Does anyone else feel like they are being financially ripped by the tax-man

[eek]

I determine what's fair in my life. I adjust my life and make changes based on things I consider to be unfair.

However, I didn't say it was unfair, if you check my post, I said it was ridiculous. I also didn't moan about it. I am not one to come on forums and whine about my situation.

It wasn't a rant either, I was simply giving support and an alternative option to the OP.

If you choose to fight HMRC, then I applaud you and offer any assistance I can give.

If the OP chooses to stay he will have no choice but to fight HMRC and I suspect (heck, I know) he would lose.

As for the rest - life is unfair, deal with it and if you can move abroad that's up to you.

[Jolie]

15% of the tax is hidden from employees - Employer NI has been increased over the years because it was just about the only thing that can be increased when a Government has said income tax, employee NI and VAT won't be changing.

And I will repeat this again Employer NI and keeping it coming in is the sole reason for this change, they don't want employers abusing it by pretending their staff are "self employed contractors".

If that were genuinely the case, then surely it would have been easier to just levy the ErNI on Ltd's with directors who are taking 100% of the dividends, or something similar. Not hard to work out.

But no, much like the TV Licensing inspectors, who continue to hound you every day to pay up when there's no legal requirement to do so, these are jobsworth's who like nothing better than to meddle in peoples's lives, and they get a kick out of it.

[BrilloPad]

Fair is no more determined by HMRC, than what is a crime is determined by the police. Both just follow the rules given them by politicians that we elect so in a sense, fair is determined by society. Although obviously that doesn't seem to be working so well.

HMRC determine the rules, ignore them when it does not suit, and apply them retrospectively.

Why is it most posters here just don't get this?

[BrilloPad]

I determine what's fair in my life. I adjust my life and make changes based on things I consider to be unfair.

I think its unfair that when I get fed up with a wife I have to divorce them. I would prefer a bag of li8me and a new patio. Some rules have to be followed.

[BrilloPad]

If the OP chooses to stay he will have no choice but to fight HMRC and I suspect (heck, I know) he would lose.

As for the rest - life is unfair, deal with it and if you can move abroad that's up to you.

Good point. Except to say that while I wil lose to HMRC I intend to fight every step of the way.

[Jolie]

HMRC determine the rules, ignore them when it does not suit, and apply them retrospectively.

If HMRC don't play by the rules, then we don't have to either. To what extent you take the piss depends on your appetite for risk.

This reminds me of when speed cameras were first introduced. The police sent people a notice of intended prosecution with a witness statement, which you were required to sign by law. Most people just said okay, we broke the rules, signed and paid up. There were a few, shall we say, who noticed the glaring error in their scam, and successfully avoided any of them or the points.

The point is, that all laws and rules should be challenged and frequently, to ensure those jobsworths in charge of enforcing them are forced into line.

Why is it most posters here just don't get this?

Oh we do get it, believe me. The fact that Hector doesn't play by the rules and will take retrospective action is the main driver to get the hell out and run. I want a life where I can sleep easy at night. Doesn't mean I am not prepared to fight, but I will do so from afar, because ultimately in the end I will have the last laugh.

[WordIsBond]

OP, despite the great certainty with which people declare things here, no one actually knows what HMRC will do, and when. But I'll give you my opinion, FWiW.

I think if investigated for historical contracts you will likely lose, unless your argument is better than anything you've stated here. And I don't think QDOS or anyone else is likely to cover you, either (again, unless your argument is better than stated here). You should plan on losing the case if investigated, and not having had timely contract reviews, you are at risk of not only losing the case and having tax and interest, but also penalties.

That's true whether you stay with the same client or not. The inside determination will sink you.

So, now let's talk about the risk of investigation.

I think that if you keep your company open and work through it on an inside contract with the same client through the same agency, you are at very significant risk. Whatever HMRC said, I suspect they'll be looking for people like you and find you.

I think that if you go brolly with the same client through the same agent, you are also at pretty significant risk.

I suspect that if you go brolly with the same client through the same agent, AND you get your company closed quickly, you improve your chances of safely getting it closed. And if it is closed, I think you greatly reduce the chance of HMRC bothering to investigate. They don't know that you don't have contract reviews, etc. So it's not until they start the investigation that they will find that they might be able to go after you personally, and not knowing that, they'll probably just chase more obvious targets.

I suspect if you go perm with the same company that there's a decent chance of escaping their eye, and that you could get your company closed and escape.

I suspect if you mess around with MVL to try and extract funds from your company that you are extending the time they have to find you. The best thing you can do, if you are going to stay with the same client in any way, is to close the company as fast as possible, even if it means paying more in dividend tax to do so. Get your accounts done, pay your Corp Tax, VAT, any PAYE, and make yourself a nice dividend payment, then close your company ASAP.

