Reply to: Private Sector and IR35 -Grrrrr

[Jenme]

Indeed - it becomes harder to argue, as I said, but not impossible.

One starting point might even be to go through HMRC's ESS tool with the client and get them to answer honestly around the working practices - the result may well be that the tool HMRC have said they would stand by indicates that the contractor is outside IR35 regardless of what a piece of paper signed before the working practices were known says.

Before he started the contract, I completed the ESS Tool (one of the first things I did) and he is definitely inside IR35 on every single count - the piece of paper is just the other party attempting to cover themselves...just in case (can't blame them). In this case, we wouldn't need the client to follow the same exercise as there is no ambiguity in the contract at all.

Many thanks for double checking that I had looked at it though - much appreciated.

[TheFaQQer]

There are asl always two risks:

- Risk of being investigated by HMRC (probably unchanged by signing piece of paper)
- Tick of being found inside IR35 if investigated (probably defensible with proper insurance / advice, but increased risk as becomes problematic when the client is asked and they reply that the contractor is absolutely part and parcel of company and didn't they sign a piece of paper...)

Indeed - it becomes harder to argue, as I said, but not impossible.

One starting point might even be to go through HMRC's ESS tool with the client and get them to answer honestly around the working practices - the result may well be that the tool HMRC have said they would stand by indicates that the contractor is outside IR35 regardless of what a piece of paper signed before the working practices were known says.

[northernladyuk]

The role is private sector, so the burden of paying the correct level of taxation is the responsibility of the limited company - the company has to deduct the correct level of tax from the consultant.

So, is the role *really* inside IR35, or has he signed a piece of paper that says that he thinks it might be? If that was signed in advance of the contract starting, then it's meaningless - you cannot know for sure whether it is inside or outside until you know the working conditions once you start. If one of the three pillars of employment are missing, then you are outside.

Of course, having signed something that says "in advance of the contract, I understand that the role is inside IR35" will make any investigation a lot harder to fight, but if the role is genuinely outside then the piece of paper is meaningless as long as you have good professional advice if HMRC ask questions.

There are asl always two risks:

- Risk of being investigated by HMRC (probably unchanged by signing piece of paper)
- Tick of being found inside IR35 if investigated (probably defensible with proper insurance / advice, but increased risk as becomes problematic when the client is asked and they reply that the contractor is absolutely part and parcel of company and didn't they sign a piece of paper...)

[TheFaQQer]

He's an IT consultant in the private sector - he had to sign a form to say he was inside IR35.

The role is private sector, so the burden of paying the correct level of taxation is the responsibility of the limited company - the company has to deduct the correct level of tax from the consultant.

So, is the role *really* inside IR35, or has he signed a piece of paper that says that he thinks it might be? If that was signed in advance of the contract starting, then it's meaningless - you cannot know for sure whether it is inside or outside until you know the working conditions once you start. If one of the three pillars of employment are missing, then you are outside.

Of course, having signed something that says "in advance of the contract, I understand that the role is inside IR35" will make any investigation a lot harder to fight, but if the role is genuinely outside then the piece of paper is meaningless as long as you have good professional advice if HMRC ask questions.

[northernladuk]

I never thought I would see you post that! Are you okay?

FWIW I think you are both wrong. The OP makes it clear they have contacted a couple of accountants who don't have a clue. And neither do HMRC.

Its a disgrace when people try to do the right thing - and cannot get any help from "professionals".

How can we be wrong? Are you saying share ownership can be indicative to the amount of work you do for a company?

EDIT : Oh you mean that they need to get an accountant. I've a feeling that although the accountant they contacted may not be the best I don't think the full blame lies with the accountants in this case...

[BrilloPad]

NLUK is right.....

I never thought I would see you post that! Are you okay?

FWIW I think you are both wrong. The OP makes it clear they have contacted a couple of accountants who don't have a clue. And neither do HMRC.

Its a disgrace when people try to do the right thing - and cannot get any help from "professionals".

[psychocandy]

P. S. The work you do for the company has absolutely nothing to do with shares. I own shares in a company and don't do any work for them at all.

You need to get an accountant...

NLUK is right.....

[Jenme]

Surely that's only the same as any contractor risks if the Revenue find them IR35-caught when they've not been operating deemed payments? So it's things like income tax, employee NI and employer NI. There's no extra obligation just because the client is nominated as responsible.

If that's the case I would pay whatever I would normally pay for that kind of assignment (most likely low salary topped up by dividends and pension, with big chunks of retained profit). Unless a tribunal has said its IR35 then its status is unknown. The Revenue can't say it's IR35 reliably up front. It's only after QDOS have failed to sink the Revenue's case that any money has to change hands and I can't see why this piece of paper makes any difference.

It's an unnecessary risk to take, the contract is clearly inside IR35 - it might not hold up in court but that's not a risk we would be comfortable taking.

[Cirrus]

It will be all to do with this.

Surely that's only the same as any contractor risks if the Revenue find them IR35-caught when they've not been operating deemed payments? So it's things like income tax, employee NI and employer NI. There's no extra obligation just because the client is nominated as responsible.

If that's the case I would pay whatever I would normally pay for that kind of assignment (most likely low salary topped up by dividends and pension, with big chunks of retained profit). Unless a tribunal has said its IR35 then its status is unknown. The Revenue can't say it's IR35 reliably up front. It's only after QDOS have failed to sink the Revenue's case that any money has to change hands and I can't see why this piece of paper makes any difference.

[northernladuk]

I coud understand if they insisted you went onto some sort of payroll vehicle but if they're still paying you (your company) gross, I'm curious what the piece of paper can do apart from indemnify them against any subsequent Revenue action.

It will be all to do with this.

http://www.contractorweekly.com/tax-...iability-ir35/

[Cirrus]

What's the wording?

The agency gave him the paperwork to sign, it was a condition of the role. His client delivers to both the private and public sector.

I coud understand if they insisted you went onto some sort of payroll vehicle but if they're still paying you (your company) gross, I'm curious what the piece of paper can do apart from indemnify them against any subsequent Revenue action.

[Jenme]

I did :-) but I'm curious about Jenme's post I've quoted. In the private sector the decision as to whether a contract is inside\outside rests with the contractor, so I wonder why there was a form to sign... unless the private sector client is delivering to a public sector body...

The agency gave him the paperwork to sign, it was a condition of the role. His client delivers to both the private and public sector.

[northernladyuk]

Sounds like a lady I know.

I see from another thread the Simon Dolan's back on the game.

[gables]

He's an IT consultant in the private sector - he had to sign a form to say he was inside IR35.

Did you not read the thread?

I did :-) but I'm curious about Jenme's post I've quoted. In the private sector the decision as to whether a contract is inside\outside rests with the contractor, so I wonder why there was a form to sign... unless the private sector client is delivering to a public sector body...

[northernladuk]

You seem to be saying you get paid as a limited company so I'm thinking you can do what you like with regard to distributing the revenue.

Did you not read the thread?