IR35, what if....

[northernladuk]

that doesn't sound right to me?

IR35 is about clawing back personal tax you have avoided/evaded. If it hasn't been paid out, you haven't avoided/evaded it yet.

I believe even if you THOUGHT about it that would be grounds enough for them to start an investigation

[Platypus]

My house and personal finances would be ok though?

Nope. You'll lose them.

No ones going to prison because they can't pay or anything. Am I right in assuming this ?

Correct.

[Pondlife]

If you are found out to have deliberately "dodged" IR35 you can be fined up to 100% of the tax owed.

Thank you everyone. I will get contract reviews and insurance to be on the safe side. I wish they'd just scrap this regulation and be done with it. Sleepless nights just trying to make an honest living.

If you don't want the hassle then get insurance and your contracts reviewed.

Alternatively, use a brolly.

The fact that you're worried about IR35 means you've taken a major step forward in dealing with it so it becomes a non issue.

[jamesbrown]

IR35 is personal taxation, so you are liable.

It isn't. It's a company liability that involves "looking through" the intermediary to establish whether the arrangement, were it not for the intermediary, would be akin to one of employment. However. it's the responsibility of the intermediary to remunerate in accordance with the law. Of course, company liabilities may be transferred to personal liabilities on the director(s) if they acted without due care or attention (this is not unique to IR35). Having appropriate contract reviews and insuring against the risks associated with IR35 would be examples of due diligence.

[Batcher]

Does it come down to this? Whether HMRC believes that you wilfully misled them?

Scenario 1: Contractor had all their contracts reviewed, made every effort to distinguish themselves from the permies but the client turned up in court and said that in their minds they were just part of a resource pool. Ruling went against them. Would the OP likely face tax bill plus interest but no penalties since they had acted in good faith based on professional advice?

Scenario2: Contractor stuck head in sand, no contract reviews or even worse failed but decided to blag it. Ruling goes against them. OP faces tax owed plus interest plus penalty.

Scenario 1 -> HMRC takes company reserves only
Scenario 2 -> HMRC pursues them personally for the cash

I'm not sure they would make that distinction between company and personal depending on if the contractor had had reviews done.

As in my case, they ignored the reviews and CoA documents anyway and produced 'evidence' from some HR bod agreeing I was inside. Of course, I was liable for a big chunk of money but it was stated in the letter that I couldn't go back and get holiday pay, etc from the client that would have been due if I had been an employee. The client had obviously wanted that confirmed before dropping me in it.

I got 4 payslips for various amounts, I know 3 were Tax, NI, & Interest. I'll check tonight to see if the other was for penalties.

[suityou01]

Just so's you knows, this sockie and this thread are absolutely nothing to do with me

[Pondlife]

Just so's you knows, this sockie and this thread are absolutely nothing to do with me

You might want to go and cheer your mate colonelyeehaw up. He's over in the prof forums complaining about client treatment.

[VectraMan]

that doesn't sound right to me?

IR35 is about clawing back personal tax you have avoided/evaded. If it hasn't been paid out, you haven't avoided/evaded it yet.

The money has been paid out: to YourCo. That's the point - IR35 takes the money YourCo earns and assumes you've earned it as if you were working without the intermediary. Doesn't matter how you shuffle money around between your bank accounts.

[suityou01]

You might want to go and cheer your mate colonelyeehaw up. He's over in the prof forums complaining about client treatment.

Uh oh. <trollmode-on>

Edit : Dammit, professional forums

[jmo21]

The money has been paid out: to YourCo. That's the point - IR35 takes the money YourCo earns and assumes you've earned it as if you were working without the intermediary. Doesn't matter how you shuffle money around between your bank accounts.

I guess my point is why would they start an IR35 investigation to try and find out if you had underpaid your personal tax (by doing small salary, divvies and so forth) if you haven't actually paid out to yourself personally yet.

It's a ridiculous edge case scenario I suppose.