Ongoing Contract

**shoes** · 30 September 2007, 20:05

Maybe it's just worth gambling that they won't come knocking. If they do, and decide you are inside IR35 for a particular contract, which means you should have paid them 10k for example, how much will the bill end up being? Does anyone know?

**thunderlizard** · 30 September 2007, 20:20

I don't see how that's IR35-relevant. Maybe the contract's just an umbrella agreement under which he does various bits of work, but there's no obligation (mutual or otherwise) to offer or do such bits of work. Or maybe he's contracted to produce a certain thing for them, rather than just to park his arse on a seat until date x.

The contract under which British Gas supplies gas to my house doesn't have an end date, but that doesn't make their employees mine.

**malvolio** · 30 September 2007, 21:48

Originally posted by shoes View Post

Maybe it's just worth gambling that they won't come knocking. If they do, and decide you are inside IR35 for a particular contract, which means you should have paid them 10k for example, how much will the bill end up being? Does anyone know?

Lots. They're limited to 6 years back of course, but using typical numbers, you make about £0.5m gross in that time. If you assume the typical non-IR35ed contractor realistically keeps around 72% of that he will have paid £140k tax. Inside IR35 you get to keep closer to 60% so call it £200k. So that's £60k missing tax, plus interest at 5% pa - can't do the sums in my head but call it £5k

Add in somewhere between £5k and £15k legal costs, you get to £75k very easily.

**shoes** · 30 September 2007, 23:00

Originally posted by malvolio View Post

So that's £60k missing tax, plus interest at 5% pa - can't do the sums in my head but call it £5k

Add in somewhere between £5k and £15k legal costs, you get to £75k very easily.

Ok, But how about my example. Lets say I would need to pay 10k more in tax for a particular contract that fails IR35 than I have actually paid due to assuming it was not IR35 caught. If I decide to pay up immediately without trying to fight the revenue (so no legal costs?) as soon as the bill arrives after an investigation, what is the total bill? If its just 10k owed plus 5% interest, aren't you just better off investing the potentially owed cash someplace for 6 years? If you get caught then pay it back, no loss there if there are no fines or legal fees. If you dont get caught its yours to spend after the 6 years.

**mace** · 1 October 2007, 07:51

Inland Revenue penalty

Shoes,

You're forgetting the 100% penalty which the revenue can charge. That said, IR35 is on a per-contract basis. Unless you've been doing long contracts, the tax bill shouldn't be that great.

**TheFaQQer** · 1 October 2007, 11:49

Originally posted by Sockpuppet View Post

He also commented that "IR35 is dead"

I hear that a fair bit from contractors I know - but they are pretty stupid!

One argued that IR35 was dead "because the Arctic case is coming up next week..." when the judgement was due.

I just rely on there being so many better candidate for HMRC to choose than me!!

**Sockpuppet** · 1 October 2007, 12:00

Originally posted by TheFaQQer View Post

I just rely on there being so many better candidate for HMRC to choose than me!!

Like those who accounts returned show annual subsistence of £26/day unreciepted.

**where did my id go?** · 1 October 2007, 12:12

And if they decide that you've deliberately and knowingly not paid I believe the 6 years restriction is out the window and 20 years is possible.

**FiveTimes** · 1 October 2007, 12:25

Originally posted by mace View Post

That said, IR35 is on a per-contract basis. Unless you've been doing long contracts, the tax bill shouldn't be that great.

Would it be better then instead of agreeing extensions to start a new contract everytime ???

Ongoing Contract