My contract has just failed the IR35 test

**beemarman** · 21 December 2009, 15:15

Mod can you please move this to the right section please.

**Jeebo72** · 21 December 2009, 15:17

Ask the client to reword it. Have done this before, they are usually ok.

**Olly** · 21 December 2009, 15:45

Originally posted by beemarman View Post

Just had my contract reviewed by AccountTax and it's failed the IR35 test.

What happens now it's been rejected? does this mean am at risk of getting caught by the Inland Revenue?

I dare say you're at no more risk of investigation but if your contract doesn't pass "the test" then what on earth are your working conditions going to be like? Yes is the answer - but "caught" is the wrong turn of phrase

and if i do nobody would any lawyer be willing to take on my case with Inland Revenue?
Maybe, you'd have to ask them though wouldn't you

What options do i have to amend my contract to match what's been recomended?

How on earth do we know? Why don't you ask the agent?

and what can i do if the agency refuse to amend it?
Two 'real' options, either go PAYE or don't do the contract. Option 3 is do it and risk getting stung later. I'm guessing a surprising number of people would opt for 3 but your accountant is going to be pissed I think

P.S. You're not a troll are you?

**singhr** · 21 December 2009, 16:33

I think you are are a bit b*ggered there although as you will know from reading related posts on this forum, it's the actualité that Hector is interested in, not what the contract says.

**original PM** · 21 December 2009, 17:43

not really a problem.

Excepot for the fact you have to make the most of any revenue as tax n expenses - you will not be able to take as dividends.

However here is a question for the board.

Lets say I have a contract which is caught by IR35 - but rather than paying all of the money out to me I take a small salary and leave the money in the company for say 5 years - (ok you pay corp tax on it) but then say after 5 years you have done a number of other non IR35 caught contracts can you then assume that the money in the account can no longer be tied to that particular contract and thus can be taken as dividends.

Or am I talking rubbish?

**NotAllThere** · 21 December 2009, 18:38

Rubbish, I'm afraid. You can't retain earnings from a contract subject to IR35...

Of course, when it's so far in the past that it's off limits, then you've no worries.

**BolshieBastard** · 21 December 2009, 19:23

Here we go again.

For the record only a Special Tax Commissioner can declare you as caught by IR35 and must pay up. (you can appeal any decision by HMRC if they say you are caught.)

The contract failing accountTax IR35 test does not mean you are more likely to be investigated either. So stop worrying.

If you can get your contract T&C's more IR35 'friendly' then do this asap and certainly at renewal.

If your contract is only for 13 weeks, even if you did have to pay up, it wouldnt be that big a hit.

Carry on.

**xoggoth** · 21 December 2009, 19:57

Reality that matters? Really?

So if a contract is IR35 unfriendly HMRC will say "Oh, it seems from the contract that you are caught but in the interests of fairness we won't make a decision until we have checked further"

Oink, oink, flap, flap.

**worzelGummidge** · 21 December 2009, 21:29

ssh!
Don't tell anyone.
The tossers will be out soon.

My contract has just failed the IR35 test