ER and the 2 year stand down

[DeludedKitten]

It's a company liability. They'd have to make a case that you were negligent in your duties as a director to come after you personally. If you have a contract review that says you are outside then it would be pretty hard for them to make that case.

I agree - it comes under Regulation 72 of the Income Tax (PAYE) Regulations.

If the company / employee undertook due diligence and determined that there was no tax to pay because they were outside IR35, then it would be impossible to show that the failure to collect the "right" tax was wilful - it was an error that was made in good faith, so cannot be transferred to the individual.

OTOH, if you did your checks etc and thought you were inside but didn't pay the taxes anyway then there could be a chance that HMRC would be able to show that this was a wilful act and transfer the debt to the individual.

[WordIsBond]

I thought they just go after you personally? Im the opposite of an expert, but I assumed that if they successfully argued a ltd co contractor was witihn IR35, then they would just total up all the money my company ever invoiced and consider that as personal income rather than company (and then do you on all the PAYE and NICS you didnt pay in those years - not surei f they are nice enough to deduct any companies tax you might of paid).

My natural starting point with anything HMRC related is 'imagine the worst thing that can possibly happen and thats what HMRC will try and do to you'

It's a company liability. They'd have to make a case that you were negligent in your duties as a director to come after you personally. If you have a contract review that says you are outside then it would be pretty hard for them to make that case.

[coe123]

I thought they just go after you personally? Im the opposite of an expert, but I assumed that if they successfully argued a ltd co contractor was witihn IR35, then they would just total up all the money my company ever invoiced and consider that as personal income rather than company (and then do you on all the PAYE and NICS you didnt pay in those years - not surei f they are nice enough to deduct any companies tax you might of paid).

My natural starting point with anything HMRC related is 'imagine the worst thing that can possibly happen and thats what HMRC will try and do to you'

I am no expert, but the key in each case is working practices, and if you decide to change your engagement model you got to ensure that there is a change is working practice.

Permi option is the easiest as you would be under direction and control and possibly take on people management responsibilities setting you apart from previous engagement, there will be free training available to you and the appraisals

Umbrella is less clear but you could ask the client what changes are they looking to make to the working practices and the contract itself which sets you apart from the previous engagement model - before deciding if that changes the model sufficiently.

[bubble99]

From an IR35 perspective, if you have closed the company, who are HMRC going to go after?

There are very specific rules on getting the company restored, and even more limiting rules on whether the liability can be transferred from the limited company to the director of the company.

I thought they just go after you personally? Im the opposite of an expert, but I assumed that if they successfully argued a ltd co contractor was witihn IR35, then they would just total up all the money my company ever invoiced and consider that as personal income rather than company (and then do you on all the PAYE and NICS you didnt pay in those years - not surei f they are nice enough to deduct any companies tax you might of paid).

My natural starting point with anything HMRC related is 'imagine the worst thing that can possibly happen and thats what HMRC will try and do to you'

[DeludedKitten]

From an IR35 perspective, if you have closed the company, who are HMRC going to go after?

There are very specific rules on getting the company restored, and even more limiting rules on whether the liability can be transferred from the limited company to the director of the company.

[bubble99]

thanks guys for the replies. Also I see the autumn bidget has been scrapped, so fairs over imminent scrapping of ER (to coincide with loan charge) seem reduced.

yeah on point 2, I know HMRC can easily go back on what they say. Why tackle big business tax issues (endless courts and appeals and cost) when you can shake the small man tree and see what fall outs.

[WTFH]

you on the last night????

The OP is on about the 2 year rule to prevent you phoenixing after claiming ER. NOT the 24 month rule for expenses.

Sorry, you're right, and no I wasn't.

[Maslins]

Yeah I'm with Lance on this, I assume the 2 year thing you're referring to is the TAAR re doing similar activity again soon after liquidating.

Becoming an employee in a similar sector to where you were contracting shouldn't fall foul of the TAAR (ie you can still liquidate and gain CGT treatment, benefitting from ER assuming you meet the criteria).

Various views re risk on IR35. HMRC have as good as said they won't challenge historic situations for IR35 except where they believe it was fraudulent. However, the more careful folk have pointed out this HMRC statement has no legal backing. Ie a bit like BoJo, what they do tomorrow doesn't need to tally with what they say today...and there'd be no consequences for them.

[Lance]

1. If you go perm, there’s no expenses etc to claim, so the 24 month rule is irrelevant.
2. If you go through a third party, then you, the individual, will be going beyond 24 months. Your accountant can advise you on what you can/cannot claim. But remember, it’s not about when you go over 24 months, but when you know you’re going to go over.

At least, that’s my take on it.

As for your second point, I’d say yes, if you switch from a long contract at a client to going perm (or continuing contracting through another guise), that may well throw up red flags to hector.

you on the last night????

The OP is on about the 2 year rule to prevent you phoenixing after claiming ER. NOT the 24 month rule for expenses.

To the OP....
Yes you can do this. Why not search the forum or ready the guides to the right (there's one on MVL)?
As for IR35 later. Also read the forums. It's been done to death. There is a body of opinion that says you are safer if the LTD is closed anyway.

[WTFH]

- If I close my company and claim ER (lets assume that all things being equal I qulaify for ER) and engage any one of the three options...would I be in breach of the two year rule? I'd be doing essentally the same work, but obviously not through a ltd company. My inital thinking is that I would be ok as i'm clearly not pheonixing into another ltd company...

1. If you go perm, there’s no expenses etc to claim, so the 24 month rule is irrelevant.
2. If you go through a third party, then you, the individual, will be going beyond 24 months. Your accountant can advise you on what you can/cannot claim. But remember, it’s not about when you go over 24 months, but when you know you’re going to go over.

At least, that’s my take on it.

As for your second point, I’d say yes, if you switch from a long contract at a client to going perm (or continuing contracting through another guise), that may well throw up red flags to hector.

[bubble99]

Hi All - I'm currently a ltd company contractor and the client I'm currently at has said they will no longer utilise Ltd co contractors from the end of Feb20 due to IR35 concerns. It seems possible I can stay working at the client by 1 of these 3 modes: become a perm, PAYE contractor (through a third party), Umbrella (become perm employee of a thrid party umbrella outfit). My questions are:

- If I close my company and claim ER (lets assume that all things being equal I qulaify for ER) and engage any one of the three options...would I be in breach of the two year rule? I'd be doing essentally the same work, but obviously not through a ltd company. My inital thinking is that I would be ok as i'm clearly not pheonixing into another ltd company...

- I guess a slightly unrelated question, and excuse my total ignorance on the matter.... but if I go for one of those 3 options, and hmrc decided to retrospectively review my IR35 status for the time I was at the client via ltd co, would they view my contniued employment at the end user post Feb20 as a sign to support an IR35 assertion? I guess thats crystal ball gazing but not sure if people have view?

Thanks