Hi everyone, need a little ir35 help and explanation please!

[HugeWhale]

No incompatibility - a UTR is needed for personal taxes, which applies, of course to a company director. I was reading between the lines that the OP meant he was registered as self employed as a sole trader rather than limited company, and “having a utr” tends to be a short cut for meaning registered as self employed.

Thank you.

[Jessica@WhiteFieldTax]

Don't mean to hijack. Is there an incompatibility between having your own company and also a UTR?

No incompatibility - a UTR is needed for personal taxes, which applies, of course to a company director. I was reading between the lines that the OP meant he was registered as self employed as a sole trader rather than limited company, and “having a utr” tends to be a short cut for meaning registered as self employed.

[HugeWhale]

Correct me if I'm wrong, Deniance, but it seems you don't have a company of your own? The reference to a UTR makes me think you are Self Employed and simply filing a Self Assessment?

Don't mean to hijack. Is there an incompatibility between having your own company and also a UTR?

I've had my own ltd for years and pay corporation tax and file company accounts etc (or my accountant does). I also file a self-assessment (or my accountant does) which pays e.g. dividend tax, personal tax etc...and to pay this bill I need to quote a UTR. Is there anything amiss?

TBH I get a message from my accountant every now and again which says: "HW, you need to pay £x VAT by the end of the month" or "HW, you need to pay £x corporation tax by the end of the month" and I just pay it. Blindly and possibly naively just trusting the accountant to get it right.

[Gomez]

You may wish to take a look at this hot off the press: https://www.contractoruk.com/news/00..._campaign=IR35

I have had a number of conversations with private sector contractors over the years in a number of different industries and I have been pretty shocked by their lack of knowledge around IR35.

[Jessica@WhiteFieldTax]

It’s self policed currently by the end contractor - your mates - with occasional HMRC checkups. Your mates - or their companies - bear the risk if it goes wrong.

The proposed/rumoured changes, if the follow the Public Sector, would shift responsibility for checks to the engager - someone higher up the chain. Unless there is a labour shortage they won’t have much incentive to try and construct outside of IR35 contacts, so you will end up being PAYEd and your take home go down. HMRC get more, you get less, contractor bears the same headline cost. But you don’t get holiday and sick.

You either need union representation - safety in numbers - or get out and do your own thing.

And really it’s all speculation right now.

[Deniance]

Yes, potentially Private Sector IR35 reform would effect them, but even as it stands IR35 effects them - if it happens, and if so if it happens the same as the Public Sector changes, the the changes would simply shift compliance responsibilities not the tests.

But it all becomes very opaque and muddled I’m afraid.

Not sure why the limited company contractors are getting that much more back than you, but chat with your accountant.

So who checks for this ir35? If it affects them now, who checks? What’s it all about? This is where I’m getting confused!!

[cojak]

They are either lying - or they are in a tax avoidance scheme and haven't been caught yet.

Or they are earning a lot more than you to start off with.

[Jessica@WhiteFieldTax]

Yes, potentially Private Sector IR35 reform would effect them, but even as it stands IR35 effects them - if it happens, and if so if it happens the same as the Public Sector changes, the the changes would simply shift compliance responsibilities not the tests.

But it all becomes very opaque and muddled I’m afraid.

Not sure why the limited company contractors are getting that much more back than you, but chat with your accountant.

[Deniance]

It’s hard to know where things will go, but you can be sure the effect in extra tax will come back to your take home.

I’m not sure there is much you can do at present. If you don’t have a company then IR35 isn’t the immediate issue, but you are right it may lead to changes up the chain - I know of a lot of sole traders - like you - working for local authorities who have been told they must become limited companies because of Public Sector IR35 - it’s bizarre and makes no sense.

Best advice, have a good accountant, and think about joining a pro active union who will help protect your interests.

What about the Limited company guys? Will they be affected by the new ir35 private sector rules if they happen?

I’ve read that agencies stopped using cis, because of the onshore intermediataries law change in 2014, they had to prove there was no direction or supervision which they couldn’t so they told everyone to use a Limited company ?

So now you have unskilled workers using a ltd company and skilled workers using ltd companies, the scam is huge

I’m just trying to do my research before it happens
All the Limited company guys think that it’s never gonna happen, they are getting massive tax returns!!

It can’t go on!
I had £2300 tax return as cis
The ltd company guys are getting 6 , 7, ,8 grand back!!

Is this what the new rules are trying to stop?

[Jessica@WhiteFieldTax]

It’s hard to know where things will go, but you can be sure the effect in extra tax will come back to your take home.

I’m not sure there is much you can do at present. If you don’t have a company then IR35 isn’t the immediate issue, but you are right it may lead to changes up the chain - I know of a lot of sole traders - like you - working for local authorities who have been told they must become limited companies because of Public Sector IR35 - it’s bizarre and makes no sense.

