Outside IR35 contract ends June

[Swiftly]

Currently contracting with a large well-known retail company through a PSC and via an agency. I've been here since September 2018 and my contract has always been (and confirmed by Larsen Howie) outside IR35.

Last week, it was just renewed for another 6 months until beginning on June, with no amendments made. Agency just announced today that all contractors have been individually assessed by end-client, and that almost all contractors have been considered inside IR35...

As my contract ends beginning of June, and is outside IR35. How does this affect me? They could very well have made a mistake, as the project manager who signed off my extension is new and may have not been fully aware.

[Patrick@Intouch]

Currently contracting with a large well-known retail company through a PSC and via an agency. I've been here since September 2018 and my contract has always been (and confirmed by Larsen Howie) outside IR35.

Last week, it was just renewed for another 6 months until beginning on June, with no amendments made. Agency just announced today that all contractors have been individually assessed by end-client, and that almost all contractors have been considered inside IR35...

As my contract ends beginning of June, and is outside IR35. How does this affect me? They could very well have made a mistake, as the project manager who signed off my extension is new and may have not been fully aware.

As your contract, and perhaps more relevantly your payments span April 2020, it would be worth having the end hirer provide you with a status assessment in advance of the proposed reforms. If they aren't willing to commit to that ahead of the time for this to officially become their responsibility then you should at the very least get a signed statement from them confirming their opinion that your engagement falls outside IR35.

If you can get that, and the subsequent status assessment confirming an outside IR35 status then you are protected. If an end hirer assesses an engagement as being outside and HMRC then prove that to be erroneous then any backdated tax liability would be the responsibility of the End Hirer, not you.

[ContractingBrit]

If an end hirer assesses an engagement as being outside and HMRC then prove that to be erroneous then any backdated tax liability would be the responsibility of the End Hirer, not you.

so you mean, if the end lcient agrees it is outside IR 35 beyond April 2020 and then for some reason HMRC disagree and pursue for back dated taxes, the end client will be responsible for tax even before April 2020?

[dsc]

[...]and my contract has always been (and confirmed by Larsen Howie) outside IR35.

[...]all contractors have been individually assessed by end-client, and that almost all contractors have been considered inside IR35...

As my contract ends beginning of June, and is outside IR35.

You say that almost all contractors have been considered inside by the client - are you part of the lucky few who are deemed outside by the client or are you saying that you are outside only because you've had your contract assessed in the past by LH? That assessment in the past doesn't really matter at this stage, you client does the assessment now and if they deem you inside, then you are inside, end of.

If you carry on on the same contract past April 2020 (or sooner actually as it's all about when you get paid) and you've been deemed inside, then you are basically admitting you've been inside all the time and significantly increasing your chances of being investigated.

[DeludedKitten]

Currently contracting with a large well-known retail company through a PSC and via an agency. I've been here since September 2018 and my contract has always been (and confirmed by Larsen Howie) outside IR35.

Last week, it was just renewed for another 6 months until beginning on June, with no amendments made. Agency just announced today that all contractors have been individually assessed by end-client, and that almost all contractors have been considered inside IR35...

As my contract ends beginning of June, and is outside IR35. How does this affect me? They could very well have made a mistake, as the project manager who signed off my extension is new and may have not been fully aware.

It affects you even more than most - you're currently operating outside IR35 but the client is going to tell HMRC from April that you are working on the same contract and you are inside IR35. If that doesn't set alarm bells ringing with you, then read that bit again.

Ask the agency to see the determination and understand why the client thinks you're inside IR35. Then ask what the appeals mechanism is, explaining why you think you are outside IR35 so that they can look at it and maybe have a rethink (do not be optimistic here though).

Any payment you receive after April 6th will be subject to the client making the determination and then the fee payer deducting the right level of tax (or not). If they are insisting that you are inside IR35 then I would worry about all that lovely money you've been earning as outside and not paying employment taxes on - if you stay with them make sure you have decent cover to protect you if HMRC come calling (IPSE, Larson Howie, Qdos, Markel Tax etc etc). If you don't want to take the risk then make sure you can terminate the contract so that you can receive that last payment before the start of the tax year so that the IR35 determination sits with your company and not with the client.

