Transferring Contract to Inside IR35

[northernladuk]

declaring yourself outside on friday and accepting inside on Monday is fraud and criminal behaviour.

Is it balls. The working conditions and contract may have changed.

[sludgesurfer]

Hi Guys,
I've received a (very) short notice yesterday from my agent,
that the client's HR emailed him that as of April 6th all contractors working for them will be forced inside IR-35.
As you can imagine I was totally unprepared for it,
and now I have to give them 2 answers (if I want to stay, of course).

A. What new rate do I want.

B. An umbrella company to work under.

Your help with both of these will be greatly appreciated.
Thanks in advance to all responders.

A. As much as you can get. If you wish to mitigate the additional tax burden then 30-35% seems to be in the right ball park
B. A legitimate one that takes the right deductions and pays them to HMRC. Check the resources on this site for finding one.

Regarding the risk of retrospective action. This is all about risk mitigation. Risk is a product of likelihood and severity.

No-one (absolutely no-one) knows the overall likelihood, but there are steps you can/should have taken to reduce the likelihood of an enquiry being found against you by ensuring your own outside determination for the contract was accurate, evidenced and (possibly) insured.

Also, use the appeal process to challenge your client's determination (assuming it is an inside SDS and not a PSC ban). It will be likely be futile in terms of changing the result but to flip from outside to inside without evidence that you disagreed with the decision would (imo) not look good under subsequent enquiry.
The severity side of the equation is down to yourself. Work out the approximate penalty over the duration of the contract (plus the hassel of an enquiry) and balance that against the prospect of finding another contract or sitting on the bench for a while.

There will be thousands of contractors going outside to inside. There will be many walking away from inside determined contracts. Whether to do so is purely a personal choice based on the information available and your own calculation of risk. People's opinions are just that - opinions. Your own assessment of risk based on your own set of circumstances are what matters.

[mwounder]

Nope - it's a difference of opinion.

However, were HMRC to push the point it's going to be very hard to demonstrate that you were outside prior to April 2021 when the end client has said they regard the role is being inside IR35.

Oh and if you are going to post a quote from HMRC include a link as to where you got it from. The context is very important when dealing with HMRC.

Apologies - links below covering similar ground:

https://www.gov.uk/hmrc-internal-man...nual/esm10001a
https://assets.publishing.service.go...ontractors.pdf
https://www.gov.uk/government/public...t-arrangements

[mwounder]

The last contract. They don't go through other contracts as it's pointless. The evidence they have on you is for just the single situation. They'd have to open new investigation on the others as what you are doing now bears no relation to what you did at other clients. Been like that forever.

Maybe because IR35 is a tax law not an employment one?

Which is what I thought, however in this case, why do companies like QDOS ask for the following with regards to IR35 insurance:

• how long you have been contracting
• your average day rate
• your VAT rate
• your annual PAYE salary
• your average travel and subsistence expenses claimed per month
• your business insurance and accountancy fee expenditure per month

What you're saying I've seen everywhere else too, but I thought the idea was that if you get caught in one, they can then look at others? If it is the one I'm on at the moment then luckily I've only been with them for 3 months...

[Lance]

Which is what I thought, however in this case, why do companies like QDOS ask for the following with regards to IR35 insurance:

• how long you have been contracting
• your average day rate
• your VAT rate
• your annual PAYE salary
• your average travel and subsistence expenses claimed per month
• your business insurance and accountancy fee expenditure per month

What you're saying I've seen everywhere else too, but I thought the idea was that if you get caught in one, they can then look at others? If it is the one I'm on at the moment then luckily I've only been with them for 3 months...

they ask for that as it determines their potential liability if you lose

[GitMaster69]

Just walk and go outside? Are you contractor or no rights employee ?

[mwounder]

Just walk and go outside? Are you contractor or no rights employee ?

I'm a contractor via Ltd. As said previously, QDOS gave me an 'outside' declaration' (both contract/working practices), but still troubles me. The market is not great so it's obviously a case of the small risk (how big/small we don't know), of going via Brolly or leave and have no work for a potential of months.

[GitMaster69]

I'm a contractor via Ltd. As said previously, QDOS gave me an 'outside' declaration' (both contract/working practices), but still troubles me. The market is not great so it's obviously a case of the small risk (how big/small we don't know), of going via Brolly or leave and have no work for a potential of months.

Market is AMAZING. Up your game, brush your linkedin , lots of jobs! You shouldn't have waited this long and should have been looking for at least a month

[NotAllThere]

I'll take a contrarian view. If the contract pre April was outside for sure, then the same contract April would onwards would also be outside. Of course HMRC may not see it like that, or pigs might possibly fly and they could accept that legally (possibly, probably, improbably...) the change is not a relevant indicator.

My guess would be that if they decided to investigate and they adopted the arguments presented here, and it went to court, they might well lose over points of law.

It all depends on your appetite for risk. Going away for a bit certainly will reduce the risk. If there is any.

I'm just so glad that HMRC finally acted to reduce all this uncertainty... *sigh*

[northernladuk]

I'd be willing to bet nearly 100% of people that have asked about going outside to inside late don't listen and just carry on. If they've had their heads in the sand this long to not bother then they are also not in a position to correctly understand the risk. The thought of leaving a gig for something they don't understand is unthinkable.

They'll just stick their head back in the sand and carry on inside where they should have been all along.