Client suddenly deems you inside before April

[Hobosapien]

Thank you.

The one point I can never understand, is if you can just run down the money in your company, and they don’t make directors liable, then what’s the problem. First sign, close company, take cash out. Sorry if an obvious answer, but how are they getting the massive sums from e.g. tv presenters ?

This is where more clarity is welcome from anyone with actual experience of an IR35 investigation where they were found guilty and HMRC chased for payment and penalties.

Regarding the headlines and cases in the news it may say HMRC are chasing x amount but unless it said that amount was recovered then it's just a goal that may not be achieved, unless the Ltd PSC had that in the bank or due from future invoices that HMRC could then take an interest in.

From what I know if the Ltd is rundown so there is little money left in the company then that is the limit of liability (hence the Ltd name) that HMRC could pursue unless they invoked special powers due to director negligence (trading while insolvent) or fraud. I don't think there has been a case where failing an IR35 investigation falls under those special powers but happy to be corrected if anyone has any proper info or feedback on that.

The problem with waiting for an investigation to start or become likely due to current circumstances is that HMRC can step in and stop the closure of the company if there is some benefit to them doing so to recover any money still available from the Ltd. So the sooner you no longer need the Ltd and start the closure process or drain funds via normal accounting practices the sooner the risk is reduced on HMRC getting at those funds if an IR35 investigation rears its ugly head. It used to be that HMRC started that investigation process querying other aspects of the accounts submitted such as expenses or pension payments, not sure if they now go straight to IR35 investigation if working from accounts submitted rather than other info such as however they got the GSK contractor PSC list.

[PTP]

Thank you.

The one point I can never understand, is if you can just run down the money in your company, and they don’t make directors liable, then what’s the problem. First sign, close company, take cash out. Sorry if an obvious answer, but how are they getting the massive sums from e.g. tv presenters ?

Exactly the same question as I asked in the bbc-presenters-lose-ir35-appeal thread and surprisingly didn't see an answer to. Maybe no one knows the answer

[mrdonuts]

If you want to continue at the client for years to come then consider closing your Ltd to draw a line under any potential future investigation and work for them inside IR35 via a brolly as they are expecting.

How sure are you that this will limit someones exposure to retrotax and fines?

[Blert596]

From what I know if the Ltd is rundown so there is little money left in the company then that is the limit of liability (hence the Ltd name) that HMRC could pursue unless they invoked special powers due to director negligence (trading while insolvent) or fraud. I don't think there has been a case where failing an IR35 investigation falls under those special powers but happy to be corrected if anyone has any proper info or feedback on that.

Hi Hobosapien.

Is this true as it seems opposite to what I thought? I could be totally wrong but I thought if HMRC wanted back taxes, it's the difference in between tax on what you have already paid yourself, via salary and dividend, and the tax that you would have paid as full PAYE. Its taxes due from the person and not the company.

If so, then as far as I'm aware then HMRC don't care where the money comes from as long as they get it. If you have none in your Ltd, then as far as they're concerned if you have to sell your house/car or whatever to pay them back, then they don't give a damn.

Surely that's correct or everyone would simply be running down the assets in their company, ie paying bigger dividends, until it was empty, and not giving one iota about April 2020.

Happy, in fact delighted, to be proven wrong though.

[cojak]

How sure are you that this will limit someones exposure to retrotax and fines?

He’s not sure. No-one is sure.

It all boils down to your attitude to risk.

If you think it’s worth the risk do it.

If you don’t, don’t. Personally I would leave the client, HS might not.

See my post https://www.contractoruk.com/forums/...ould-i-go.html

[mrdonuts]

He’s not sure. No-one is sure.

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No offence but perhaps they are better qualified to comment than you

What say you Hobosapien?????:

[cojak]

No offence but perhaps they are better qualified to comment than you

What say you Hobosapien?????:

Better qualified. Yes, he might be qualified in IR35 decisions, possibly working for QDOS.

What say you Hobosapien???????

[Hobosapien]

Erm, no I am not better qualified, I've not had any personal experience of an IR35 investigation so am going off what I've read on this site and elsewhere.

Not sure if ok to link to other sites but a quick google of IR35 and liability found the following, as I wanted to be sure I was remembering stuff right regarding Ltd/personal (director) liability before responding any further if in fact I had given bad info (not advice, I'm not qualified):

IR35 taxes uncollectable if contractors’ company has no money

Summary is that personal liability for IR35 is only likely if due diligence on whether correctly operating outside IR35 is not done before deciding to not pay those taxes that HMRC may later via investigation say are due. So in normal circumstances, if you get contracts reviewed and follow the recommended process, the liability remains with the Ltd.

It would be useful if anyone reading this that has gone through an IR35 investigation can add their feedback. The cases in the press seem to be few and far between so maybe there aren't many on here that have experienced it directly and still visit this site having perhaps given up contracting for one reason or other.

Edit: To answer the other question about retrotax and fines post closedown of a Ltd. This is a different scenario where HMRC would have to decide to investigate a closed (dissolved) company and for IR35 purposes I'm not sure I've ever heard of that happening. So as the article I linked to above says, the risk is that HMRC start an IR35 investigation during closedown of the Ltd. Afterwards then it seems unless caught in a bigger web of fraud then there should be little risk of HMRC wanting to start an investigation for IR35 on a closed company. Again, if anyone has any personal or professional experience (liquidators/accountants/QDOS et al) then we are all ears.

[cojak]

But mrdonuts asked you this:

How sure are you that this will limit someones exposure to retrotax and fines?

Can you answer that question?

[mrdonuts]

"If you want to continue at the client for years to come then consider closing your Ltd to draw a line under any potential future investigation and work for them inside IR35 via a brolly as they are expecting."


hobosapien, do you have any links to support this comment regarding continuing to operate with the same clinet via a brolly post april 2020??