First batch of HMRC IR35 compliance letters out

[centurian]

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.

Only if it a fully unfettered RoS, which is pretty rare in agency contracts. If you have any form of restriction in your ability to execute RoS, the court will probably dismiss it as a sham clause anyway.

[Jog On]

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.

WHS

If you were confident of your status before this nothing has changed. When they decided to keep IR35 because of the revenue it generated it widely believed that this is because of the large percentage of contractors who just paid themselves inside or went umbrella rather than face an investigation. This obviously brings them in money so they're ramping it up a few notches. Just keep calm and carrying on invoicing

[malvolio]

Only if it a fully unfettered RoS, which is pretty rare in agency contracts. If you have any form of restriction in your ability to execute RoS, the court will probably dismiss it as a sham clause anyway.

The case law requirement is for a "reasonably unfettered" RoS. "Reasonably" is an understood legal concept: it is not unreasonable for the client to insist the subbie has a comparable level of expertise and/or technical experience, it is unreasonable to require that they come from Lancashire or have some other irrelvant characteristic. The point remains, an employee cannot have an RoS under any circumstances, and you have one in your contract as an insurance against the unforseen.

[LisaContractorUmbrella]

The case law requirement is for a "reasonably unfettered" RoS. "Reasonably" is an understood legal concept: it is not unreasonable for the client to insist the subbie has a comparable level of expertise and/or technical experience, it is unreasonable to require that they come from Lancashire or have some other irrelvant characteristic. The point remains, an employee cannot have an RoS under any circumstances, and you have one in your contract as an insurance against the unforseen.

Agreed but isn't there also legal precedent for a requirement to actually know and have access to a potential substitute?

[gingerjedi]

I wonder how big the 'first batch' is? If it's say 5000 and past performance is an indicator I'll be retired by the time they get around to releasing the second.

[DaveB]

Agreed but isn't there also legal precedent for a requirement to actually know and have access to a potential substitute?

And now we finally have practical use for LinkedIn

[kingcook]

2600+ views of this thread, and not one person (unless i've missed it) has said they have received the letter

[moggy]

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.

I would say they want victories its not about the money just yet. People on lower rates are probably much more like disguised employees and so inside ir35 as a % compared to the guys on big rates.

[gingerjedi]

I would say they want victories its not about the money just yet. People on lower rates are probably much more like disguised employees and so inside ir35 as a % compared to the guys on big rates.

It should be in the tax payers interest, they can't just go around in pursuit of 'victories' if it's costing more than they win.

[THEPUMA]

I wonder how big the 'first batch' is? If it's say 5000 and past performance is an indicator I'll be retired by the time they get around to releasing the second.

Given that there are 3 teams of 12 people, I reckon they will open somewhere in the region of 1,000 - 1,500 enquiries between them per year. So based on an estimated target population of 500,000, I would say your chances of an enquiry are circa 0.2% - 0.3% per year.

There are a few estimated variables in there though and I am happy to be corrected if anyone has any better guesses.

PUMA