Don't Be Outlaws
This may not seem like it is all that relevant to most of us, we aren't going to keep trading if our business is out of money. But it actually could matter.
It appears to me they've just made it easier to "pierce the corporate veil" and hold directors liable for the debts of the corporation. Now, you have to prove that you've taken every step to minimise losses to creditors. If you can't prove that, you can be held personally liable.
So suppose HMRC comes along five years from now and says, "Your contract back in 2015 was inside IR35, and you didn't operate it properly." If you lose the case, you've got a very large bill, including interest and penalties. It's a company liability, of course, so if your company has no money, well, you're off the hook -- unless they are able to "pierce the corporate veil".
Now, all they have to do is say, "Well, you could have operated IR35, so you clearly didn't take every step to protect your creditor, HMRC." How are you going to prove that you did take "every step" to protect creditors in that case?
Has this been applied to IR35 claims yet? No. But don't be surprised if we hear before long that HMRC has started to go after directors personally, and is using this argument.
This may not seem like it is all that relevant to most of us, we aren't going to keep trading if our business is out of money. But it actually could matter.
It appears to me they've just made it easier to "pierce the corporate veil" and hold directors liable for the debts of the corporation. Now, you have to prove that you've taken every step to minimise losses to creditors. If you can't prove that, you can be held personally liable.
So suppose HMRC comes along five years from now and says, "Your contract back in 2015 was inside IR35, and you didn't operate it properly." If you lose the case, you've got a very large bill, including interest and penalties. It's a company liability, of course, so if your company has no money, well, you're off the hook -- unless they are able to "pierce the corporate veil".
Now, all they have to do is say, "Well, you could have operated IR35, so you clearly didn't take every step to protect your creditor, HMRC." How are you going to prove that you did take "every step" to protect creditors in that case?
Has this been applied to IR35 claims yet? No. But don't be surprised if we hear before long that HMRC has started to go after directors personally, and is using this argument.
Comment