IR35 - Is it worth getting an in-place contract amended?

[Whoknows]

Situation is this:

- In contract for 12 months, now renewed
- Working practices indicate a strong position outside IR35 (confirmed by legal review)
- Working practices backed in writing by client
- Contract is poorly written and puts me firmly inside IR35 (confirmed by legal review)

I know it's my own fault for not getting it reviewed at the start, but I was very green about the whole situation.

Now I know that my contract is letting me down but my working practices are strong - is it worth trying to get the contract changed? Or would HMRC simply look at the first one and use that against me?

I'd rather not go through the grief of getting it changed, if it will make no difference should I come under scrutiny.

Any thoughts?

[GB9]

Situation is this:

- In contract for 12 months, now renewed
- Working practices indicate a strong position outside IR35 (confirmed by legal review)
- Working practices backed in writing by client
- Contract is poorly written and puts me firmly inside IR35 (confirmed by legal review)

I know it's my own fault for not getting it reviewed at the start, but I was very green about the whole situation.

Now I know that my contract is letting me down but my working practices are strong - is it worth trying to get the contract changed? Or would HMRC simply look at the first one and use that against me?

I'd rather not go through the grief of getting it changed, if it will make no difference should I come under scrutiny.

Any thoughts?

I would get it changed. If HMRC look at the contract and see it inside IR35 then don't expect them to look for further evidence that would dispute that even if you have it.

My recent experience with HMRC is that they do exactly what suits them.

[northernladuk]

Although working practices trump the contract, it's the contract that's likely to be to be what kicks off the investigation. Even if your practices are inside its still not a place you want to be.

Sadly the chances of getting your contract changed after you have started is very slim.

Is your second renewal for 12 months also? If so I'd say strong inside IR35 gig is as strong as you think.

[VectraMan]

If you leave a permie job and come back the next week as a contractor doing the same thing in the same way then supposedly an outside IR35 contract and working practices doesn't help you. The fact is you're doing the same role in the same way as you were when inside IR35, and they'd look at the entire role as one not as individual contracts.

Having said that, I'd probably get it changed unless it was going to cost a lot to do so.

[Whoknows]

OK thanks, I'm going to take the inside route for this engagement and be safe.

Next contract I'll make sure it's as tight as possible.

Appreciate the comments guys.

[TheFaQQer]

I see little benefit in changing the contract, since HMRC will take the first one when they try to claim you are inside IR35.

However, if your working practices put you firmly outside (and remember that at the moment you only have to prove one of the three pillars of employment is absent, whereas HMRC need to prove all three are present), then I wouldn't consider myself inside IR35.

What I would do, however, is make sure I had professional representation in place - if you aren't an IPSE member, then you should consider joining here as they will fight your corner for tax investigation, plus numerous other benefits of membership.

[jamesbrown]

On the one hand, you shouldn't be working under T&Cs that don't reflect the reality of your working practices so, upon renewal, this is something I'd be looking to correct, regardless of IR35. You should never let the IR35 tail wag the dog. On the other hand, if you've signed the extension, it's essentially too late, as there's no incentive for your client to change this. However, if your working practices are really supportive of an outside IR35 position, you should, at the very least, secure a Confirmation of Arrangements, which is a non-binding checklist/letter, signed by someone at the client who is familiar with your working practices. There are various templates available.

Two other points. First, if you're now deciding that you're operating inside IR35 for this contract, you will need to pay the appropriate taxes from the start of the contract, otherwise penalties and interest will apply in future. Second, you can expect a long and protracted fight if this contract is investigated by HMRC in future. Although your working practices are ultimately more important than the contract wording, there will be literally no chance of an early end to an investigation when the contract wording is poor. Also ensure that you have appropriate representation from now on.

[northernladuk]

What I would do, however, is make sure I had professional representation in place - if you aren't an IPSE member, then you should consider joining here as they will fight your corner for tax investigation, plus numerous other benefits of membership.

Even if he rocks up with an inside IR35 contract? I'd want to make sure of that before relying on their service. Still a no brainer to join IPSE+ in the long run though...

OP - The link in TF's post is incorrect. The amended link to join is THIS ONE.

Thanks.

[jamesbrown]

Even if he rocks up with an inside IR35 contract? I'd want to make sure of that before relying on their service. Still a no brainer to join IPSE+ in the long run though...

OP - The link in TF's post is incorrect. The amended link to join is THIS ONE.

Thanks.

They'll represent the OP, regardless (or, rather, they will appoint someone to do so). On the other hand, no legal representation is going to pursue a futile case very far. There either needs to be a reasonable chance of success (which almost always applies) or a point of law at stake that might outweigh cost.

[TheFaQQer]

Even if he rocks up with an inside IR35 contract? I'd want to make sure of that before relying on their service. Still a no brainer to join IPSE+ in the long run though...

HMRC have to consider the actuality of the situation, not merely the words that are on the paper - they have argued this before, albeit when it suited them to show that the reality differed from paper in their favour.

If you are confident of the working practices, then there's no way I would declare myself inside IR35, but I would make sure that I have someone good in my corner if the call ever came.