IR35 and complete numpties

[nomadd]

As I have said before, HMRC have investigated 13 week contracts where the tax take was considerably less than the cost of the IR35 investigation. HMRC do not just work on the cost of the current investigation v tax they can generate of an IR35 win on, say, a 13 week contract.

HMRC know that by putting the frighteners on a number of contractors via an IR35 investigation, even though they may not win or, may only reclaim a small amout of tax from that contract, a number of those contractors will deem themselves IR35 caught going forward.

So, HMRC do not need to continually investigate these contractors and, they will receive IR35 tax off those contractors for what may seem initial negligible return or even a net loss to start with.

And as for 'stupid working practices' and S660, well!

We are just going round and round and round in circles here...

And as I've said - twice now - please point me at a case were a contractor with a sensibly phrased, short-term contract with project-based working practices (as the OP has) has been taken to court and successfully prosecuted... That's now the third time I've asked.

I've already mentioned that contractors who cave in to the "frighteners" from the IR are their own problem - not mine, not yours, and not the OPs. The IR have "tried it on" only around a dozen times in ten years with my accountants contractors - and that's from the enormous number of contractors on their books, as they've been providing services to contractors for over 20 years (I've been with them for 23.5 years...) In each case, the IR has only investigated because the contract has been poorly phrased and of long duration (or had a large, continuous degree of income sharing with a spouse.) In each and every case, my accountant has pointed the IR and the contractor at a tax specialist: the result is that in every case so far the IR has dropped the investigation: simply not worth the cost of pursuing.

Now, look at the cases where the IR has been successful (or partially so) in court: those cases are a million miles away from what the OP is doing on his contract. And that is pretty much true for most contractors these days. Look at the Spencer case - he was 7 years on the same client site, but he took no protective measures beyond the initial three years (which were deemed outside of IR35) to protect himself. And it's that kind of case - for several hundreds of thousands of pounds - that the IR are willing to chase through the courts...

Anyway, this whole subject has been debated to death on these forums many times, so there is no point dragging this thread on for several pages covering the same old ground again. Different contractors have different opinions. You have my opinion, FWIW - and that is that too many contractors are paying "fees" for contract reviews, IR35 insurance, etc. that ultimately isn't worth the paper it's written on. Most of it is simply FUD-marketed get rich quick schemes based on the naivety/gullibility of contractors.
Your opinion may differ.

[BolshieBastard]

We are just going round and round and round in circles here...

And as I've said - twice now - please point me at a case were a contractor with a sensibly phrased, short-term contract with project-based working practices (as the OP has) has been taken to court and successfully prosecuted... That's now the third time I've asked.

I've already mentioned that contractors who cave in to the "frighteners" from the IR are their own problem - not mine, not yours, and not the OPs. The IR have "tried it on" only around a dozen times in ten years with my accountants contractors - and that's from the enormous number of contractors on their books, as they've been providing services to contractors for over 20 years (I've been with them for 23.5 years...) In each case, the IR has only investigated because the contract has been poorly phrased and of long duration (or had a large, continuous degree of income sharing with a spouse.) In each and every case, my accountant has pointed the IR and the contractor at a tax specialist: the result is that in every case so far the IR has dropped the investigation: simply not worth the cost of pursuing.

Now, look at the cases where the IR has been successful (or partially so) in court: those cases are a million miles away from what the OP is doing on his contract. And that is pretty much true for most contractors these days. Look at the Spencer case - he was 7 years on the same client site, but he took no protective measures beyond the initial three years (which were deemed outside of IR35) to protect himself. And it's that kind of case - for several hundreds of thousands of pounds - that the IR are willing to chase through the courts...

Anyway, this whole subject has been debated to death on these forums many times, so there is no point dragging this thread on for several pages covering the same old ground again. Different contractors have different opinions. You have my opinion, FWIW - and that is that too many contractors are paying "fees" for contract reviews, IR35 insurance, etc. that ultimately isn't worth the paper it's written on. Most of it is simply FUD-marketed get rich quick schemes based on the naivety/gullibility of contractors.
Your opinion may differ.

Keep your head in the sand. Like Im going to trawl through all the HMRC bulletins, contractor website posts etc to find one link that you then come back on and say something like 'that's just one case and we dont know the full circumstances' etc.

Look, if you dont want to accept that HMRC will investigate a contract at a net loss in the short term but net gain in the long term, that's up to you.

[nomadd]

Keep your head in the sand. Like Im going to trawl through all the HMRC bulletins, contractor website posts etc to find one link that you then come back on and say something like 'that's just one case and we dont know the full circumstances' etc.

Thank you. It only took four long-winded posts from you to admit you were wrong.

[LisaContractorUmbrella]

From the horse's mouth so to speak:

ESM1075 - Detailed guide to determining status: length of engagement

The length of engagement is neutral in determining the employment status. However, in general, the longer the engagement the more likely that it will be a contract of service and the shorter the engagement the less likely. This is not down to the length of the contract itself, but because the other factors are more likely to indicate this to be the case.

For example, the longer the engagement the more likely that the engager will want to, or need to, exert significant amounts of control over the worker, a significant pointer towards a contract of service. In an engagement lasting for several months the engager may want a right of control because of a need to move the worker between tasks. Additionally, the worker may become integrated into the engager’s organisation in a manner that is indicative of employment. The approach to the work may also be less business-like and the personal factors are likely to be less significant.

Conversely these factors are less likely to be present in a short-term engagement. There may be less control exercisable by the engager particularly if the worker is taken on to undertake a specific task. It is less likely that the worker will become integrated into the business. Personal factors may be more significant and there may be a more business-like approach.

However, it is always necessary to consider the employment status factors in every case and then paint the whole picture. The principles set out in ESM1013 to ESM1095 above apply to casual, temporary, part-time or short-term workers as well as to those working on a full-time basis. The result could be employment, self-employment or a combination of both.

Where there are a number of separate short engagements with different engagers, then this could point to self-employment (see ESM1093) but the length of engagement alone is not sufficient to determine self-employment. Where work is offered and accepted occasionally and irregularly there is unlikely to be a continuous (or ‘umbrella’) contract of employment (see ESM1073). Instead, each engagement may itself represent a contract of services or a contract for services.

[darrenb]

In any sane system the length of engagement would be the main factor, possibly the only one.

The law needs to be simple to be effective. If you have twenty different pointers, nobody knows what's going on. Complex law means that officials and judges can pick and choose according to unspoken motivations. In such a system the people who have most success are the dishonest ones and those who can best curry favour with the powerful. So, law that is complex and confusing is really a variant of lawlessness, creating great uncertainty for one-man businesses.

[NotAllThere]

In any sane system the length of engagement would be the main factor, possibly the only one. ...

Only if you're trying to distinguish between temps and perms.

Which takes us into the nitty-gritty of being in business on your own account.

[Boo]

In any sane system the length of engagement would be the main factor, possibly the only one.

You are insane to say that ! What on earth does length of contract have to do with employment status ?

Boo

[Scoobos]

Thanks to all contributors to this, its been an excellent read and I hope it helps others in similar situations to me.

[northernladuk]

Thanks to all contributors to this, its been an excellent read and I hope it helps others in similar situations to me.

So did you ever get your contract reviewed by the likes of QDOS or not?

[darrenb]

Worried that I've alienated the permatractors...