If you do that I think there's a reasonable chance the company is closed before HMRC come looking, and that when they come looking they say, 'Oh, this guy saw us coming, too much trouble, we'll go after easier targets,' and move on.

Again, we don't KNOW that HMRC will come looking. We don't know, if they do, when they will. But if they are going after historical contracts of people who've gone inside/brolly/perm, I suspect in the next year their primary target will be the public sector guys because time is running out for them to chase them.

Mostly, I agree with those telling you to move or you are taking a huge risk. But if you don't move, you can at least mitigate the risk somewhat by closing your company ASAP.

[WordIsBond]

If HMRC don't play by the rules, then we don't have to either. To what extent you take the piss depends on your appetite for risk.

The guy with the loaded shotgun may not play by the rules but if he's telling the other guy to play by then and the other guy refuses, he's a fool.

[Cirrus]

So for ... almost half of the year! - every penny I earn is going straight to the Tax Man! - How on earth is that fair? - how do they call that paying "your fair share of taxes!"

About half a GDP is funded by the State. Somebody has got to stump up for that. It sounds a lot but actually it is nowhere near enough which is why we've got less hospital beds, MRI scanners, doctors etc etc than half of the rest of the world.

The rule we live by is poor people pay relatively less so rich people have to pay relatively more. Unfortunately you're in the rich category.

It hurts but schools cost a lot. The NHS costs a lot. State pensions cost a lot. The Police, Army, Navy, Airforce, Border Force etc etc cost a lot. When you voted for Brexit you saddled us all with literally billions of wasted expenditure. These all have to be paid for. It's painful but they're not punishing you now; you were getting away with unfair contributions before. Now they're making you pay as much as a permie.

You can't rant at HMRC. The cause of your financial stress is you. You can't charge a high enough rate to fund the lifestyle you want, the lifestyle you once had. You voted Conservative. That means you voted for rich people to stay rich. The working class like you don't get any freebies. They're just sealing up that hole in the dyke.

[GummiBear]

HMRC's advice is time limited - it always says this year meaning the tax year 2020-21.

HMRC don't actually need to do anything until April 2024 - that gives them a lot of time to go after year without breaking their "word".

Edit - but the decision is all yours - we are just giving you our opinion - albeit an opinion based on watching HMRC for a lot of years and observing exactly how they operate and their very careful use of words that mean different things to them then they do to the general public (fraud being a word that HMRC regard as a far more general term than people on here think it means).

HMRC only said they won't go after people IF there's no suspected fraud and I'm sure that HRMC classes almost everything as fraud, especially carrying on for 4 years claiming to be outside when in fact inside. CEST doesn't always give an inside result, but it doesn't really matter as HMRC will ignore CEST results if it says outside, and will use it against you if it suits them. They also don't care that you can be dropped at any point, that you work from home etc. as by default they class everyone inside and it's up to you to convince them and the tribunal otherwise. They will basically claim you are under control or some sort of supervision, that there's a mutuality of obligation, especially as you've taken every extension offered and that you haven't got the right of substitution.

As for masses of contractors simply bending over and going PAYE / inside at the same client - yes that is indeed true and exactly what HMRC wants / will be going after, they will make millions out of retrospective investigations and announce this IR35 change as a massive success.

Hand in your notice asap and look for another, most likely inside, contract elsewhere as that reduces the risk of retro investigation significantly.

OP,

I warned many Permie-Tractors years ago that change was coming. The response was in nearly all cases "Oh I leave all that to my accountant." Believe me your accountant does not know you, he does your books and information you provide. End of. It says as much in the preface of your accounts.

You need to grasp how serious the situation is. You are a disguised employee not in business of your own accord. You've done 4 years at one location, and because of the changes due in April, you are looking to go PAYE at the very same. No business owner would contemplate such a scenario because of the known tax implications.

You need to be gone and then worry about finding a new role. The alternative is a trap door set by HMRC, and they are just waiting for it to drop.

OP, despite the great certainty with which people declare things here, no one actually knows what HMRC will do, and when. But I'll give you my opinion, FWiW.

I think if investigated for historical contracts you will likely lose, unless your argument is better than anything you've stated here. And I don't think QDOS or anyone else is likely to cover you, either (again, unless your argument is better than stated here). You should plan on losing the case if investigated, and not having had timely contract reviews, you are at risk of not only losing the case and having tax and interest, but also penalties.

That's true whether you stay with the same client or not. The inside determination will sink you.

So, now let's talk about the risk of investigation.

I think that if you keep your company open and work through it on an inside contract with the same client through the same agency, you are at very significant risk. Whatever HMRC said, I suspect they'll be looking for people like you and find you.

