HMRC have decided I'm inside IR35

[Craig at Nixon Williams]

They even tried to say because I had a local authority badge I was an employee. Except that I never had a badge as they wouldn't give me one. The end client said I did have one but I have mine supplied by my agency and NOT by the local authority. I still have it.

They will ask leading questions to your client – your client will probably not really want to answer the questions, they will want it over and done with as quickly as possible and will not be fully aware of the implications of their answers. This approach will give easy evidence to HMRC to use against you – it sounds like this is what has happened here as the client probably didn’t know how badges were issued and made as assumption, unaware of how that will affect you.

Its good that you still have the badge as you can now use that to prove that (at least a small part of) their evidence is incorrect.

Craig

[LisaContractorUmbrella]

Wasn't someone saying only yesterday that IR35's dead and nothing to worry about

[Martley]

Are you two years into an investigation without invoking the insurance? What does the insurance cover?

Yes, they will always show you to be inside. They will ask the client loaded questions to 'prove' you were a disguised employee.

They will ask leading questions to your client – your client will probably not really want to answer the questions, they will want it over and done with as quickly as possible and will not be fully aware of the implications of their answers. This approach will give easy evidence to HMRC to use against you – it sounds like this is what has happened here as the client probably didn’t know how badges were issued and made as assumption, unaware of how that will affect you.

Its good that you still have the badge as you can now use that to prove that (at least a small part of) their evidence is incorrect.

Craig

That is exactly what happened. The end client didn't have to speak to them but they were bullied into doing so through pressure and constant phone calls. The HMRC should not be allowed to do this. Does anyone know how many business entity tests have to be satisfied? Oh and believe me IR35 is getting more vicious and I'm hearing of people being asked to complete a compliance check on a regular basis. Public sector contractors feel hounded and there is every possibility that many will exit the service leaving key services at real risk

[Craig at Nixon Williams]

. Does anyone know how many business entity tests have to be satisfied?

The business entity tests have no legal standing, so really none of them need to be satisfied.

Craig

[Martley]

The business entity tests have no legal standing, so really none of them need to be satisfied.

Craig

In that case what real chance do HMRC have of winning?

[Craig at Nixon Williams]

In that case what real chance do HMRC have of winning?

HMRC's case will not be built around the business entity tests - it will be centred around three factors from your contract and working practices: Personal Service, Direction & Control and Mutuality of Obligation.

[Martley]

HMRC's case will not be built around the business entity tests - it will be centred around three factors from your contract and working practices: Personal Service, Direction & Control and Mutuality of Obligation.

Thanks for the information. Do all of these factors need to be satisfied?

[tractor]

...

HMRC's case will not be built around the business entity tests - it will be centred around three factors from your contract and working practices: Personal Service, Direction & Control and Mutuality of Obligation.

Which is why the only three things that you need to do are to ensure that;

Your contract is fit for purpose and
that it reflects working practice and
you make and retain evidence of the first two.

As long as you have those three and they stand up, you are pretty much home and dry.

Of course PCG membership and the appropriate insurances will help immensely. The level of defence that anyone offers up has to have an effect on HMRCs appetite for chasing you. They are no different to anyone one else in any context, they will go for the low hanging fruit first and foremost.

[tractor]

...

The business entity tests have no legal standing, so really none of them need to be satisfied.

Craig

I am amazed that such important legislation can hinge on frameworks that actually have no legal standing. Something really is not right about it all and hasn't been since 2000 and PCG losing the Judicial Reviews. Business entity tests that have no legal standing; tick boxes on forms that can be ignored; Tax code definitions that have no legal definition or meaning (PSC) etc. etc.

Because there has been no successful challenge to the rules that HMRC make up annually, this will get worse and more complicated by the year..

[VectraMan]

Because there has been no successful challenge to the rules that HMRC make up annually, this will get worse and more complicated by the year..

You might all have to start paying tax.

If you've had an expert provided by the insurance all along, and they've now lost, I imagine the insurance will now not cover you any further seeing any future efforts as futile. Which they may well be.