Good luck, whatever you choose to do.

[eek]

It affects you even more than most - you're currently operating outside IR35 but the client is going to tell HMRC from April that you are working on the same contract and you are inside IR35. If that doesn't set alarm bells ringing with you, then read that bit again.

Ask the agency to see the determination and understand why the client thinks you're inside IR35. Then ask what the appeals mechanism is, explaining why you think you are outside IR35 so that they can look at it and maybe have a rethink (do not be optimistic here though).

Any payment you receive after April 6th will be subject to the client making the determination and then the fee payer deducting the right level of tax (or not). If they are insisting that you are inside IR35 then I would worry about all that lovely money you've been earning as outside and not paying employment taxes on - if you stay with them make sure you have decent cover to protect you if HMRC come calling (IPSE, Larson Howie, Qdos, Markel Tax etc etc). If you don't want to take the risk then make sure you can terminate the contract so that you can receive that last payment before the start of the tax year so that the IR35 determination sits with your company and not with the client.

Good luck, whatever you choose to do.

Sorry but if they have determined you are inside I would be looking to leave as soon as possible once I had found somewhere else to go to. This is from another post today but it shows how difficult you situation could be were you to stay

Given what Sky have said, if an enquiry arose and you went into a meeting with HMRC saying:

1. I have the right to substitution
2. I have the right to not do the work Sky want me to do
3. I have control over what I do, when, how and to what standard

and the HMRC officer across the desk has a letter with Sky's header saying:

1. Yes but we will reject - always
2. No you do not, you have to do the work offered
3. No, we control how, what, when

I suspect that it could be a short interview.

Going into a dispute, especially if it reaches FTT and beyond, without the support of the end client is a brave shout.

[Swiftly]

I got the determination through today. They have classed me as inside, which they have done for pretty much every contractor here. They say that this is on the basis of:

1. They would reject any substitute
2. I have no financial liability. Any mistakes made would not need to be fixed in my own time at my own cost. (This is the first I have heard of it, my current contract says otherwise)
3. They have a level of control and direction. (This is true in terms of the project as a whole, stakeholders set requirements. but how I complete my work is entirely up to me)

The only point I can't argue with is point 1, but that point alone shouldn't be a basis for being inside... The other two I will be appealing against.

The determination statement itself has a date of 10th December (why did they wait 10 days to send it to me), and they've put the LTD of another contractor as the company name... I've asked for a new statement with the correct details, but won't get until after 6th Jan now. So is this statement even valid at this point?

My main concern at this point is that I've been determined, but I'm going to appeal. So do I still need to take action immediately, use an umbrella etc or shall I wait a few weeks until I get a reply regarding the appeal and statement correction?

[northernladuk]

Going umbrella is an admission and will be difficult and a pain in the ass to backtrack.

That said, it's the client youve got to appeal to and you are already caught on one major point so I really can't see the point. They may give in the other two but you are still caught. The other thing that could happen is they walk you for causing trouble. I really can't see a win for you here.

What you should really be doing, in my opinion, is leaving and doing everything you can to mitigate the risk you've now shafted by your client who have effectively said your entire engagement up to now has been inside.

[northernladuk]

P. S. I don't know one contractor yet that has had to fix mistakes in their own time. It just gets done as part of the day to day routine so I can't see you winning that one either.

[Swiftly]

Going umbrella is an admission and will be difficult and a pain in the ass to backtrack.

That said, it's the client youve got to appeal to and you are already caught on one major point so I really can't see the point. They may give in the other two but you are still caught. The other thing that could happen is they walk you for causing trouble. I really can't see a win for you here.

What you should really be doing, in my opinion, is leaving and doing everything you can to mitigate the risk you've now shafted by your client who have effectively said your entire engagement up to now has been inside.

Worse case if I stay with client and got investigated, I would have to pay back 1 year of employment taxes, and doing the maths this is something I can set aside. Would there be any additional fines if I were to be investigated? I've got IR35 insurance from Kingsbridge, would this cover me still?

Also, as I have paid corp and dividend tax, do HMRC take this into account when working out the taxes that would be owed?