Best advice, have a good accountant, and think about joining a pro active union who will help protect your interests.

[Deniance]

Hi there!!! Thanks for the reply!!

No I don’t have a company of my own, never have done !!!


When I first approached an agency in 2001 I was 21 and was just told to phone the tax people and get a utr number, it was just how the agency pay you, then that stopped in 2003 and they said that you have to use an umbrella company, the. Cis payments returned along with ltd company option.

What ever way they pay, umbrella ltd or cis, is just a means of paying you, it’s false self employment, everyone keeps telling me to make my accountant make me a ltd company

I’ve read about this ir35 private sector and just wondered if it will make the agencies make Us use umbrella companies, some agencies won’t or can’t pay via cis because of some tax rules , I’m not sure, it’s a massive scam in the industry

Correct me if I'm wrong, Deniance, but it seems you don't have a company of your own? The reference to a UTR makes me think you are Self Employed and simply filing a Self Assessment?

In which case IR35 cannot apply. What could apply is Employment Status - broadly the same tests - but the liability under law would generally sit one level up the chain, so with the payroll company. The 20% they stop is CIS not PAYE, and if a Employment Status decision went against you/them, they would be liable for the PAYE (tax and NI) hopefully less the 20% already deducted (hopefully, as the set off is discretionary not statutory).

If the above is correct I would imagine that the payroll company have either a watertight contract with you or have an indemnity to recover tax/NI over the 20% from you if there was a Status fail. Maybe both.

Bottom line. IR35 no. Employment status fail maybe. Liablity, in practice, who knows, but its normally the person at the end who suffers.

[Deniance]

Hey there!! Thanks for the reply, I appreciate it!

I’ve trawled the internet looking for answers but not much success !

Can you explain a bit more?
What will the proposed private sector changes mean to me and my work?

When I started years ago in like 2001 maybe we just got paid via the cis scheme and deducted 20% tax, then in 2003 I think the agencies started telling us that they could only pay us via an umbrella company, which we all learnt quickly was a complete rip off! There was obviously a reason for the agencies not paying via cis because they would send out a questionnaire before paying us stating questions like are we under direction supervision and control etc and we were just told to say no!
Then as the years went on, cis payments came back.
Some agencies will only offer umbrella and ltd now some will offer umbrella cis and ltd, but whichever option you choose the hourly rate is the same!

It’s getting worse and worse for us, all construction sites are now using agencies, we should be Paye with holiday pay etc but both the agencies and electrical companies have had years of experience with this tax scam, it’s just getting bigger and bigger





Moderator edit: quoted portion snipped as it was incorrect advice.

[Jessica@WhiteFieldTax]

Correct me if I'm wrong, Deniance, but it seems you don't have a company of your own? The reference to a UTR makes me think you are Self Employed and simply filing a Self Assessment?

In which case IR35 cannot apply. What could apply is Employment Status - broadly the same tests - but the liability under law would generally sit one level up the chain, so with the payroll company. The 20% they stop is CIS not PAYE, and if a Employment Status decision went against you/them, they would be liable for the PAYE (tax and NI) hopefully less the 20% already deducted (hopefully, as the set off is discretionary not statutory).

If the above is correct I would imagine that the payroll company have either a watertight contract with you or have an indemnity to recover tax/NI over the 20% from you if there was a Status fail. Maybe both.

Bottom line. IR35 no. Employment status fail maybe. Liablity, in practice, who knows, but its normally the person at the end who suffers.

[Deniance]

Hi everyone, I’m not an it contractor but I’m hoping you can help me or offer an insight please.

I am wondering if all this private sector ir35 talk will affect me and my work colleagues !

Ok, so, I’m an electrician, I work for agencies most of the time, and it’s getting more and more agency based .

I am registered with the CIS scheme and have a Utr number
I use a payroll company who deduct 20 percent tax then pay me.

Other guys in work are a ltd company and get paid that way.

I can’t speak for everyone but I would say 90 percent of us use either cis or ltd only as a means of being paid by the agency.

I am not self employed and never have been, the family tree so to speak is this
Client Exxon Mobil new construction project
Foster Amec wheeler main construction company
Bilfinger electrical company
Heads eng. agency
Guild payment company
Then me!

I am told the hours of work
I can’t supply a substitute
I wear their uniform
They set the pay rates
I don’t supply materials or tools, got my own small hand tools

So I guess, I’m asking, would this ir35 private sector affect me as a cis person, would it affect the guys who are ltd company?
Or am I barking up the wrong tree altogether and this or 35 has nothing to do with us?
We all just go from different Job to different Job, different agencies etc?
Any help or pointers greatly appreciated thanks Danny!