Reply to: Christmas Bonus

[JB3000]

I wouldn't try to dress this up as something it isn't.

Indeed, deliberate and concealed errors are pretty harsh:

CH82470 - Penalties for Inaccuracies: Calculating the Penalty: Penalty reductions for quality of disclosure: Maximum and minimum penalties for each type of behaviour

[jamesbrown]

Invoice them for a Stand by fee. You couldn't go away for weekends as you were on call

If you're going to lie, you may as well back-date an invoice for ordinary services, not actually delivered. It's missing the point entirely. It's asking your client to be complicit in that lie and, chances are, they won't remember the story in a few years.

No, the best you can do is to not draw attention to it too much, but to otherwise accept the bonus for what it is. As others have pointed out, this would be a point of contention with HMRC, but it's unlikely to prove decisive, especially as the OP doesn't operate in a borderline way (based on earlier posts). Conversely, getting caught in a lie could prove decisive.

[Brussels Slumdog]

Invoice them for a Stand by fee. You couldn't go away for weekends as you were on call

[jamesbrown]

I'd parade around the car park naked, letting the client whip me whilst shouting "I'm a disguised permie, come and get my big boys at HMRC!" if my client gave me £5K for no reason.

Yeah, but you'd do that for a can of Diamond White.

[jamesbrown]

Thanks, Louisa.

This client is non-EU, the services I provide to them are VAT exempt. Since this is presumably related to the services I've provided, I hope it would be, too.

So you recommend raising an invoice for it and discussing terminology with the client? Maybe something like "Additional payment for services rendered as per verbal agreement"?

I guess you mean outside of the scope of VAT but, yes, in that case, this "supply" should also be outside of the scope of VAT, as it's just an additional payment for supplies already provided (my non-expert opinion, because the VAT place of supply rules can be complicated).

I wouldn't try to dress this up as something it isn't. Sure, don't be overt in calling it a bonus (e.g. instead, identify it as a discretionary payment for some concrete deliverables ABC, already provided, because that's truthful), but there's no hiding what it's about in the unlikely event that the question ever arises.

[billybiro]

If that ever came out in an investigation, wouldn't it look like I was trying to hide something, and potentially cause far more trouble?

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Meanwhile, just enjoy the £5k.

Jeez, some people don't half like to stare that gift horse right in the mouth until it throws up on them, don't they?

[SlipTheJab]

All your clients give you money for no reason.

Ho ho ho

[northernladuk]

I'd parade around the car park naked, letting the client whip me whilst shouting "I'm a disguised permie, come and get my big boys at HMRC!" if my client gave me £5K for no reason.

All your clients give you money for no reason.

[psychocandy]

I'd parade around the car park naked, letting the client whip me whilst shouting "I'm a disguised permie, come and get my big boys at HMRC!" if my client gave me £5K for no reason.

[Louisa@InTouch]

I'd run all this by my accountant, but he's either hitting the slopes in Switzerland or soaking up rays in Jamaica or swimming in Cumbria or directing traffic on the Forth Road Bridge or trying to finish his Christmas shopping. Anyway, he isn't in this week. I'm obviously paying him too much if he can ever take off any time at all. Accountants are always dull people, I've heard, and not supposed to have a life. The most they should be allowed as far as free time goes is to come on CUK and answer questions from people like me. Perhaps Louisa will provide evidence to the contrary.

I am very dull... I'm spending my Christmas morning running in the sea in fancy dress for charity!

And then I'll be back on CUK, as every accountant works 24/7 365 days a year.

(But I might indulge in having some of the bank holiday days off)

[Danglekt]

sounds like the sort of client most would kill for!

I get 4 week extensions, maybe 6 weeks if they are feeling bold and a bit flush.

If you ever need any extra support please let me know

[Contreras]

IMHO the payment itself doesn't put the contract inside IR35, but you have to wonder how the client would respond if questioned about it by HMRC and by invoicing through the correct channel it may very well cause them to think about what they have done.

The client really ought to have an invoice to reconcile against the payment.

The contractor really ought to have an invoice to reconcile against the receipt.

Both client and contractor really ought to have an invoice to account for the VAT content.

So the risk is this could snowball from say a VAT irregularity, either at the client or with another contractor, to HMRC asking who else has received direct payments, to a IR35 investigation which you may well defend but could do without the hassle.

I declined a £50 bonus once (letter was addressed to me personally and requesting an invoice, no payment was made). But in this instance, FWIW, I would take it, so long as it can be accounted for correctly.

[WordIsBond]

Thanks, Louisa.

This client is non-EU, the services I provide to them are VAT exempt. Since this is presumably related to the services I've provided, I hope it would be, too.

So you recommend raising an invoice for it and discussing terminology with the client? Maybe something like "Additional payment for services rendered as per verbal agreement"?

I wouldn't sweat it if your WP are otherwise strong and, from what I recall of your situation, it would be difficult to argue that you were a disguised anything.

Yeah, not too worried. Multiple clients (mostly foreign), 100% WFH, now five employees. This has gone so much better than I expected, keep waiting for the other shoe to drop. But this upcoming retainer with them could be on terms that are a little shaky for IR35. I'd feel better if it were any other client but this one. I suppose the likelihood of an investigation and them picking this one client/contract is pretty low anyway.

I'd run all this by my accountant, but he's either hitting the slopes in Switzerland or soaking up rays in Jamaica or swimming in Cumbria or directing traffic on the Forth Road Bridge or trying to finish his Christmas shopping. Anyway, he isn't in this week. I'm obviously paying him too much if he can ever take off any time at all. Accountants are always dull people, I've heard, and not supposed to have a life. The most they should be allowed as far as free time goes is to come on CUK and answer questions from people like me. Perhaps Louisa will provide evidence to the contrary.

[mudskipper]

One other thing you will need to consider is VAT too, if you are registered.

Ah yes, that's a pain

[Louisa@InTouch]

I think the 'bonus' would be something that HMRC would latch onto, if there was an IR35 investigation.

But as long as you have a number of really strong factors that still help you point away from employment, you can argue back!

You will need to make sure this income is recognised in your accounts. I would agree with your client together the description on the invoice. I wouldn't suggest calling it something that it's not, in case the client needs to support this at a later date.

One other thing you will need to consider is VAT too, if you are registered.