IR35 liability from April 2021

[djones123]

From April 2021, the responsibility for compliance with IR35 in the private sector is shifting from off-payroll contractors to end-users. What would happen if a client did a wrong assessment, who will end up paying all taxes and penalties? Is it end client or a contractor ?

I am in a situation where client is willing to extend my current contract (which i am pretty sure inside IR35) and claiming my current contract is outside IR35. They have asked me to do the HMRC online employment status check which came out as outside IR35, they are going to come back to me on this later. They are willing to amend the contract and issue a new one if needed.

My question is, do i need to worry about getting my contract check with legal firms like Qdos and get it changed? From next month, all the liability will be on the end client, do i need to worry about anything if the client get the assessment wrong ?

[Lance]

From April 2021, the responsibility for compliance with IR35 in the private sector is shifting from off-payroll contractors to end-users. What would happen if a client did a wrong assessment, who will end up paying all taxes and penalties? Is it end client or a contractor ?

I am in a situation where client is willing to extend my current contract (which i am pretty sure inside IR35) and claiming my current contract is outside IR35. They have asked me to do the HMRC online employment status check which came out as outside IR35, they are going to come back to me on this later. They are willing to amend the contract and issue a new one if needed.

My question is, do i need to worry about getting my contract check with legal firms like Qdos and get it changed? From next month, all the liability will be on the end client, do i need to worry about anything if the client get the assessment wrong ?

The end client will be taking the responsibility for the determination, and the liability for getting it wrong.
Happy days.

caveat: if they're small then it's still your problem

[malvolio]

Well you could start form the point that if you believe your contract is under IR35 now, then deliberately ignoring that and getting a new contract that also ignores that is probably not a good start. And of course CEST came out as outside if you are answering the questions. How closely and how honestly did you represent the real working arrangements.

Get an assessment if you think it worth having, but unless you and/or the client are accurate in describing your working arrangements, then it won't give you a different answer, much less a correct one.

And right now the liability rests with you. If you have mis-represented the position and not paid the IR35-related taxes, that isn't going away. Similarly if you have colluded with the client to mis-represent the position, you will share liability if it gets to court.

[djones123]

Well you could start form the point that if you believe your contract is under IR35 now, then deliberately ignoring that and getting a new contract that also ignores that is probably not a good start. And of course CEST came out as outside if you are answering the questions. How closely and how honestly did you represent the real working arrangements.

Get an assessment if you think it worth having, but unless you and/or the client are accurate in describing your working arrangements, then it won't give you a different answer, much less a correct one.

And right now the liability rests with you. If you have mis-represented the position and not paid the IR35-related taxes, that isn't going away. Similarly if you have colluded with the client to mis-represent the position, you will share liability if it gets to court.

I have given my notice to end my contract and told my client that i would only continue through my ltd company.

I have sent my CEST outcome to HR yesterday and they are going to go through my answers with my line manager before giving the final verdict. If the final verdict is outside then i am going to get my contract review from a legal firm and get it updated if needed.

[Lance]

I have given my notice to end my contract and told my client that i would only continue through my ltd company.

I have sent my CEST outcome to HR yesterday and they are going to go through my answers with my line manager before giving the final verdict. If the final verdict is outside then i am going to get my contract review from a legal firm and get it updated if needed.

You are doing the right thing for the future engagement.

However..
Malvolio's point is that if you and the client have conspired to defraud HMRC, then all legislation considering the liability become immaterial. You could both face criminal proceedings. Be very careful about the facts and evidence of the current/historic situation.

[djones123]

got it. Thanks.

[northernladuk]

If you think it is inside IR35 how did you get an outside CEST decision. Did you answer the questions as you think the contract should be or really is?

I've said it before. Asking contractors to fill in their own CEST is an absolute joke.

[djones123]

If you think it is inside IR35 how did you get an outside CEST decision. Did you answer the questions as you think the contract should be or really is?

I've said it before. Asking contractors to fill in their own CEST is an absolute joke.

I totally agreed with what you are saying. The CEST was done for the new contract starting after April 06 and it will be based on new terms.

My current contract has some clauses which may make it inside IR35 so just to be on the safer side i am treating it as inside and will pay the full tax even though my client's legal team claiming it to be outside.

It is a big client but i don't think their legal team knows how to draw a IR35 friendly contract.

[malvolio]

...

It is a big client but i don't think their legal team knows how to draw a IR35 friendly contract.

Well that's easy. They give you a Supplier Purchase Order for a defined piece of work. If they can't define a suitable piece of work with a set deliverable "thing" then you're most likely inside anyway.

[northernladuk]

I totally agreed with what you are saying. The CEST was done for the new contract starting after April 06 and it will be based on new terms.

What new terms? And terms don't cover working practices. They can write down what they want but if they decide they don't really want or sub, or to D&C you as they say fit you are screwed. This is why the contractor doing the CEST is an utter waste of time.

My current contract has some clauses which may make it inside IR35 so just to be on the safer side i am treating it as inside and will pay the full tax even though my client's legal team claiming it to be outside.

But you were outside before? So you are in a straight outside to inside situation? That not worry you?

It is a big client but i don't think their legal team knows how to draw a IR35 friendly contract.

If it's a big firm then it's likely they use an agent and don't have to. The agent does it. Is there no agent in this chain?