HMRC vs Contractors - IR35

**malvolio** · 21 May 2010, 11:55

Originally posted by stek View Post

I was always under the impression the HMRC lost almost all these cases, but it's seems like they win more than we are lead to believe, did a quick google, they do win a fair few, this chap ended up with a £100k tax bill, bit scary....

Dragonfly vs HMRC

Dragonfly Vs HMRC IR35 Case : Contractor Umbrella

Don't beleive everything you read in the papers. The loss ratio on the few appealed cases is around 70/30 in HMRC's favour, buit there are only a few samples to work with. Close to 90% of cases never get to appeal and are found to be outside.

HMRC also claim Larkstar as a victory, whereas the truth is the original case was thrown out and it has never been retried (the contractor couldn't face anouther fiver years of uncertainty and had retired anyway). Certainly no money was due.

And Dragonfly's £90k was the total recalculated tax bill for that engagement. You have to deduct the CT and other relevant taxes already paid.

**stek** · 21 May 2010, 12:06

Originally posted by malvolio View Post

Don't beleive everything you read in the papers. The loss ratio on the few appealed cases is around 70/30 in HMRC's favour, buit there are only a few samples to work with. Close to 90% of cases never get to appeal and are found to be outside.

HMRC also claim Larkstar as a victory, whereas the truth is the original case was thrown out and it has never been retried (the contractor couldn't face anouther fiver years of uncertainty and had retired anyway). Certainly no money was due.

And Dragonfly's £90k was the total recalculated tax bill for that engagement. You have to deduct the CT and other relevant taxes already paid.

Cheers, interesting.

I was told all this doom and gloom by a bunch of accountants, to be honest I must know personally about 2/300 contractors either well or fairly well and none of them have had any HMRC IR35 issues or court cases.

In fact, I remember the panic about IR35 was it first about, was it 1998/9?, most people did nowt about it and are still ok, so it is a loads of bollocks, ur right...

**BolshieBastard** · 21 May 2010, 20:39

Originally posted by stek View Post

I was always under the impression the HMRC lost almost all these cases, but it's seems like they win more than we are lead to believe, did a quick google, they do win a fair few, this chap ended up with a £100k tax bill, bit scary....

Dragonfly vs HMRC

Dragonfly Vs HMRC IR35 Case : Contractor Umbrella

Er, the dragonfly case is now quite old. I think HMRC's record of wins is not much more than 10 or so (according to the PCG anyway!)

**LisaContractorUmbrella** · 24 May 2010, 07:45

It's true, I am sure that HMR&C don't win nearly as many cases as they would like but any contractor working outside IR35 when they know they are inside is still taking a risk - it all comes down to how much of a gambler you are and whether you are sensible enough to have a 'what if' account should HMR&C come calling. The problem is that many people are of the opinion that the risks associated with IR35 are very low and therefore don't make any provision for a repayment of tax should the worst happen

**lukemg** · 24 May 2010, 09:29

What a position to put people in !! It's unbelievable that a huge number of workers are placed in this impossible position by cretins. This is exactly the flexible skilled workforce the country is saying it needs.
Taking no risks ? Have a chat with the people contributing to the warchest thread about risk, the market has shifted away from some of them and it ain’t coming back, I expect IR35 will keep them in work, or retrain them or pay them redundancy like a perm would get ?
I have a solution too – 20% expenses allowance (perm benefits are worth at least this and usually a lot more) and we cough for the rest and sleep at night OR just put a 2-year rule on it. You have to go to court and argue about what the agency told the client and wrote in docs you have never seen, ’kin idiots.
The reality is this – Government workers elected or not are simply different flavours of local council workers i.e. totally clueless and when you add this to a government determined to reduce everyone to the same level, regardless of effort, it’s a shambles. If Clegg and Cam can sort this one, they will have at least done something right.

**centurian** · 24 May 2010, 15:55

Originally posted by LisaContractorUmbrella View Post

The problem is that many people are of the opinion that the risks associated with IR35 are very low and therefore don't make any provision for a repayment of tax should the worst happen

WSS. A low risk isn't the same as a zero risk. You shouldn't need to lose any sleep over IR35, but at the same time, don't ignore it completely, simply because HMRC haven't won many cases.

The key part is to be aware of the risks - what you can do to mitigate them, and the worst case position scenario.

HMRC vs Contractors - IR35