Here we go again...IR35 determination

[BABABlackSheep]

This to me is simply a calculation of risk.

I had a not too dissimilar situation myself:

1. Qdos reviewed outside contract & WP review
2. Very late inside determination by small client based on IR35 shield assessment and an admission that they'd blanketed all their offshore contractors inside due to their perceived inability to substitute.
3. Client proposes brolly and a 35% rate increase
3. Appeal
4. Voided without reply to appeal when legislation was postponed
5. Discussed situation with Qdos as I was considering walking. In particular I wanted their take on a voided client inside determination
6. Re-review contract with Qdos to further tighten contract
7. Balanced risk vs reward
8. Decided to remain with client

Assessing the risk is a personal choice. I weighed up the likelihood and severity and decided I was comfortable with the risk. Whilst I might have done a bit more to reduce the likelihood, essentially we're in the same boat. Many more will be too.

As an aside, my accountant had a chap join their team who had previously worked with "HMRCs IR35 compliance team". My accountant relayed his experience and expectations to me around the (at that time) impending legislation change which also fed into my decision. This is highly anecdotal and second hand so I don't intend posting the details but it did allow me to adjust my estimate of the "likelihood" side of the equation.

Thanks for taking your time in writing such a detailed response.

I’m considering my options in the next few weeks.

[WordIsBond]

Here's another option.

1. Operate the new contract inside IR35, and attribute your salary and pension contributions to it to mitigate the tax.
2. Keep all your evidence that the prior contract was outside.
3. If ever challenged, your defence is that on the first contract, you were told to make your own determination, on the second, the client said it was inside and so (even though the evidence pointed the other way) in the interests of being conservative you operated inside.
4. Start looking for a new role early.

This keeps your options open -- if no new outside contract comes up by January, you can MVL and go brolly. If you work quickly, you can hopefully get your first distribution in the current tax year and your second the following year. Might want to check with the MVL experts to see if that's feasible, though.

It also lets you position yourself as a responsible contractor who operates inside IR35 sometimes and outside sometimes based on the situation.

All that said -- don't ignore the possibility of ER being withdrawn, they have to get money somewhere. If you have a particularly large reserve, I'd lean towards just doing the MVL now so it is in process before the budget, and hopefully done before April.

If you had a contract review, and have a decent argument re: working practices, I don't think the "inside determination", which has no legal force, is all that damaging for the first contract. They told you to do your own determination. I think if you accept the new contract with them having giving you an inside determination at the start (even though it still has no legal force), the risk is much, much higher. I personally would not consider trying to operate outside in that scenario. But everyone has his own risk threshold.

[BABABlackSheep]

Here's another option.

1. Operate the new contract inside IR35, and attribute your salary and pension contributions to it to mitigate the tax.
2. Keep all your evidence that the prior contract was outside.
3. If ever challenged, your defence is that on the first contract, you were told to make your own determination, on the second, the client said it was inside and so (even though the evidence pointed the other way) in the interests of being conservative you operated inside.
4. Start looking for a new role early.

This keeps your options open -- if no new outside contract comes up by January, you can MVL and go brolly. If you work quickly, you can hopefully get your first distribution in the current tax year and your second the following year. Might want to check with the MVL experts to see if that's feasible, though.

It also lets you position yourself as a responsible contractor who operates inside IR35 sometimes and outside sometimes based on the situation.

All that said -- don't ignore the possibility of ER being withdrawn, they have to get money somewhere. If you have a particularly large reserve, I'd lean towards just doing the MVL now so it is in process before the budget, and hopefully done before April.

If you had a contract review, and have a decent argument re: working practices, I don't think the "inside determination", which has no legal force, is all that damaging for the first contract. They told you to do your own determination. I think if you accept the new contract with them having giving you an inside determination at the start (even though it still has no legal force), the risk is much, much higher. I personally would not consider trying to operate outside in that scenario. But everyone has his own risk threshold.

I’m leaning towards this.

I can’t see how I can take a contract extension knowing full well the client has not only deemed the role as being inside, but also sent out a bloody letter saying so prior to me signing.

Also, I’m well aware of the potential tax implications on MVL and I have a decent war chest. Swapping to Brolly now, also gives me an opportunity to stay(or return) at this client if the market doesn’t improve next year. Anyone on April 5th previously outside will come under massive scrutiny.

As I have zero expenses because everyone is WFH till at least the end of my extension, its not like I’ll take a massive take-home hit anyway.

Going to take professional advice after todays bank holiday.

[eek]

Here's another option.

1. Operate the new contract inside IR35, and attribute your salary and pension contributions to it to mitigate the tax.
2. Keep all your evidence that the prior contract was outside.
3. If ever challenged, your defence is that on the first contract, you were told to make your own determination, on the second, the client said it was inside and so (even though the evidence pointed the other way) in the interests of being conservative you operated inside.
4. Start looking for a new role early.

This keeps your options open -- if no new outside contract comes up by January, you can MVL and go brolly. If you work quickly, you can hopefully get your first distribution in the current tax year and your second the following year. Might want to check with the MVL experts to see if that's feasible, though.

It also lets you position yourself as a responsible contractor who operates inside IR35 sometimes and outside sometimes based on the situation.

All that said -- don't ignore the possibility of ER being withdrawn, they have to get money somewhere. If you have a particularly large reserve, I'd lean towards just doing the MVL now so it is in process before the budget, and hopefully done before April.

If you had a contract review, and have a decent argument re: working practices, I don't think the "inside determination", which has no legal force, is all that damaging for the first contract. They told you to do your own determination. I think if you accept the new contract with them having giving you an inside determination at the start (even though it still has no legal force), the risk is much, much higher. I personally would not consider trying to operate outside in that scenario. But everyone has his own risk threshold.

My actual question would be why wait until January to MVL - you could start the process in November and use the argument that the way you decided (and were forced) to go inside meant you suspected running a limited company wasn't likely in the future.

After all you will only be asked this question if and when the next outside IR35 contract came along and all evidence when you closed the company was given the budget and this companies attitude that it was unlikely that many outside contracts were going to appear.

[BABABlackSheep]

My actual question would be why wait until January to MVL - you could start the process in November and use the argument that the way you decided (and were forced) to go inside meant you suspected running a limited company wasn't likely in the future.

After all you will only be asked this question if and when the next outside IR35 contract came along and all evidence when you closed the company was given the budget and this companies attitude that it was unlikely that many outside contracts were going to appear.

He said Jan as that’s when my contract is up. I could try and get another outside gig. Unlikely, after xmas, IR35 looming and a crap jobs market.

No, if I’m going to do it, I do it before I take any extension.