Outside IR35 contract ends June

[northernladuk]

One year taxes upto 100% in fines, interest and a horrible 2 years during investigation. That said, the client has admitted they wouldn't take subs and knocked a couple of other pillars down so maybe much quicker.

I bekeieve they would only insure you if there is a realistic chance of success. We don't know if clients determining inside is an easy win for HMRC as it hasn't been to court yet. If HMRC do win one comfortably because of this its going to invalidate a lot of people's insurance.

[Swiftly]

One year taxes upto 100% in fines, interest and a horrible 2 years during investigation. That said, the client has admitted they wouldn't take subs and knocked a couple of other pillars down so maybe much quicker.

I bekeieve they would only insure you if there is a realistic chance of success. We don't know if clients determining inside is an easy win for HMRC as it hasn't been to court yet. If HMRC do win one comfortably because of this its going to invalidate a lot of people's insurance.

If I am determined inside on information that I have only been made aware of today (e.g. that client will refuse ALL substitutes no matter what, and that I have no financial liability), surely this is a good argument for winning a case against HMRC? As I truly believed I was outside based on all other factors. I can work from my own workplace, set my own hours, complete work the way I want etc... I thought I had the right to substitute, and I thought I was financially responsible for mistakes... Why would it be my fault if the client has only just informed me otherwise?

[dsc]

I thought I had the right to substitute, and I thought I was financially responsible for mistakes... Why would it be my fault if the client has only just informed me otherwise?

You thought that based on what? What does your contract say re substitution and financial responsibility? I'd say that they can't just make tulip up out of thin air, so I reckon whoever made the assessment based it on smth.

[northernladuk]

If I am determined inside on information that I have only been made aware of today (e.g. that client will refuse ALL substitutes no matter what, and that I have no financial liability), surely this is a good argument for winning a case against HMRC? As I truly believed I was outside based on all other factors. I can work from my own workplace, set my own hours, complete work the way I want etc... I thought I had the right to substitute, and I thought I was financially responsible for mistakes... Why would it be my fault if the client has only just informed me otherwise?

Because working practices have now trumped your contract. Your RoS was strong even though it was untested. Its now been tested and there is a definitive answer. Judge, you've said no subs, would you have allowed one before. Client Probably not. Ouch!

And that's nkt looking at other points like working from home permanently. Permies can do this as well you know.

[RobScott]

quite sad

Because working practices have now trumped your contract. Your RoS was strong even though it was untested. Its now been tested and there is a definitive answer. Judge, you've said no subs, would you have allowed one before. Client Probably not. Ouch!

And that's nkt looking at other points like working from home permanently. Permies can do this as well you know.

I believe more and more firms are following the same pattern to avoid paying any penalties to HMRC

[Swiftly]

So I formally disputed the client's determination, and they have come back saying they would never accept a substitute, and would never hold me finacianlly liable etc. So on that basis, my working conditions have always been Inside IR35 despite me not knowing they had this stance. I'm at the point now where I am accepting this, if HMRC were to investigate me I wouldn't bother fighting back.

Now going forward, as my pre-april contract is tainted, I see no reason in leaving. I might as well just switch to Inside IR35 in April.

Is there any way to determine what the maximum taxes and penalty would be if I was investigated? My revenue for the 12 months was about £90k, this was all taken out as salary + dividend.

Also will corporation tax and dividend tax I have already paid be taken into account? Would I just be paying for employee and employers NI + penalties?

[WordIsBond]

You had a contract review stating outside and you appealed the determination. That shows you had legitimate reason for believing you were outside, YOUR contract showed it, you appealed showing you still believed it.

Therefore, you were not fraudulent nor extremely negligent in operating outside. There should be no penalties, but there will be interest.

The taxes paid should apply but because Corp Tax can only be claimed back for so long, there could be a time limit on this. It depends on what the tribunal decides in your case.

If the money was all received in the same tax year, then you can just use a standard inside IR35 calculator to find the liability. ContractorCalculator has one, don't have the link to hand, google it. Take the tax due it tells you, subtract the CT you paid on that income and any dividend tax you paid, and that's what will be due.

If it was across tax years then it becomes more complicated, and you should just ask your accountant.

The best thing you can do if you are staying is close your company as quickly as you can. In my view you've done nothing wrong. The agency lied to you in giving you a contract that didn't reflect their contract with the client. That's what has put you in this situation.

So get your company closed, hold on to the evidence that you had a review from Larsen-Howie and the evidence of your appeal. They'll probably never chase you if your company is closed. but if they do you have evidence that you acted reasonably in operating outside, and they will not be likely to try to hold you personally responsible.