Retrospective IR35

re: IR35 Investigation

The IR are notorious for reinterpreting rules as they go along.
Look at husband and wife companies hit by section 660 and they can go back 5 years.

Your best bet is to get insurance pronto and change your trading practises.
If you can prove you are in business of your own account presently, the IR
will have a hard time that you weren't operating the same way X years ago.

People who buried their heads in the sand and pretended that IR35 didn't exist but
didn't change their trading practises are in trouble. However most of the
IR35 cases that went to appeal, won. That doesn't mean people who made no
effect in combating IR35, are given a 99 percent success rate.
(I always wonder if these cases involved "bums-on-seat" contractors and not
small businesses)

Change your trading practises now before it's too late. Don't be given a false sense of security by the win rate.

Re: IR35 Investigation

If it’s too late to join the PCG, then still talk to one of the legal companies they use (Accountax, Qdos, Lawspeed etc). They should be able to help you (but you will have to pay for it).

If it’s any conciliation, so long as you can say that you took due care in deciding you were outside IR35, the IR will not charge penalties if you are subsequently found to be inside. But you would have to pay the tax and interest.

IR35 Investigation

IR have to give all clear before companies house will strike the company down. Applying to close the company may trigger the IR35 investigation

If you are not currently under investigation, then the best option IMHO is for you to join the PCG & get some insurance. The Route35 insurance covers all previous contracts. They have almost 100% record in defending IR35 investigations.

PCG contact details
Website : www.pcg.org.uk
E-mail : admin@pcg.org.uk
Phone : 0845-125-9899

There are retrospective elements to IR35 which is why it is so unreasonable. Other retrospective elements are subsequent court cases that change case law or changes to working conditions within a contract that was originally a pass.

However, I think court cases so far have indicated that if the conditions of the individual contracts show a pass there is no reason to look outside.

Hi. I have been advised that my contracts since the inception of IR35 may in fact put me within IR35. I may therefore have been "avoiding tax" even though I see myself as a law abiding citizen. I am horrified that the men in black may soon be arriving at my door. I don't want to go into details of why I am only discovering this now. Needless to say, some earlier advice I received has been rubbished.

Two options have been suggested:

1. Close down my company immediately. The IR are unlikely to seek retrospective compliance to IR35 for companies that no longer exist. This sounds like a load of tosh to me and carries a huge risk.

2. Seek to comply with IR35 retrospectively by appointing a lawyer to represent me. However, although I see this as approaching the IR with hand-on-heart, they may decide that I was avoiding tax and throw the book at me. I have been paying Corporation Tax, a nominal salary and dividends as we all did pre-IR35 and they may not recalculate what I should have paid fairly.

Any thoughts on how to approach this? My increased tax liability as a result of IR35 is probably massive (crippling in fact) but I do not want this haunting me for ever more.

Thanks

AD