Retrospective IR35 investigations

[NeedTheSunshine]

Back to an earlier point...let's say they open an enquiry later this year into a contractor who switched from contracting to umbrella just before April...they don't cite avoidance or evasion, just that prior to 05/04/2020 the contractor was a 'disguised employee'. The contractor was operating business-to-business in a true 'outside' manner for say four years with this client prior to 05/04/2020 (and has a file of evidence to prove it) and has one of these retrospective insurance policies. If the contractor goes to court/tribunal and wins, great. If the contractor goes to court and loses, the tax hit is covered by the insurance policy. Why wouldn't the contractor switch from contracting to umbrella? It may cost the contractor £1400 a year, but the risk is hedged.

I'd be reading the terms and conditions of the insurance policy very carefully. HMRC will absolutely be sending out generic letters to all those with the same client who are now umbrella/paye and who were previously Ltd and declaring outside. They have the data. If the client has said no Ltds/all roles inside then the client is basically agreeing with HMRC's view of the role as it always was - inside. Imagine you are the judge at the tribunal. Client says inside, HMRC says inside, one man band says outside.

There is absolutely no way I would be staying at the same client without an outside determination from them even with the insurance.

[Skint]

Timely reminder that QDOS IR35 insurance has never had to pay out. In most/all cases that means they've won the argument. But that they have no precedent for paying out.

From a Qdos client's perspective I'd say winning the argument or paying out, either is fine! On their website they cite >1,500 cases successfully defended, 99.6% success rate, £35m saved (and no I don't have any connection to Qdos )

and has one of these retrospective insurance policies. If the contractor goes to court/tribunal and wins, great.

There are many reasons why an insurer wont pay out. One reason would be you didnt tell them something (deliberately or otherwise)

[Skint]

Back to an earlier point...let's say they open an enquiry later this year into a contractor who switched from contracting to umbrella just before April...they don't cite avoidance or evasion, just that prior to 05/04/2020 the contractor was a 'disguised employee'. The contractor was operating business-to-business in a true 'outside' manner for say four years with this client prior to 05/04/2020 (and has a file of evidence to prove it) and has one of these retrospective insurance policies. If the contractor goes to court/tribunal and wins, great. If the contractor goes to court and loses, the tax hit is covered by the insurance policy. Why wouldn't the contractor switch from contracting to umbrella? It may cost the contractor £1400 a year, but the risk is hedged.

Avoidance is not encouraged these days. And having your contract switched from outside to inside does NOT make you a criminal, and I would thank you not continuing to make that comparison.

Sorry, I cant not say something because you dont like it

Tax avoidance is buying duty free. Legal.

Tax evasion is not declaring extra duty free. Not Legal.

It is legal to buy extra duty free, but if you dont declare it, it is Evasion and illegal.

Timely reminder that QDOS IR35 insurance has never had to pay out. In most/all cases that means they've won the argument. But that they have no precedent for paying out.

Just because an insurance company doesnt pay out, doesnt mean the house didnt burn to the ground.

[PerfectStorm]

how many people have enough IR35 insurance to cover multiple years?
TLC35 can go up to £1400 a year. I dont know anyone who pays that.
Almost everyone has just £50k of cover, which will cover a year maybe (maybe 2 for some). So it's not a magic solution.

I don't know about any others but Qdos's cover is what they term a "claims made policy" which means it isn't designed to 'cover multiple years' but remains in force for as long as the individual keeps paying the premium. So if you do that and say HMRC open a retrospective enquiry in say November 2020 into your work for a client from say Jan 2015 to Nov 2020, then it's covered. Some people here think £1400 a year is worth paying, in order to (a) keep the income flowing now (the alternative is to sit on the bench, not earning) and (b) mitigate the retrospective enquiry risk.

Timely reminder that QDOS IR35 insurance has never had to pay out. In most/all cases that means they've won the argument. But that they have no precedent for paying out.

[cojak]

While the uniformed masses and red top newspapers dont understand the difference, there is a HUGE difference between avoidance and evasion.

Avoidance is legal, and encouraged.

Evasion is Hiding tax liability, which is illegal.

Avoidance is not encouraged these days. And having your contract switched from outside to inside does NOT make you a criminal, and I would thank you not continuing to make that comparison.

It will give you a potentially large tax bill but you won't have a criminal record because of it.

I believe it is avoidance. Though HMRC have no difference between avoidance and evasion.

While the uniformed masses and red top newspapers dont understand the difference, there is a HUGE difference between avoidance and evasion.

Avoidance is legal, and encouraged.

Evasion is Hiding tax liability, which is illegal.

[BrilloPad]

Well milud, I put it to you, that not only am I correct, but it is the esteemed poster, what is incorrect.

Working outside is legal. However, saying that you are outside, whilst knowing to be inside, would most likely be considered as tax evasion.

I believe it is avoidance. Though HMRC have no difference between avoidance and evasion.