Interesting IR35 finding / possible appeal

[CosmicWave]

Hi All,

Looking for some guidance / views on this one (for a change) -

The role of myself several of my colleagues (same role) have been found to be within IR35. The basic setup is this that I am engaged by an agency, to a "client". The "client" is using myself to fulfil a contract with another company "end client". This contract is bid on annual and renewed for the past 3 years (we've actually been in the same role with the end client through different clients for 11 years). NOTE: never directly engaged by the "end client".

Earlier this week we had a call with the client regarding IR35 was quite enlightening. I summarised the meeting -

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1. The <xx> role has been found to be within IR35.
2. <client contact> is building a business case to have the <xx> FTE role created within <client>
3. The <xx> FTE role would be unique to the <end client> contract, should the <end client> contract be lost the <xx> FTE would cease to exist. Albeit alternative roles focusing on one of our broad spectrum of skills could potentially be offered but probably not on the same basis / package as the very specific <xx> FTE role.
4. IR35 is intended to stop PSC's fulfilling FTE roles / tax people fulfilling FTE roles at the appropriate level.

Points 3 and 4 seem to be directly at odds with each other as the <xx> role is unique to the contract and unavailable as an FTE role even within an organization as large as <client> is.
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What you guys reckon??

You and all your colleagues, are all done!
Please start thinking about how you are going to arrange to pay close to a £million that is also going to include interest and penalties, etc.

11 years.. are you kidding?

No wonder, we are in this mess!
I applaud HMRC for what they are trying to do with these changes!
Time for good-riddence with these kinds of con-tractors!

Anyways, prepare your cheques please.

[Pring]

Where are these £600k/"close to a million" figures coming from? I remember the liability section from a QDOS document (attached below) that says the liability at a day rate of £500 for 6 years is £66,000 including interest. 11 years would be closer to £140,000 probably and a possible but extremely unlikely 100% penalty but that's still nowhere near the other figures being quoted. On the hook for a lot sure, but aren't those figures hyperbolic?

[GhostofTarbera]

Where are these £600k/"close to a million" figures coming from? I remember the liability section from a QDOS document (attached below) that says the liability at a day rate of £500 for 6 years is £66,000 including interest. 11 years would be closer to £140,000 probably and a possible but extremely unlikely 100% penalty but that's still nowhere near the other figures being quoted. On the hook for a lot sure, but aren't those figures hyperbolic?

Because qdos figures are bollocks it seems

Inside IR35 you will get about 52% percent with no expenses, outside you should be getting 70%+ plus expenses that’s not £10k in any calculator


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[Pring]

Because qdos figures are bollocks it seems

Inside IR35 you will get about 52% percent with no expenses, outside you should be getting 70%+ plus expenses that’s not £10k in any calculator


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Ah I think the difference may be (roughly) people quoting the total tax that would be due rather than the total tax minus tax already paid?

Very simplified but sticking £500 day rate
Calc shows £6788 difference between inside and outside. The liability would be the difference between what was paid when Outside (corp tax/etc) vs Inside (Paye/NI/etc) so ~£10k/year including interest/expenses/etc doesn't seem too far off.

[northernladuk]

Look up the JLJ case. He was looking at 141k for 7 years.

[WordIsBond]

Because qdos figures are bollocks it seems

Inside IR35 you will get about 52% percent with no expenses, outside you should be getting 70%+ plus expenses that’s not £10k in any calculator


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Only the last few years have expenses been excluded, isn't it?

Didn't you used to get expenses inside IR35?

[GhostofTarbera]

Only the last few years have expenses been excluded, isn't it?

Didn't you used to get expenses inside IR35?

When commuting to Amsterdam for 3 years and London for 7 years my expenses were £50K+ per year


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[WordIsBond]

When commuting to Amsterdam for 3 years and London for 7 years my expenses were £50K+ per year


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Which is irrelevant to the question. Didn't they just change the rules a few years ago and before that, you could claim expenses even when you were inside IR35?

[eek]

Which is irrelevant to the question. Didn't they just change the rules a few years ago and before that, you could claim expenses even when you were inside IR35?

Yep - prior to 2016 you could expenses via umbrellas (ideally, once you has 2 clients). Afterwards the rules are if you are outside IR35 and not subject to Supervision, direction or control.

[andydd68]

Yep - prior to 2016 you could expenses via umbrellas (ideally, once you has 2 clients). Afterwards the rules are if you are outside IR35 and not subject to Supervision, direction or control.

Really ?

If you are employed via an umbrella you are clearly Inside IR35 (or in actuality its not relevant) but most umbrellas will still allow expenses (subject to SDC), which tends to imply that its only SDC thats relevant not IR35 AND SDC.