IR35 Buddy - worth a closer look, maybe

[DaveB]

BET Test Question IR35Buddy© Points
Substitution Contract Substitution Buddy© 2

You don't need an actual buddy, just the right to substitute as has been established by the courts. Which is a standard clause these days

PI Insurance Ltd Services Buddy© 2

Already got that. Most contracts now require it.

Financial Billing Test Ltd Services Buddy© 2

Are there genuine contractors out there who get paid without invoicing? Really?.

Advertise your Services Advertising Buddy© 2

No, never actually needed to.

Repair at Own Risk Contract Contracts Buddy© 4

Again, this seems to be a standard contact clause these days.

Business Office Contract Premises Buddy© 10

From what I can see this is no different to having business office access via PGC+.
Plus I have a business plan anyway, so an extra point there. 1

Total 22

21

Now get 43 Points

You already have 22 points - 22

Business Plan Contracts Buddy© 1
Invoke Buddy Substitution Contract Substitution Buddy© 20

Total 43

Why? If I have 21 points thats more than I need to be in the low risk category?

Leaving aside the fact that the BET is a meaningless exercise with no basis in law, why do I need to spend money with IR35 buddy when I have everything needed anyway, as will most contractors if they actually stop and think about it.

[Maslins]

In an attempt to add some balance to this...

We all agree the BETs mean nothing if a case actually goes to court, right?

We also (I think) agree that HMRC try to use the BETs to decide who to investigate, or as a way to close down an IR35 case early if they can see you're "low risk".

On that basis, what's the problem with trying to game it? If it's the stupid rules HMRC want to play by, fine, play by their rules and put yourself in the best position you can. If it leads them to stop an IR35 challenge early on when the strict law would actually say you're inside, that's their problem.

I don't understand why all the negativity, it doesn't seem any different to anything else. HMRC make rules (whether with strict legal backing or not), individuals tweak their circumstances to best suit them.

MVL Online wouldn't have got any business 2 years ago, there was no need...but HMRC changed the (ESC C16) rules about getting cash out of a redundant company. The market reacted by slashing the price of liquidations for these simple cases.

From what I understand, the basic buddy site is free. If you want formal backing to it you can get a (paid) package with QDOS, where presumably they'll do what some of us may refer to as "proper" IR35 checks, advise accordingly, and then have your back if HMRC came sniffing.

PS I have no direct involvement with IR35 Buddy, but do promote QDOS products where appropriate to our clients as I think they offer good products at good value for contractors.

[LisaContractorUmbrella]

In an attempt to add some balance to this...

We all agree the BETs mean nothing if a case actually goes to court, right?

We also (I think) agree that HMRC try to use the BETs to decide who to investigate, or as a way to close down an IR35 case early if they can see you're "low risk".

On that basis, what's the problem with trying to game it? If it's the stupid rules HMRC want to play by, fine, play by their rules and put yourself in the best position you can. If it leads them to stop an IR35 challenge early on when the strict law would actually say you're inside, that's their problem.

I don't understand why all the negativity, it doesn't seem any different to anything else. HMRC make rules (whether with strict legal backing or not), individuals tweak their circumstances to best suit them.

MVL Online wouldn't have got any business 2 years ago, there was no need...but HMRC changed the (ESC C16) rules about getting cash out of a redundant company. The market reacted by slashing the price of liquidations for these simple cases.

From what I understand, the basic buddy site is free. If you want formal backing to it you can get a (paid) package with QDOS, where presumably they'll do what some of us may refer to as "proper" IR35 checks, advise accordingly, and then have your back if HMRC came sniffing.

PS I have no direct involvement with IR35 Buddy, but do promote QDOS products where appropriate to our clients as I think they offer good products at good value for contractors.

I can't speak for anyone else but the problem I have with it is that it purports to help contractors operate outside IR35 using utterly contrived and artificial 'products' which, in reality, are likely to offer no protection at all - if anything this sort of thing is likely to make HRMC take a firmer stance on IR35 - how is that then of benefit to contractors?

[amcdonald]

It's canny advertising aimed at those ignorant of IR35, offering vague promises that it will keep you under Hectors radar

Sometimes a little knowledge is dangerous

[Maslins]

I can't speak for anyone else but the problem I have with it is that it purports to help contractors operate outside IR35 using utterly contrived and artificial 'products' which, in reality, are likely to offer no protection at all - if anything this sort of thing is likely to make HRMC take a firmer stance on IR35 - how is that then of benefit to contractors?

