outside IR35 before..inside after?

[hammertime1985]

So... if you're currently acting outside on an engagement and you're providing services on this basis but you have a sneaky suspicion your client may be nervous and want to avoid any tax issues post April.

They then "verbally" tell you that if you stay on passed this date you're "inside" (as you have asked this info rather than assume because the contract you signed is till May), you then work back your notice from the 3rd April (5th is a Sunday FYI) which is the last day to be paid before you're in the new tax year and thus will be caught.

Would verbally vs a written confirmation make a blind bit of difference in terms of an investigation / red flag? i.e how could they prove you left because they were going to deem you inside when no written confirmation was provided?

Any tactful suggestions for the rationale of leaving the engagement with some considerable time left?

I suspect I'd completely ruin the relationship with the client as this was initially 6 months with a view to another 6 month extension thereafter. I am going via an agent for this who did say that they have not yet made a determination post April for this project. However, I did forewarn them that if they were to decide it as inside I'd leave as soon as I found out. Although I'd bet my last pound this message was not communicated to them.

[hammertime1985]

But if you have your determination carried out by your client and you're found to be inside then you are already at risk of an investigation regardless of whether you stay with the client or not. The determination made by the client that you have been with for the past x number of months/years has found you to be inside.

Best not to stick around to have a determination done.

So at what point do you leave when you're not even aware of what the determination is? I left my last engagement three weeks before they started reviewing contractors and communicating assessments, as an email went round stating that they would start doing them and would communicate the decision by X date. I then subsequently heard that they basically made an inside determination on all LTD contractors.

However, who is to say that even though I weren't there at the time the determination was made and communicated, I still won't be investigated as an insider - what is the cut off for being tarred with this brush and how do you wriggle out of it if you are?

[malvolio]

So at what point do you leave when you're not even aware of what the determination is? I left my last engagement three weeks before they started reviewing contractors and communicating assessments, as an email went round stating that they would start doing them and would communicate the decision by X date. I then subsequently heard that they basically made an inside determination on all LTD contractors.

However, who is to say that even though I weren't there at the time the determination was made and communicated, I still won't be investigated as an insider - what is the cut off for being tarred with this brush and how do you wriggle out of it if you are?

Practically speaking, the cut off is anything that gets you paid by the end of March (or April 5th if you want to be pedantic). Anything after that, even late payments on a February invoice, will be caught by the new rules.

[PTP]

Practically speaking, the cut off is anything that gets you paid by the end of March (or April 5th if you want to be pedantic). Anything after that, even late payments on a February invoice, will be caught by the new rules.

What Hammertime meant was:
He leaves before SDS is made
Remainers get their inside SDS
HMRC decide to investigate the remainers, and while they’re at it, they think they may as well investigate anyone who was at that client in the 6 months .....1 year....2 years....previous.

So quitting before the SDS was issued might not be as strong a tactic as some people might think.....but still a step in the right direction

[hammertime1985]

What Hammertime meant was:
He leaves before SDS is made
Remainers get their inside SDS
HMRC decide to investigate the remainers, and while they’re at it, they think they may as well investigate anyone who was at that client in the 6 months .....1 year....2 years....previous.

So quitting before the SDS was issued might not be as strong a tactic as some people might think.....but still a step in the right direction

Couldn't have put it better myself.

[Superfly]

What Hammertime meant was:
He leaves before SDS is made
Remainers get their inside SDS
HMRC decide to investigate the remainers, and while they’re at it, they think they may as well investigate anyone who was at that client in the 6 months .....1 year....2 years....previous.

So quitting before the SDS was issued might not be as strong a tactic as some people might think.....but still a step in the right direction

Technically, Hammertime wasnt with the client to argue the determination at that point.
The determination of being inside was made on the remaining contractors who were still servicing the client. Hammertime was not within the scope of that determination.
Each contractors circumstances/contract wording/working practices differ, so hypothetically Hammertime could have been found outside, but he was never assessed and the client can never claim to have determined Hammertime as being inside.

So that point could be defended.

What also can be argued and possibly defended is if you have a determination carried out by the client, and you are found inside, and on the basis of the determination you leave as you do not accept the determination outcome and still consider yourself outside.

What would be more difficult to argue and defend is if you are working outside of IR35 prior to April 2020, then your determination is carried out by the client and you are found inside. You then stay with the client and work through an Umbrella/paye or you go permie with the same client. This could be interpreted by HMRC as tacit approval of the clients inside determination.

But as PTP said, leaving if or prior to being found inside IR35 is a step in the right direction.

[malvolio]

Couldn't have put it better myself.

Shame you didn't!

Anyway, now I understand the question, I think it's a bit of a low risk to be honest. Apart from anything else, HMRC don't have the resources to chase down every possible case. And even if they do, assuming your original outside determination was correct, your IPSE membership* will protect you.




* Other providers are available. Just not as comprehensively.

[hammertime1985]

Well, I need to keep everyone on their toes....

The issue has arisen it's ugly head yet again in this engagement. I'm going to have to be either vigilant and just hand in notice period (two weeks) before they determine me OR take a risk and ask the agency what the clients "verbal" view on the engagement is post April and hope that it's outside still (and secure it in blood).

If inside, then keep my fingers crossed they don't communicate it in writing / email et al!

Really frustrating that I managed to secure this engagement with the potential to go for up to one year and might end up only seeing 4 months of it.

**** YOU IR35!!!

[hammertime1985]

Technically, Hammertime wasnt with the client to argue the determination at that point.
The determination of being inside was made on the remaining contractors who were still servicing the client. Hammertime was not within the scope of that determination.
Each contractors circumstances/contract wording/working practices differ, so hypothetically Hammertime could have been found outside, but he was never assessed and the client can never claim to have determined Hammertime as being inside.

So that point could be defended.

What also can be argued and possibly defended is if you have a determination carried out by the client, and you are found inside, and on the basis of the determination you leave as you do not accept the determination outcome and still consider yourself outside.

What would be more difficult to argue and defend is if you are working outside of IR35 prior to April 2020, then your determination is carried out by the client and you are found inside. You then stay with the client and work through an Umbrella/paye or you go permie with the same client. This could be interpreted by HMRC as tacit approval of the clients inside determination.

But as PTP said, leaving if or prior to being found inside IR35 is a step in the right direction.

Thanks! this makes me feel a whole lot better after reading that!

[Superfly]

Shame you didn't!

Anyway, now I understand the question, I think it's a bit of a low risk to be honest. Apart from anything else, HMRC don't have the resources to chase down every possible case. And even if they do, assuming your original outside determination was correct, your IPSE membership* will protect you.




* Other providers are available. Just not as comprehensively.

What are IPSEs guidelines on the new legislation and determinations?

If you are found inside and carry on with the client using an Umbrella, will they still defend you? Does IPSE recommend that you leave if found inside at the risk of invalidating your IR35 insurance?

If you are relying on IPSE then it is important to know what their take on the new rules are and how you as a policyholder with them are expected to navigate through the new process, in order to ensure that you are not invalidating your cover.

I myself am not a member of IPSE, but those that are and are relying on them should speak to them and be clear as to what you need to do prior to/when the new legislation comes in.