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Outside-Inside-Outside-Inside

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    Outside-Inside-Outside-Inside

    So here’s one for you.

    I started contracting for the first time - at HMRC, ironically - in Apr 2017. (Had a small-scale consultancy/agency up until then working through MyLtdCo in which I was a 50% shareholder. Mainly one-off large projects and retained clients - no contracting.)

    From Apr 2017 to Apr 2018 the HMRC role was designated inside IR35.

    The set-up was:

    Me > MyLtdCo > Capita > HMRC

    Capita paid my wage into MyLtdCo’s account after tax, NI, Employer’s NI and the Apprenticeship Levy were deducted. That payment then went to me without any further deductions. (MyLtdCo continued to have other clients, which is why I kept it on rather than going through an umbrella. I paid myself using dividends for the other work MyLtdCo was billing.)

    Then from April 2018 the role went back outside IR35 and I continued to bill as:

    Me > MyLtdCo > Capita > HMRC

    Obv my take-home increased from then.

    And now from Apr 2020 the role is being shoved back inside IR35 but we won’t be able use our limited companies anymore so the set-up will be:

    Me > AN Umbrella Co > Capita > HMRC

    Oh yes, and before Apr 2017 (before I joined), the HMRC role was outside IR35!

    So the history of my HMRC role has been:

    Before Apr 2017 (before I joined): Outside IR35
    Apr 2017 to Apr 2018: Inside IR35
    Apr 2018 to Apr 2020: Outside IR35
    Apr 2020 onwards: Inside IR35

    I’m mulling over whether to continue come Apr 2020. Worried about retrospective tax-clawback action from HMRC (the taxman). But given the role has been doing the hokey-cokey in terms of IR35, I don’t quite know what to think…

    #2
    Originally posted by Spangled View Post
    So here’s one for you.

    I started contracting for the first time - at HMRC, ironically - in Apr 2017. (Had a small-scale consultancy/agency up until then working through MyLtdCo in which I was a 50% shareholder. Mainly one-off large projects and retained clients - no contracting.)

    From Apr 2017 to Apr 2018 the HMRC role was designated inside IR35.

    The set-up was:

    Me > MyLtdCo > Capita > HMRC

    Capita paid my wage into MyLtdCo’s account after tax, NI, Employer’s NI and the Apprenticeship Levy were deducted. That payment then went to me without any further deductions. (MyLtdCo continued to have other clients, which is why I kept it on rather than going through an umbrella. I paid myself using dividends for the other work MyLtdCo was billing.)

    Then from April 2018 the role went back outside IR35 and I continued to bill as:

    Me > MyLtdCo > Capita > HMRC

    Obv my take-home increased from then.

    And now from Apr 2020 the role is being shoved back inside IR35 but we won’t be able use our limited companies anymore so the set-up will be:

    Me > AN Umbrella Co > Capita > HMRC

    Oh yes, and before Apr 2017 (before I joined), the HMRC role was outside IR35!

    So the history of my HMRC role has been:

    Before Apr 2017 (before I joined): Outside IR35
    Apr 2017 to Apr 2018: Inside IR35
    Apr 2018 to Apr 2020: Outside IR35
    Apr 2020 onwards: Inside IR35

    I’m mulling over whether to continue come Apr 2020. Worried about retrospective tax-clawback action from HMRC (the taxman). But given the role has been doing the hokey-cokey in terms of IR35, I don’t quite know what to think…
    What changed to make it outside IR35 in April 2018 and again in April 2020 to make it inside once more.

    Remember
    1) IR35 was created to stop people on Friday resigning and returning the following Monday as a contractor paying far less tax.
    2) all the recent cases HMRC have won are related to the BBC shifting their presenting staff from payroll to "outside IR35" contracts..
    Last edited by eek; 24 February 2020, 09:32.
    merely at clientco for the entertainment

    Comment


      #3
      Same advice as usual. The ongoing engagement with your client will put you in HMRCs cross hairs. All that is different here is HMRC will have a bit more work to do to sort the situation out.
      'CUK forum personality of 2011 - Winner - Yes really!!!!

      Comment


        #4
        Public sector, right? So HMRC made the inside and outside determinations.

        So there would be no liability for you and no risk of clawback.

        Comment


          #5
          Originally posted by WordIsBond View Post
          Public sector, right? So HMRC made the inside and outside determinations.

          So there would be no liability for you and no risk of clawback.
          Not to be a scaremonger, but weren't we treated to statements from people who had used the Loan Charge further to a review by HMRC of the scheme?