Regardless of the actual IR35 legislation and case law, HMRC seem keen to focus on their tickbox exercise that is the BETs. It therefore makes sense that contractors do too. After all it's HMRC who are going to challenge contractors on IR35, nobody else.

HMRC are the ones who decided on the BETs, not IR35 buddy.

Yes it's control, personal service and MOO which would likely decide which way a judge ruled should you go to court re IR35...but if playing the (stupid) system can mean any IR35 challenge stops way before it gets to court, surely that's a good idea for the contractor to do?

[GB9]

Rarely....

I can't speak for anyone else but the problem I have with it is that it purports to help contractors operate outside IR35 using utterly contrived and artificial 'products' which, in reality, are likely to offer no protection at all - if anything this sort of thing is likely to make HRMC take a firmer stance on IR35 - how is that then of benefit to contractors?

Not often I agree with a Brolly but you have is spot on.

The whole basis of the 'Buddy' seems to be to present the appearance that you are low risk from an IR35 perspective, thus reducing the likelihood of investigation. No genuine reduction in legal risk at all.

And it gets worse. The 'Marketing Buddy' appears to suggest that you can count hours spent on marketing as genuine costs towards the HMRC target by multiplying by your hourly contracting rate. So, the example they give is that if you charge £25/hour then each hour counts as £25 towards the HMRC target. I'm sure the accountants can confirm or otherwise, but that seems like cobblers to me.

Premises Buddy - pay a few quid and get time at a shared office facility.

And just to round it off, they are offering a Total Tax Coverage insurance that appear to be cheaper than QDOS's, and which reduced further in cost dependent upon your BET score.

On the plus side, I suspect HMRC will target anyone whose name appears on the site first.

[GB9]

Regardless of the actual IR35 legislation and case law, HMRC seem keen to focus on their tickbox exercise that is the BETs. It therefore makes sense that contractors do too. After all it's HMRC who are going to challenge contractors on IR35, nobody else.

HMRC are the ones who decided on the BETs, not IR35 buddy.

Yes it's control, personal service and MOO which would likely decide which way a judge ruled should you go to court re IR35...but if playing the (stupid) system can mean any IR35 challenge stops way before it gets to court, surely that's a good idea for the contractor to do?

No, it's carp. It's EBTs for IR35.

[Maslins]

The whole basis of the 'Buddy' seems to be to present the appearance that you are low risk from an IR35 perspective, thus reducing the likelihood of investigation.

Exactly...why is that a bad thing?!

BET is a stupid HMRC tick box exercise, so tick their stupid boxes and keep them off your back. I haven't looked in any great detail at IR35 Buddy, but if that's what it helps you do, then great.

We all do convoluted but legal things all the time to minimise exposure to tax. Does it really seem normal that most contractors take a pitiful ~£7k salary for the hard work that they do, but then receive hefty dividends for their investment in the company? Of course not. It's BS, but it's BS that contractors do every year to suit themselves based upon HMRC's rules. This isn't any different IMO.

[LisaContractorUmbrella]

Regardless of the actual IR35 legislation and case law, HMRC seem keen to focus on their tickbox exercise that is the BETs. It therefore makes sense that contractors do too. After all it's HMRC who are going to challenge contractors on IR35, nobody else.

HMRC are the ones who decided on the BETs, not IR35 buddy.

Yes it's control, personal service and MOO which would likely decide which way a judge ruled should you go to court re IR35...but if playing the (stupid) system can mean any IR35 challenge stops way before it gets to court, surely that's a good idea for the contractor to do?

But this isn't putting ticks in boxes - this is creating an artificial situation which is advertised as improving your IR35 position

[LisaContractorUmbrella]

Exactly...why is that a bad thing?!

BET is a stupid HMRC tick box exercise, so tick their stupid boxes and keep them off your back. I haven't looked in any great detail at IR35 Buddy, but if that's what it helps you do, then great.

We all do convoluted but legal things all the time to minimise exposure to tax. Does it really seem normal that most contractors take a pitiful ~£7k salary for the hard work that they do, but then receive hefty dividends for their investment in the company? Of course not. It's BS, but it's BS that contractors do every year to suit themselves based upon HMRC's rules. This isn't any different IMO.

No disrespect meant at all but - look more closely