Reply to: My client will only renew if within IR35 - Advice?

[Peoplesoft bloke]

I've experience of closing my company, that's all PB

I closed mine too when I went permie (I got better) but just because HMRC didn’t come after me for anything last time doesn’t mean they couldn’t have done.


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[ChimpMaster]

Ok I think the key is in the timing then - the article says
“When a contractor limited company is being closed down, the contractor submits a final tax return to HMRC, which details all of the final activities of the company. HMRC has a window of 12 months to investigate the business if they suspect there is tax still to pay”

I guess you were saying after the 12 month window there’s no further comeback?

I will admit to not being an expert and loathe to argue with Cojack (it didn’t end well last time)


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That's pretty standard TBH, with any tax return.

[cojak]

Ok I think the key is in the timing then - the article says
“When a contractor limited company is being closed down, the contractor submits a final tax return to HMRC, which details all of the final activities of the company. HMRC has a window of 12 months to investigate the business if they suspect there is tax still to pay”

I guess you were saying after the 12 month window there’s no further comeback?

I will admit to not being an expert and loathe to argue with Cojack (it didn’t end well last time)


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I've experience of closing my company, that's all PB

[Peoplesoft bloke]

Nope - HMRC can stop or complain that tax is outstanding during closure as it says in that article (I had a glitch in my company paperwork that HMRC grumbled about which temporarily halted my closure).

But once HMRC give the OK and the company is closed. That's it.

Ok I think the key is in the timing then - the article says
“When a contractor limited company is being closed down, the contractor submits a final tax return to HMRC, which details all of the final activities of the company. HMRC has a window of 12 months to investigate the business if they suspect there is tax still to pay”

I guess you were saying after the 12 month window there’s no further comeback?

I will admit to not being an expert and loathe to argue with Cojack (it didn’t end well last time)


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[Maslins]

I think it's worth distinguishing between:
- what is legally possible,
- what is likely.

Companies can be resurrected, even after being fully dissolved. Main times you'll see that mentioned on here is the director doing it to get funds back that would otherwise be lost to bona vacantia.

Third parties can resurrect companies too. However, it's expensive to do so. Therefore a third party (eg HMRC) is only likely to do so if:
1) they're very confident they'd been underpaid (IR35 challenges seem to be a bit 50:50 at best from HMRC's perspective),
2) the amount at stake is significant enough to warrant it.
For your average contractor, where there's no suggestion of fraud, just a possibly questionable decision on the grey area of IR35, I can't see HMRC reviving the company in practice, though legally they could.

[BolshieBastard]

Doesn't it ….?

The issue here is HMRC has the opportunity to object to any company closure. If they do object, the company isnt being closed and liable for investigation.

[cojak]

Nope - HMRC can stop or complain that tax is outstanding during closure as it says in that article (I had a glitch in my company paperwork that HMRC grumbled about which temporarily halted my closure).

But once HMRC give the OK and the company is closed. That's it.

[Peoplesoft bloke]

.

Once the company is closed, that’s it.

Not according to some articles online

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[mudskipper]

There is simply no process. The client is one of the big banks, who declared they won't engage with PSC anymore. It is therefore either that or contract not renewed. Which in normal times would be fine, except, they're really not. It's the first time in my career that I get nothing in my LinkedIn inbox. My next thought is to close down and leave the country in 2020.

OK - so the client has not said you are inside IR35. That's a plus from a "retrospective" point of view, but also leaves little scope for challenging what is essentially a policy decision.

[cojak]

Thanks a lot. I'll definitely check and enquire. It's a silly question, but would closing down the company prevent HMRC from coming after me?

Provided you have an outside IR35 contract with working practices to match, I don’t think that you will be investigated.

Once the company is closed, that’s it.

[dsc]

It's disappointing, but the market is dead and I feel cornered: accepting seems the only way to keep getting an income unless I start considering perm roles

This is exactly what HMRC wanted, to have contractors bent over the barrel and forced to take inside / perm roles to pay more tax. So far there was an option to simply walk in such a scenario as there was loads of other outside roles (or should I say "outside" roles). With the April change coming, most clients will be either going PAYE-only or puting roles inside, effectively eliminating the walk alternative.

Have you discussed going through an umbrella company? some say that the risk of doing this would be smaller than simply switching outside -> inside on an ltd, so perhaps that's worth pursuing.

[sal]

You still have 3 months until the end of your current contract - just look for another contract even if it's inside IR35 too.

1) It's not worth the risk of HMRC retrospective investigation
2) Middle finger to ClientCo. On your way out just tell them you have found another role outside IR35 and wish them GL (even if you haven't)

[ciaozio]

You can buy tax investigation insurance. You haven't been investigated, and have no reason to think you will be, so that will be valid.


Ask how they came to their determination. Do you agree with it? What process is there for you to appeal it?

You say the rate remains the same - be absolutely clear about who is covering Employers NI - it should be the feepayer/client.

There is simply no process. The client is one of the big banks, who declared they won't engage with PSC anymore. It is therefore either that or contract not renewed. Which in normal times would be fine, except, they're really not. It's the first time in my career that I get nothing in my LinkedIn inbox. My next thought is to close down and leave the country in 2020.

[eek]

You can buy tax investigation insurance. You haven't been investigated, and have no reason to think you will be, so that will be valid.


Ask how they came to their determination. Do you agree with it? What process is there for you to appeal it?

You say the rate remains the same - be absolutely clear about who is covering Employers NI - it should be the feepayer/client.

It won't be - did IPSE ever find a case to pursue?

[mudskipper]

Too late for IR35 insurance. Can't buy insurance to cover you after the event.

You can buy tax investigation insurance. You haven't been investigated, and have no reason to think you will be, so that will be valid.


Ask how they came to their determination. Do you agree with it? What process is there for you to appeal it?

You say the rate remains the same - be absolutely clear about who is covering Employers NI - it should be the feepayer/client.