There's already been about 1,749 threads on the risk of "retro" investigations, HMRC targeting your historical contracts with your client if your role is declared inside IR35, if you go brolly with the same client, or if you go perm with the same client. Perhaps one of the more important ones is here:
https://www.contractoruk.com/forums/...ould-i-go.html
There's also been some discussion about what HMRC specifically said about this topic:
I've previously expressed my view that "reason to suspect" can be used to open any investigation that they want. They don't have to actually have any evidence, they just have to have "reason to suspect" and then they can open the investigation. Even if they open it and don't find "fraud or criminal behaviour," once it is open it is open and then they just might "find" that you actually should have been inside IR35 all along.
Now that I've read the review in entirety, I think I've found what they will use as "reason to suspect." It's in their response to the blanket PSC bans.
They have always claimed that the reform would not impact those who are truly self-employed. The blanket PSC bans strike at that claim, so they've found an excuse that lets them keep it:
If you stop and think about that, what they are saying is the blanket PSC bans are coming in because organisations were engaging contractors who were working like employees.
In other words, the "it's a policy decision rather than a determination" defence isn't going to work with HMRC. They can't acknowledge "policy decisions" because that would move some truly self-employed people onto payroll and so make the "reform" impact the truly self-employed, when they've been denying all along that it would. So they have to treat "policy decisions" as a determination that contractors were "working like employees".
So clearly, HMRC's policy (whether they actually believe it, or whether they have adopted it to spare their blushes in the face of blanket PSC bans) is that a blanket ban IS an inside determination.
That means if you've been contracting for a client that has instituted a blanket ban anytime within the last 6 months, HMRC now is on record as believing you were inside (whether they actually believe it or not, that's their policy). And if you didn't declare yourself inside, then that means they have "reason to suspect" that you have engage in "fraud or criminal behaviour" and so, within their policy, grounds to open an investigation.
If you go brolly with the same client through the same agent, there is, in my view, a substantive risk that they will match you up and decide there is basis to investigate you, and they have already prejudged the matter that you were "working like an employee." The fact that they have prejudged the case will be damaging to their case and beneficial to yours once you get to tribunal, but you'll possibly have months or years of misery before it gets that far.
I still do not think those impacted by a blanket ban will be their first or easiest target, but this review should not give you any comfort. If you are going brolly with the same client and you have any significant exposure on prior contracts with the client, you should get your company closed ASAP, in my view.
https://www.contractoruk.com/forums/...ould-i-go.html
There's also been some discussion about what HMRC specifically said about this topic:
HMRC has already committed to not using information resulting from the changes to therules to open a new compliance check into Personal Service Companies for tax years priorto 6 April 2020, unless there is reason to suspect fraud or criminal behaviour.
Now that I've read the review in entirety, I think I've found what they will use as "reason to suspect." It's in their response to the blanket PSC bans.
They have always claimed that the reform would not impact those who are truly self-employed. The blanket PSC bans strike at that claim, so they've found an excuse that lets them keep it:
2.15 The Government is aware that some organisations are considering whether PSCs are the best way to engage contractors who are working like employees. Businesses reported that where individuals had been moved onto payroll, this was a result of a review of the structure of their workforce.
In other words, the "it's a policy decision rather than a determination" defence isn't going to work with HMRC. They can't acknowledge "policy decisions" because that would move some truly self-employed people onto payroll and so make the "reform" impact the truly self-employed, when they've been denying all along that it would. So they have to treat "policy decisions" as a determination that contractors were "working like employees".
So clearly, HMRC's policy (whether they actually believe it, or whether they have adopted it to spare their blushes in the face of blanket PSC bans) is that a blanket ban IS an inside determination.
That means if you've been contracting for a client that has instituted a blanket ban anytime within the last 6 months, HMRC now is on record as believing you were inside (whether they actually believe it or not, that's their policy). And if you didn't declare yourself inside, then that means they have "reason to suspect" that you have engage in "fraud or criminal behaviour" and so, within their policy, grounds to open an investigation.
If you go brolly with the same client through the same agent, there is, in my view, a substantive risk that they will match you up and decide there is basis to investigate you, and they have already prejudged the matter that you were "working like an employee." The fact that they have prejudged the case will be damaging to their case and beneficial to yours once you get to tribunal, but you'll possibly have months or years of misery before it gets that far.
I still do not think those impacted by a blanket ban will be their first or easiest target, but this review should not give you any comfort. If you are going brolly with the same client and you have any significant exposure on prior contracts with the client, you should get your company closed ASAP, in my view.
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