          And a whiles later, they seemed to have changed their mind about what they reviewed, how they reviewed and how far back to investigate and clean up?

          But yes, in the minutiae, I would say there is no risk of clawback.

          Although I would love to see the OP have the chops to create a case to have all the contracts retrospectively declared Outside and claw tax back from the HMRC...

          Comment


            #6
            Originally posted by eek View Post
            What changed to make it outside IR35 in April 2018 and again in April 2020 to make it inside once more.
            Thanks for replying.

            The HMRC centre I joined lost a lot of contractors in Apr 2017 (when I joined) when the roles went inside IR35. So they worked with Capita to redraw up the main HMRC-Capita supply contract to make the roles outside IR35 in Apr 2018. TBH, at the time I knew next to nothing about IR35 and just took the job as my personal circumstances had changed.

            The roles have gone back inside IR35 from Apr 2020 as Capita have blanket assessed everyone as inside IR35 (as most private sector suppliers have). There is an appeals process but I'm not holding my breath for that.

            Although HMRC is the end client, my contract is with Capita.

            Comment


              #7
              Originally posted by Spangled View Post
              Thanks for replying.

              The HMRC centre I joined lost a lot of contractors in Apr 2017 (when I joined) when the roles went inside IR35. So they worked with Capita to redraw up the main HMRC-Capita supply contract to make the roles outside IR35 in Apr 2018. TBH, at the time I knew next to nothing about IR35 and just took the job as my personal circumstances had changed.

              The roles have gone back inside IR35 from Apr 2020 as Capita have blanket assessed everyone as inside IR35 (as most private sector suppliers have). There is an appeals process but I'm not holding my breath for that.

              Although HMRC is the end client, my contract is with Capita.
              I doubt HMRC want their dirty tricks revealed so the contract until April is safely outside (I missed the HMRC bit in your original post). Whether you continue beyond April is up to you..
              merely at clientco for the entertainment

              Comment


                #8
                Originally posted by WordIsBond View Post
                Public sector, right? So HMRC made the inside and outside determinations.

                So there would be no liability for you and no risk of clawback.
                Thanks for replying.

                Although I wasn't privy to everything that went on (and knew very little about IR35 when I joined in Apr 2017), I believe that HMRC (as in HMRC the end client, not HMRC the taxman, if that makes sense) initially put the contracts inside IR35 in Apr 2017 because that's when the public-sector rules came into force (?) and everyone was sh*t scared of getting it wrong but then worked with Capita over the next 12 months to redraw the contracts in order to designate the roles back outside IR35 from Apr 2018.

                The designation back inside IR35 from Apr 2020 is coming from Capita alone, who my ultimate contract is with.

                Comment


                  #9
                  Originally posted by Spangled View Post
                  Thanks for replying.

                  Although I wasn't privy to everything that went on (and knew very little about IR35 when I joined in Apr 2017), I believe that HMRC (as in HMRC the end client, not HMRC the taxman, if that makes sense) initially put the contracts inside IR35 in Apr 2017 because that's when the public-sector rules came into force (?) and everyone was sh*t scared of getting it wrong but then worked with Capita over the next 12 months to redraw the contracts in order to designate the roles back outside IR35 from Apr 2018.

                  The designation back inside IR35 from Apr 2020 is coming from Capita alone, who my ultimate contract is with.
                  Have you considered making a submission to the House of Lords Economic Affairs Finance Bill Committee who have called for evidence on the off-payroll legislation (see Finance Bill Sub-Committee - submit a written submission - UK Parliament?
                  One particular question they're asking seems appropriate: What has been the experience of the new off-payroll rules in the public sector? What lessons have been learned from this experience, and how have they affected the draft Finance Bill proposals?

                  It strikes me that hearing from a contractor working for HMRC who's been bounced in & out of IR35 while effectively doing the same role, illustrates perfectly how impossible a situation clients find themselves in, when even HMRC can't make their mind up whether their own role is inside or outside.

                  If you haven't made a submission, please do. It doesn't have to be fancy, you just respond to whichever questions you like, they want to hear real facts from real people or companies. But you need to do it quickly - the deadline for submissions is 23:59 on 25 Feb, i.e. tomorrow. If it helps, you need to submit your response by email to [email protected] and they prefer a Word or PDF doc attached rather than the response being in the email body.

                  Go on - you know it makes sense!
                  Last edited by Snooky; 24 February 2020, 11:29.

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