First batch of HMRC IR35 compliance letters out

[psychocandy]

That's not good. That's a pointer to being employed.

It's better that you don't charge expenses i.e. it's covered in your rate.

As for being at home I don't know how good that is, but working in your business premises...now that would be impressive. There is a judgement on one case where the judge found that to be significant.

So there is some advantage to this then ;-)

I'm on inclusive rate so no expenses paid if I have to go to clients customer site. Of course, since its my companies money its travelodge/etap all the way!

[psychocandy]

Should be fairly easy to work out from self assessment and company returns. There would be certain key markers which would give a high indication that a company is a PSC.

I think they boasted to the IR35 forum that the Services Company question on the P35 was largely redundant - that they have already identified the majority of PSC's.

Whether this is true or not - is another matter

By that rationale, no need to have any IR35 before you ever submit a 'contractor' self assessent or company return?

[gingerjedi]

I'd love to know if there is a cut off threshold where HMRC wont investigate because the cost would be too high Vs what they would likely recoup.

I'm not a very big fish in the contracting world, the tax payer won't be getting good value if HMRC chase me.

[BlasterBates]

One strategy would be to pay yourself not the minimum salary say 20 grand a year, sure you pay some extra NIC's but I bet you have a good chance of getting off the target list, and you still save a lot of NI.

Also I reckon the idea floated of several contractors in a co. would help, means your company profile is more like a normal co.

I presume they look for one man co's earning minimum salary.

Anyway these would be options if the new IR35 regime proved to be a problem.

[meanttobeworking]

This whole thing is driving me crazy... either it's ok to offer your services as a freelancer through a PSC and remunerate yourself tax efficiently via salary and dividends or it's not. I can understand them specifically targeting Fri-Mon people, but they are very easy to identify with a simple "are you contracting with a company you were employed by immediately before" test.

The fact that HMRC provide examples of "outside IR35" freelancers in their guidance indicates that yes, it is ok to do it. Yet the constant stream of unclear direction, the-responsibility-is-with-you-to-work-it-out messaging, and what is commonly referred to as FUD on here is frankly appalling.

I've said nothing new, and what I have said is not very eloquent - just needed to vent.

[ecc83]

I'd love to know if there is a cut off threshold where HMRC wont investigate because the cost would be too high Vs what they would likely recoup.

I'm not a very big fish in the contracting world, the tax payer won't be getting good value if HMRC chase me.

Yes I was wondering that!

"Who's that trip-trapping over my bridge?!?"

"Oh don't mind me, wait for the contractor behind me, he earns £700 a day!"

[northernladuk]

One strategy would be to pay yourself not the minimum salary say 20 grand a year, sure you pay some extra NIC's but I bet you have a good chance of getting off the target list, and you still save a lot of NI.

Also I reckon the idea floated of several contractors in a co. would help, means your company profile is more like a normal co.

I presume they look for one man co's earning minimum salary.

Anyway these would be options if the new IR35 regime proved to be a problem.

And both would be picked up on immediately. Neither of these are valid options, they are just hiding in the mists. The outcome once identified would be exactly the same. I am sure there methods of picking potential canditates are more complex than that and will change as they progress through.

[DaveB]

The thing we have to remember is that no matter what HRMC are up to the law has not changed.

If you are chosen for an investigation the same case law and precedents still apply. Cases must be judged on a contract by contract basis, not a blanket assessment of your business practices.

Just because HMRC put so much store in substitution for example, and whether you have ever actually done it, in their tests makes no difference in the investigation itself. It's already been shown in court that simply having the clause in your contract and the option to substitute if required is in itself important regardless of whether you have ever actually done it.

This is simply about them deciding how they are going to pick their targets, not how the investigation will be conducted.

No doubt they will point to the test results and claim they are proof, but I'm sure any competent tax lawyer would be able to drive a coach and horses through them should the need arise.

Get PCG Plus membership or other insurance and ring them if you get a letter. Then stop worrying about it.

[Old Greg]

And both would be picked up on immediately. Neither of these are valid options, they are just hiding in the mists. The outcome once identified would be exactly the same. I am sure there methods of picking potential canditates are more complex than that and will change as they progress through.

Has anyone put in an FoI request asking for how they select companies for investigation?

[BlasterBates]

And both would be picked up on immediately. Neither of these are valid options, they are just hiding in the mists. The outcome once identified would be exactly the same. I am sure there methods of picking potential canditates are more complex than that and will change as they progress through.

Yes that would be the case if they were to look at every company in detail. But they don't have time. They only have your tax return and the info at companies house. From that they have to find their targets. That's the point. Now if you were a team faced with thousands of Ltd companies and only the resources to enquire a few hundred companies, what criteria would you use to select "suspect" companies? Well a typical IR35 co. will be a one man co with a turnover of around 100 grand and one Director on minimum salary. If I were an inspector that's exactly the search criteria I would use to find my targets. I mean we don't know how they do it, but they don't have a lot of info to go on.

Also just going back to my example of paying yourself a bit more, obviously their return on an investigation in your company would be lower than someone on minimum salary, and if you're judged on how much tax you can bring in you'll focus on those companies with the most potential NI to pay.

You don't necessarily need to be IR35 compliant (It is subjective and I suspect a lot of contractors would fail if the inspectors ask the right questions and the contractor wasn't supported by a good lawyer) but you do need to put up sufficient barriers so the inspector moves on to the next case.