IR35 (again ;) ) and the points system

[DaveB]

Hi all

I was wondering about the exciting (newish) rating system and decided to rank myself to see if the score really stacked up to my outside IR35 view of my life!

I score a massive 12 points, but have a fairly day way to make this 22 points by going and renting an office, which I would then use about once a week when I was not on clients site in UK or abroad.

Now, this is a fairly cheap option to get the 10 points.

The company registered office would remain at home address.

Does anyone think this is just a waste of money or would having real company premises other that the office space at home be a benefit?

It would be beneficial for me as it has a speedier broadband connection, my own secretary, etc. (about 15/20 small office based companies live in one site).

Thoughts please - as always I expect high quality ones!!

Cheers

The points system is largely irrelevent, whatever you score on these tests the law hasn't changed, IR35 cases are judged on a contract by contract basis. Despite what HMRC are trying to say you can't treat it as a blanket assesment. You score is irrelevant if it ever comes to court, and provided your contracts and working practices are sound you should be able to defend yourself with the help of the PCG+/Abbey/QDoS insurances to cover your legal costs.

[Wanderer]

Does anyone think this is just a waste of money or would having real company premises other that the office space at home be a benefit?

It would be beneficial for me as it has a speedier broadband connection, my own secretary, etc. (about 15/20 small office based companies live in one site).

I know a lot of people here will howl that it's just a sham to try and help your tax dodging credentials but I know people who commute to an office because they cannot bring themselves to work at home. They are absolutely adamant that they need the physical and psychological separation of "work" and "home" to maintain focus when they are working and conversely to switch off when they are not working. Some of these people are permies and directors of small/medium sized businesses so they have no tax advantage to gain from having an "office" rather than working from home - indeed it costs them money and time commuting.

If that is genuinely how you prefer to work and you would consider renting the office regardless of the IR35 status then go ahead and do it. Don't let the tax man drive the way you operate your business and treat the fact that it may tip you outside IR35 as purely incidental.

If you're going to do it then do it properly though and make sure you have some sort of record of you using the premises on a weekly basis, records of meetings with people there etc.

[BlasterBates]

If you are going to use it regularly then indeed this will be a big help.

When HMRC make an initial enquiry they won't look at anything in depth, they'll make a decision based on documentation you've sent. If you can demonstrate having an office this will make it less likely they'll persue the enquiry.

Obviously if they did look at it in depth they might decide that there are other factors that are more important and disregard it. If you are actually using the office it obviously isn't a sham, at worst it would be seen as unimportant in view of other factors. In fact regardless of how often you use the office they can never say it's a "sham", in the same way they could attack an offshore loan, that's your business decision to have an office when you choose to work in it is your affair, as long as you're truthful answering questions about how you use it.

IR35 investigations are time consuming for HMRC so anything that sets you aside from other soft targets is beneficial. Lets face the inspector is probably going to checking up on whole load of small companies so anything that gives him the impression it aint going to yield anything will make hime likely drop your file and persue another one.

[northernladuk]

I know a lot of people here will howl that it's just a sham to try and help your tax dodging credentials but I know people who commute to an office because they cannot bring themselves to work at home. They are absolutely adamant that they need the physical and psychological separation of "work" and "home" to maintain focus when they are working and conversely to switch off when they are not working. Some of these people are permies and directors of small/medium sized businesses so they have no tax advantage to gain from having an "office" rather than working from home - indeed it costs them money and time commuting.

But unforunately the OP has stated he is doing it to get the points for IR35 so by his own admission it is a sham. If he needed an office he wouldn't have one, if he didn't he wouldn't. To get one just to get the points up but can possibly use it can't be anything but a sham.