New IR35 Guidance hot off the presses

[LisaContractorUmbrella]

This isnt the way I read it. It looked to me like HMRC were trying to get people to fill in the stuff but I dont see where it says you cant operate as a business until you get their permission?

No what I meant was that negotiation (i.e. what Qdos or PCG would normally do) doesn't become part of the equation until you have provided all your evidence, it has been examined by HMR&C and they have reached their verdict

[NickNick]

Just seen this bit (page 9) - HMR&C specialists can review a contract for you....if you are found to be outside IR35 they will give you a certificate valid for 3 years

But isn't IR35 on a contract by contract basis? So the certificate is only valid for that contract and not subsequent ones?

[LisaContractorUmbrella]

But isn't IR35 on a contract by contract basis? So the certificate is only valid for that contract and not subsequent ones?

OK have now turned to the next page and can elaborate (but I'm not sure you'll like it )

"If later on, we open an IR35 review you can give us the certificate reference number. We will then suspend our IR35 review while we consider all the information. We will close our review if:

The contract we reviewed is typical of your engagements terms and conditions

The information provide is accurate.

[GeekyGrandad]

No luck required Lisa ..... determined and coordinated action!

[/I][/B]

Good luck with that

Not a matter of luck Lisa. The obstacle is the complexities and inequities in the tax system. It is a matter of putting concise, fully researched and costed proposals in front of HMG that makes true tax simplification reality for the benefit of not only contractors, not only SME's but the public in general. True tax simplification would level the playingfield such that the inequities are dealt with and thus make it impossible for HMRC to need to DEEM employee status on freelances because of a perceived tax avoidance. Combine that with a right to be self-employed (or in business) and the whole thing is better for UK Plc and the taxpayer.

As as said eariler, if a mutually agreed and reciprocal contract of employment exists, you are then and only then an employee. Anything else is an "in business" (SE, LtdCo, LLP) status. If you sign a contract of employment then your employer is responsible for meeting the tax and employment laws. If there is a contract for services in place e.g. "in business status" then there are rules and regulations in place currently that make tax and other obligations mandatory.

It is totally wrong to have allowed HMRC to go after the client if a non-employee fails to meet tax obligations. That was the easy option for HMRC and by providing them with that legislation, they by default have managed to create case law the gives them the deeming capability. In the process of simplification, make the non-employee fully responsible (as we should be - we're in business after all!) and thus neuter HMRC's capability to deem.

Lastly, as an umbrella company, you have a vested interest in the status quo and possibly even enhanced IR35 action as your business model only really exists because of IR35.

[Sockpuppet]

Wonder how they'd take a review from the likes of QDOS / B&C?

After all if these guys review you to be outside your contract probably is and as long as your working conditions are the same then you should be OK. Anyone else see scope here for QDOS/B&C to offer FSA style regulation to contracts and help HMRC target IR35 better?


I'm still of the opinion if HMRC come knocking there are two points to remember.

It is looks like a business and sounds like a business. Its a business.
You don't have to be the fastest person running away from a lion, just not the slowest.

I'm happy I'll pass IR35 with the knowledge I have and I'm not avoiding tax as I believe I am in business. I can't say the same about others I know.

[GeekyGrandad]

But isn't IR35 on a contract by contract basis? So the certificate is only valid for that contract and not subsequent ones?

Yes. That's why the certificate is only valid if your working conditions do not change.

[GeekyGrandad]

Wonder how they'd take a review from the likes of QDOS / B&C?

After all if these guys review you to be outside your contract probably is and as long as your working conditions are the same then you should be OK. Anyone else see scope here for QDOS/B&C to offer FSA style regulation to contracts and help HMRC target IR35 better?

An interesting point! As Ms Cottrell of B&C is on the IR35 Forum ..... it would be interesting to contrast and compare how the same contract was viewed by B&C and HMRC's service ..... wouldn't it?

[private123]

Hang about. As someone about to start a new contract for the first time, working from home, it seems virtually impossible for me to score anything other than high risk. The most I can get to start with is 11.
PII=2, Business plan=1 Repair at own expense=4, Billing test=2, Right of Substitution=2 total=11.
If I immediately spend £1200 on advertising I can scrape up to 13 points.

Most of the big scoring ones need you to have been in business a while.

So even though I will be working from home, at hours I agree (between the other contractors), with little or no control from the client, with right of substitution and no MOO, little or no notice period, no employee rights, no sickness or holiday, I am still low end of medium risk. Really I have to wait until they don't pay me or until I have to invoke RoS before I can be fairly sure of a medium/low risk.

So if I start the contract paying myself as if inside IR35, but then later I invoke RoS (using someone who I have to pay), but the end client does not pay me, THEN I am outside IR35. By then I've paid myself a salary as if inside IR35 and I can't then go back and change the payment/dividend structure. What a joke !

Maybe thier tactic will be to immediately target new contractors from day 1 who will have virtually no chance of "passing" thier "tests". If they put the frighteners on early enough that could be thier way to herd everyone into IR35.

[JamJarST]

Hang about. As someone about to start a new contract for the first time, working from home, it seems virtually impossible for me to score anything other than high risk. The most I can get to start with is 9.
PII=2, Business plan=1 Repair at own expense=4, Billing test=2, Right of Substitution=2 total=9.
If I immediately spend £1200 on advertising I can scrape into medium risk with 11 points.

Most of the big scoring ones need you to have been in business a while.

So even though I will be working from home, at hours I agree (between the other contractors), with little or no control from the client, with right of substitution and no MOO, little or no notice period, no employee rights, no sickness or holiday, I am still high risk. Really I have to wait until they don't pay me or until I have to invoke RoS before I can be fairly sure of a medium/low risk.

So if I start the contract paying myself as if inside IR35, but then later I invoke RoS (using someone who I have to pay), but the end client does not pay me, THEN I am outside IR35. By then I've paid myself a salary as if inside IR35 and I can't then go back and change the payment/dividend structure. What a joke !

Maybe thier tactic will be to immediately target new contractors from day 1 who will have virtually no chance of "passing" thier "tests". If they put the frighteners on early enough that could be thier way to herd everyone into IR35.

You are missing the point! You are deemed high risk and therefore more likely to be investigated, it doesn't mean you will fail IR35 investigation any more than low risk would guarantee a pass. If your contract is as you sau and all the important things are there like no MOO, no direction and control, righ to sub, then your contract is outside IR35 even if you score 2!!

It is my opinion that this is what HMRC want, to con you into thinking you are inside IR35 and acting accordingly.

[BlasterBates]

Point of order. IR35 status is determined solely on EMPLOYMENT LAW using the standard "employee" tests of MOO, D&C etc., so that by DEEMING you an employee, you can then be caught by IR35. If HMRC were unable to "deem" then IR35 would die.

What really needs to be worked on now is to remove that power from HMRC. We need to get tribunals to throw out any cases where, if there is no mutually accepted and reciprocal CONTRACT OF EMPLOYMENT between the worker and engager, then there can be no case to answer. End of.

That doesn't work, has already failed in court, Usetech vs Young.

The judge accepted he could be laid off at short notice if there was no work, but still deemed to be inside IR35.

Usetech vs Young