isn't for individuals, it is for businesses. Your accountant might like to review his advice.

[the4thamigo_uk]

Which question? Yes/No is optimum, No/No is fine but someone may ask you to justify it, Yes/Yes is suicide unless your SAR agrees you've paid under IR35, No/Yes is just silly.

Yes I think I put yes/yes, the question is should I amend it now?

[malvolio]

Yes I think I put yes/yes, the question is should I amend it now?

Probably not. Arguably, you have said "Yes I operate a service company by your defnition, Yes I have applied the IR35 legislation and decided it doesn't apply to me"...

[the4thamigo_uk]

Probably not. Arguably, you have said "Yes I operate a service company by your defnition, Yes I have applied the IR35 legislation and decided it doesn't apply to me"...

Thanks, I can see that point of view, but in the blurb for that (infamous) question it says :

P35 Checklist - Question 6b

You should only select 'Yes' if:

income has been treated as deemed employment income and PAYE/National Insurance contributions (NICs) deducted in accordance with the Managed Service Company or Intermediaries legislation (IR35)
an engagement is within the IR35 rules but the deemed payment is nil because sufficient amounts of employment income has been paid.

In all other circumstances answer 'No'.

The only engagements affected by the IR35 rules are those in which the worker would be classed as an employee (for NICs, employed earner) of the client if it were not for the service company involvement. Where the IR35 rules apply, the intermediary (service company) may have to account for an additional amount of PAYE and NICs on the deemed payment, which is based upon the income from the engagements, after an allowance for certain expenses and pensions contributions. All income, less any allowable expenses, received by a worker providing their services through a Managed Service Company, is liable to PAYE and NICs.

In respect of the Intermediaires legislation (IR35) only.

If you are not able to calculate the actual amount of the deemed payment and the PAYE and NICs due by 19 April 2010, a payment on account of the estimated tax and NICs due should be made by 19 April supported with a P35 showing provisional figures. We will write to all employers later in the year reminding them that their P35 figures were provisional in accordance with the above guidance, they must submit an amended P35 and make a balancing payment by 31 January. Where HM Revenue & Customs does not receive an amended P35 and balancing payment by 31 January, the original P35 submitted will be considered to reflect figures which the employer declares to be final and correct. If you cannot finalise the amounts by 19 May, you will not have to pay a penalty so long as you send in your Employer Annual Return by that date, and you pay all of the PAYE and NICs due in respect of the deemed payment by 31 January. You will still be charged interest from 19 April until the PAYE and NICs are paid.

Which kind of makes it clear I should have said 'No' for that question... If I leave it, is it 'suicide' or if I change it, is it a 'red flag' for investigation? Which is the lesser evil?

[malvolio]

Thanks, I can see that point of view, but in the blurb for that (infamous) question it says :



Which kind of makes it clear I should have said 'No' for that question... If I leave it, is it 'suicide' or if I change it, is it a 'red flag' for investigation? Which is the lesser evil?

Hmmm... No idea. If you're a PCG member then (a) don't worry about an investigation and (b) call the tax helpline for their advice. If you're not then (a) why not and (b) check with your accountant. Probably best not to ask HMRC until you have a rather more authoritative answer then mine!

[northernladuk]

Hmmm... No idea. If you're a PCG member then (a) don't worry about an investigation and (b) call the tax helpline for their advice. If you're not then (a) why not and (b) check with your accountant. Probably best not to ask HMRC until you have a rather more authoritative answer then mine!

You say this alot but I it is misleading. You should always worry about an investigation and should do everything you possibly can. WHEN you are investigated you PCG membership will take some of the worry out. To say carry on doing whatever just because you have PCG insurance is not correct. That is like saying don't worry about driving like a moron you have insurance.

[malvolio]

You say this alot but I it is misleading. You should always worry about an investigation and should do everything you possibly can. WHEN you are investigated you PCG membership will take some of the worry out. To say carry on doing whatever just because you have PCG insurance is not correct. That is like saying don't worry about driving like a moron you have insurance.

I didn't say (and have never said) you shouldn't take IR35 seriously. But if the little brown envelope arrives, you either run around trying to work out what the hell to do and how you're going to pay for it and how you answer HMRC's questions, or you fill out the PCG claim form (or the equivalent if you're with an insurance company) and do what they tell you. There is a very good chance it won't go much further if you have professional support from day one.

The worries are (a) it will take five years, (b) you will say something irreversible that buggers your whole defence, (c) you will lose and (d) you will be sent a bill for several tens of thousands. All of which is still vaguely possible, but being properly covered at least means you're not on your own.