Dragonfly

[Lewis]

I had five contracts from 4 different clients investigated at the same time. All were found to be outside.

How did it progress? They started on one and them moved on to all the rest? They were all through the same Ltd company I assume?

[LadyChatterley]

I had my first contract investigated by HMRC back in 2000. I was working Brussels. The accountant I had at the time was totally shambolic and he assured me the contract was outside IR35 and there was no problems. Thus I got investigated by them and got done for being inside IR35. They stung me for just over £40k. I recall paying at least £20k before declaring myself bankrupt and shelving the Ltd co. I do believe if I'd of payed up and carried on running the company that they would certainly have investigated any further contracts.

[Lewis]

Anyone been investigated on closing a company or after a company has been closed?

[Incognito]

Anyone been investigated on closing a company or after a company has been closed?

I know someone who triggered some probing questions about why they wanted to close the company, but it never triggered an investigation.

(He was going travelling for a year)

[Lockhouse]

Out of curiosity, have they left you alone since?

Yep but that's no guarantee and I've been at my current client for longer that I would wish.

[Lockhouse]

How did it progress? They started on one and them moved on to all the rest? They were all through the same Ltd company I assume?

3 contracts investigated initially then 2 contracts became included as the investigation dragged on for over three years.

[Fred Bloggs]

I had always assumed it was a personal debt. That all the monies (less 5%) earned by your company would be regarded as your personal income. Once you have accounted for legitimate expenses you would be taxed at the relevant rate on the rest and it would be a personal tax bill not a business tax bill.

If it is as easy as you say then what are we all worried about? New company every contract empty it and close it. Nothing to chase.

I too have taken your view. However, I have regularly "lost the argument" here at CUK. I'm not convinced that a "drain and fold" strategy is as foolproof as some would suggest.

[Fred Bloggs]

I think people have to stop and think and not get carried away. As for you FB, you've had many short term contracts which, if investigated and you lost, would not amount to much overall. Your current gig may possibly be cause for concern but all you need to do is keep a %age aside, if you can.

It seems that Dragonfly did not have a good set of contracts so he was halfway up a certain creek without a paddle straight away. What there will certainly be is new guidance from the likes of QDOS, B&C etc for us to follow so let's just wait and see what happens...

That's has been my strategy to date (and to put as much as possible into a Ltd Co funded SIPP). However, the current gig is a long term infrastructure project that could run to 2012 +. I actually rate the gig a marginal pass/fail. I have taken out the insurance based on the risk assessment form that you are required to fill in by one of the insurers out there. They accepted my risk.

[DaveB]

I too have taken your view. However, I have regularly "lost the argument" here at CUK. I'm not convinced that a "drain and fold" strategy is as foolproof as some would suggest.

It's not, there are rules around folding a co. and removing the assets and doing it repeatedly can easily been seen to be evasion.

[Fred Bloggs]

It's not, there are rules around folding a co. and removing the assets and doing it repeatedly can easily been seen to be evasion.

At the moment I am able to act as an "dirty income shifter" and drain the Co that way. As well as paying as much as I can afford into a SIPP. That's opart of my strategy, keep the cash out of the Co account as far as possible. Less of a target that way?