I think that if you go brolly with the same client through the same agent, you are also at pretty significant risk.

I suspect that if you go brolly with the same client through the same agent, AND you get your company closed quickly, you improve your chances of safely getting it closed. And if it is closed, I think you greatly reduce the chance of HMRC bothering to investigate. They don't know that you don't have contract reviews, etc. So it's not until they start the investigation that they will find that they might be able to go after you personally, and not knowing that, they'll probably just chase more obvious targets.

I suspect if you go perm with the same company that there's a decent chance of escaping their eye, and that you could get your company closed and escape.

I suspect if you mess around with MVL to try and extract funds from your company that you are extending the time they have to find you. The best thing you can do, if you are going to stay with the same client in any way, is to close the company as fast as possible, even if it means paying more in dividend tax to do so. Get your accounts done, pay your Corp Tax, VAT, any PAYE, and make yourself a nice dividend payment, then close your company ASAP.

If you do that I think there's a reasonable chance the company is closed before HMRC come looking, and that when they come looking they say, 'Oh, this guy saw us coming, too much trouble, we'll go after easier targets,' and move on.

Again, we don't KNOW that HMRC will come looking. We don't know, if they do, when they will. But if they are going after historical contracts of people who've gone inside/brolly/perm, I suspect in the next year their primary target will be the public sector guys because time is running out for them to chase them.

Mostly, I agree with those telling you to move or you are taking a huge risk. But if you don't move, you can at least mitigate the risk somewhat by closing your company ASAP.

Thank you all so much for taking the time to reply and give advice.

In particular, WordIsBond - absolute stellar post, and sums up the situation so perfectly the advice is spot on - I would definitely buy you a pint or two for this post! Thank you!

I would very much like to stay with this client as I've built up quite a good reputation, the people are friendly and I have a fair amount of say on what goes on and how things are done, flexibility to work from home or office etc. I would lose all this, if I were to move to another client and would have to start at bottom and work my way back to the top.

Main way forward is try to mitigate risk as much as possible whilst staying with the same client.

Closing the company is exactly the advice my accountant was saying as a way to very much mitigate the risk of an investigation - WordIsBond very much in line what you have stated - so even though I might lose any IR35 case - the fact the company is closed - would set a higher bar of HMRC to chase and transfer liability from company to individual - and there are prob easier cases for them to chase.

Though I was thinking of going down the MVL route - try to get one done as fast as possible.
There is a quite a lot of funds in the company as I haven't been taken a lot out in dividends - so the 32.5% would be an eye-watering amount.

One possible option I was trying to consider was to go brolly - same client - but try to change agency - I understand, agencies send quarterly data to HMRC with quite a lot of detail of turnover along with personal details. Though Agency, only thinking of their own bottom line, wouldn't release me - had thought they could do some sort of contractor swap with another agency serving the client. It might be possible if I push harder.

There is an option to go perm with the client - but the salary is significantly lower - I think you were alluding to this being the least riskiest of options.

The QDOS review is being done with the client, if this does, by some miracle, come back as being outside, and the client is happy to sign off as outside - does

The advice that previous posters have given that I should leave as I'm high risk if I stay - isn't this advice based on the old paradigm i.e. where all contractors were operating via PSC - HMRC therefore had reason to go after contractors and try to claw back missing NI/tax.

Under the new paradigm, where all contractors are pretty much brolly/PAYE and paying full whack NI/tax - with HMRC coffer's over-flowing with loot - isn't this job done for HMRC and an end to IR35 - are they really going to put time and effort going after retro - when that effort can now be diverted to perhaps some real serious fraud - or perhaps are we low hanging fruit and easier for the picking.

Is the main reason people are saying I'm inside is purely down to the time (~4 years) I've been with the client and everything else is irrelevant?

So my current thinking is to close down company fast via MVL and go brolly probably with same agency if they won't let me switch. Or if this is still considered high risk, potentially go perm with client.

If it is better that I should leave now, as previous posters have said, I don't think I've come across articles that reflect the same view. Most seemed to have cited HMRC - twice stated - advice that it won't go after previous years. Is there any tax or ir35 professional articles that suggest the same course of action. While I respect and value your advice and it certainly has me now reviewing my options, the same advice needs to come from a professional source. I'll try and contact a few more ir35 tax professionals to gauge what they think I should do going forward.

Thanks again for the replies.

Also thanks to Jolie and escapeUK for your input and support - I couldn't understand the attacks and how comparing someone on £15k to those earning more - it wasn't handed to us on a plate and like you've said - we've worked bl**dy hard to get to where we are, a lot of sacrifice is made, esp those of us with families, it gets a lot harder trying to keep up with the latest tech and still maintain a semblance of family life.