IR35, what if....

[TheFaQQer]

I'm trading as a ltd company for 10 years and I get investigated and found to be "caught" by IR35.

On one contract, or all of them? Over the ten years, how long is the longest contract that might expose you to an IR35 failure?

I am taken to court and told to pay a huge tax bill, interest, and a penalty.

As others have said - penalty only if you were negligent. Perform due diligence and that bit goes out the window.

There is no chance of me being able to pay this. Next comes insolvency? So they would cease any monies and/or assets the company has and close it down. My house and personal finances would be ok though? No ones going to prison because they can't pay or anything. Am I right in assuming this ?

I'd guess that they would take what they can from the company - employers NI at a minimum, and then come after the individual for any shortfall since it's the individual who didn't pay their employee NI or income tax.

The important thing is that as soon as that letter hits the mat, get professional advice before you do anything else.

[OwlHoot]

Interesting discussion.

Talking about IR35 insurance, is there any adequate alternative to IPSE (formerly known as PCG) ?

My insurance is up for renewal and, following the PSC saga, I'm disillusioned with IPSE

[Pondlife]

Interesting discussion.

Talking about IR35 insurance, is there any adequate alternative to IPSE (formerly known as PCG) ?

My insurance is up for renewal and, following the PSC saga, I'm disillusioned with IPSE

QDOS TLC35.

More coverage since it includes any tax owed.

Tax Liability Cover - TLC35 - Full IR35 Insurance - Qdos Consulting

Or there's a cheaper version for less cover

http://shop.qdosconsulting.com/freel...does-it-cover-

[TheFaQQer]

QDOS TLC35.

More coverage since it includes any tax owed.

Tax Liability Cover - TLC35 - Full IR35 Insurance - Qdos Consulting

Or there's a cheaper version for less cover

Tax Enquiry Insurance - Contractor Insurance - Freelancer Insurance - Qdos Insurance - Qdos Consulting

That's what I use.

<mal>If you want the same kind of cover but still be an IPSE member, you can get an add-on to the standard IPSE offering</mal>

But that doesn't help if you want the cover but don't want to be an IPSE member.

(Five weeks until the CC elections start)

[Lightwave]

Interesting discussion.

Talking about IR35 insurance, is there any adequate alternative to IPSE (formerly known as PCG) ?

My insurance is up for renewal and, following the PSC saga, I'm disillusioned with IPSE

Caunce O'Hara seem to be offering me something?
I've not looked into it as they emailed me a few days after I'd renewed IPSE.

[VectraMan]

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.

Nobody knows for sure why they start an IR35 investigation. If they had reason to believe you're a PSC, and you posted profits but paid no salary, that could be a red flag.

It's not just dividends; you can also avoid tax by paying yourself less in year one in anticipation of having a lean year two. If IR35 caught you'd have to pay all your tax in year one, just like an employee would, in other words not acting as a business. In a way that's the part of it that is unfair: you can't build up a war chest in the business as insurance against your variable income, like a business would, as you're going to be hit by 40% tax in the first year.

[cojak]

Hi, theoritical situation:

I'm trading as a ltd company for 10 years and I get investigated and found to be "caught" by IR35.

I am taken to court and told to pay a huge tax bill, interest, and a penalty.

There is no chance of me being able to pay this. Next comes insolvency? So they would cease any monies and/or assets the company has and close it down. My house and personal finances would be ok though? No ones going to prison because they can't pay or anything. Am I right in assuming this ?

Thanks.

Sheesh.

Have you been in the same contract for 10 years?

My theoretical reply. Go away, read up on and make sure you understand what IR35 is all about. because you obviously don't understand it at the moment.

[RoastedSlopes]

Sheesh.

Have you been in the same contract for 10 years?

My theoretical reply. Go away, read up on and make sure you understand what IR35 is all about. because you obviously don't understand it at the moment.

I think the OP is asking because he doesn't have the level of experience as some on this board. I must admit there seems to be a slight disdain to newbies asking questions on this board, we all started somewhere

[cojak]

I think the OP is asking because he doesn't have the level of experience as some on this board. I must admit there seems to be a slight disdain to newbies asking questions on this board, we all started somewhere

Then he should have asked this question in the Accounting/Legal professional forum, where a certain restraint is encouraged.

Mods can't be expected to be around to move every post into the right forum.

[TheFaQQer]

I think the OP is asking because he doesn't have the level of experience as some on this board. I must admit there seems to be a slight disdain to newbies asking questions on this board, we all started somewhere

Since he has been a member of CUK for two years, one would expect that even by the process of osmosis some kind of knowledge of IR35 would be there by now.

Even more so if the OP has been trading for ten years.

There is a level of disdain for any poster who cannot be bothered to do their own research as a starting point. There are plenty of guides out there that explain IR35 so at least read one if you are going to run your own business.