Outside IR35 now even harder to prove PGMOL ruling

[malvolio]

"So contract needs to tick all boxes" - the point I was making.

If the contract aligns to reality. If it doesn't, the reality tends to take precedence. But yes, you have to start from the basis that it does.

[vetran]

If the contract aligns to reality. If it doesn't, the reality tends to take precedence. But yes, you have to start from the basis that it does.

And prove that the contract aligns with reality when HMRC come calling.

[woody1]

How likely is an IR35 investigation? Are companies selected pretty much at random, or does HMRC use some form of screening to identify potential non-compliance?

[malvolio]

How likely is an IR35 investigation? Are companies selected pretty much at random, or does HMRC use some form of screening to identify potential non-compliance?

We have been trying to answer that question for many many years....

Not too sure about the new Chapter 10 regime, but in Chapter 8 terms the best guess is that it is partly random, but also possibly triggered by some inconsistency in your various tax returns. Don't forget their systems can look across several sources to get the true picture.

General advice from PCG/IPSE back in the day was to keep everything accurate, don't take the mick on expenses and hit all the deadlines - but to be fair, that pretty much applies to any company director anyway.

But barring egregious piss-taking, the chances of getting challenged are fairly low - not that that should make any difference.

[milanbenes]

for those of us resident on the mainland



how cool is that

toodle pip

Milan.

[northernladuk]

How likely is an IR35 investigation? Are companies selected pretty much at random, or does HMRC use some form of screening to identify potential non-compliance?

WMS. We've only got a couple of cases to discuss but they are only the ones that got to court or hit the news. We've no idea if people get letters or fold before it goes too far. Seb from QDOS did hint that that people do have to call on the insurances to get them out of the mire that we don't see but obviously he didn't say how many. To be fair he also didn't say if that was IR35 investigations or just a tax one.
We've got people on the forum that think all this discussion and effort to stay outside and keep squeeky clean is a complete waste of time because no one gets investigated. It's a fair opinion and they are welcome to it but don't forget when you talk about the risk you need to consider the effect of that risk being realised. What will be the impact if it does happen, hint, it won't be pleasant and very very expensive. IMO low risk with high impact is still not something to be sniffed at. Washing your hands of it because it is low risk is not the right approach IMO. Still do what you can to avoid it and minimise fall out in the outside chance it hits I'd say.

[vetran]

I know a few contractors that just pay it. I suspect plenty without insurance fold when HMRC arrive.

[willendure]

I know a few contractors that just pay it. I suspect plenty without insurance fold when HMRC arrive.

You can get insurance that would cover the extra tax they would make you pay? Is it expensive to get this insurance?

[northernladuk]

You can get insurance that would cover the extra tax they would make you pay? Is it expensive to get this insurance?

Firstly the only time that a contractor has the responsibility and liability for IR35 is where the original ‘Chapter 8’ IR35 rules apply -- where their PSC is engaged by a “small company” or a company based wholly overseas with no UK presence. If that is the case then yes you could can (and should) get insurance that covers you.
You would have to check the small print of the policy but the big providers do say they things like 'IR35 insurance provides indemnity for the insured against the representation costs in defending IR35 compliance activity from HMRC, as well as the tax/NIC liabilities, penalties, and interest found to be owed as a result of such activity.'

The gotcha here is most (I believe) will have a 'Prospect of Success' clause. If there is little no not prospect of you winning they won't cover it. Who knows what that really means though. If you've put yourself inside or not carried out the proper diligence then it's not worth the paper it's written on. Bad news for your average tickbox IR35 contractor or those ones that don't give a jot about it all thinking the insurance will cover them. If the worst comes to the worst they could be in for a nasty surprise.

It could be an interesting discussion around how the prospect of success has changed bearing in mind the ruling we are discussing, Ros being a sham and all the other things that have eroded the success over time. What cases will they actually take on nowadays?

The rest of the time the liability sits with the client so the contractor wouldn't be liable. I've lost track of the discussion but it's about now someone might mention contracts that pass the liability to the contractor but I don't know what the outcome of that discussion is. I guess there is one benefit to being inside that I don't have to understand it for now :|

I've got to ask though, how come you don't know this when you've been on the forums since 2015? Insurance was almost mandatory in the old days.

[Zigenare]

With reference to "IR35" Insurance I can recommend "Kingsbridge" and their "IR35 Protect Policy" they were very helpful in organising everything I needed.