Declared to be inside- what options do I have?

[DKB]

The tool has already been used and I think that is the determining factor as far as tool is concerned. This is a hypothetical case as I have tried convincing the client saying that I would be able to provide a substitute in case really required but they believe its not practical and they would not be really willing to accept a replacement although the contract does not have any mention of it. Furthermore with limited number of employees in my LTD company its seems hard to prove when and if HMRC comes knocking at the door. So, I don't really know what to do :-(

Sounds like you've failed elsewhere then as not being able to substitute isn't the only factor. I swear on my dogs life (he's pretty important to me) that yesterday, I sat with my hiring manager and had my inside IR35 role (Public Sector) changed to outside. After nearly three weeks of being here and thinking about billing, I queried it as this role is very much outside of IR35!

We sat down, used the CEST tool and I even said that while I can sub, it's a short contract so they should reject. I still got an outside determination.

[northernladuk]

Thanks, that's one option sorted, probably the one I'd stick to. But for the sake of evaluating other options, what are the potential risks of terminating the current contract by say end of March and then come in through a consultancy/umbrella to the same client? I guess client does not need to declare anything about my current contract or share the results of my current assessment in such a case. They would only need to do it for the new contract. Isn't it? Safer option?

No. There is a sticky at the top of the IR35 Reforms section explaining the options. Plenty of threads in there discussing each of them in detail as well. A vast majority of contractors are facing the same dilemma.

[jkb99]

Around that figure.
As you've not filed your companies tax, nor your own for the period in question, then you have nothing to declare yet. You don't report to HMRC that you're inside IR35. You just need to pay the deemed tax.
In your situation you want your accountant to deal with anyway. Just tell him that you want the low risk approach, get him to make all the correct tax payments and then look to close the company down as you move to umbrella. You may choose to keep the company open but unless you expect to become a proper business at any time soon it's not worth the costs. The accountant should be able to quote you for the whole lot for not much more than your annual accountacy fee would be.

Thanks, that's one option sorted, probably the one I'd stick to. But for the sake of evaluating other options, what are the potential risks of terminating the current contract by say end of March and then come in through a consultancy/umbrella to the same client? I guess client does not need to declare anything about my current contract or share the results of my current assessment in such a case. They would only need to do it for the new contract. Isn't it? Safer option?

[Lance]

I'm assuming somewhere between 30%-40%. Is that correct? Would I still have to pay fines if I self declare /change my declaration now? Sorry for any silly questions, I am very new to this world of contracting.

Around that figure.
As you've not filed your companies tax, nor your own for the period in question, then you have nothing to declare yet. You don't report to HMRC that you're inside IR35. You just need to pay the deemed tax.
In your situation you want your accountant to deal with anyway. Just tell him that you want the low risk approach, get him to make all the correct tax payments and then look to close the company down as you move to umbrella. You may choose to keep the company open but unless you expect to become a proper business at any time soon it's not worth the costs. The accountant should be able to quote you for the whole lot for not much more than your annual accountacy fee would be.

[jkb99]

...Or you could highlight that there is an option 5 and that the end client could use something like the CEST tool HMRC have provided for exactly this purpose and click on the 'No, it's never happened' and 'Yes, we have the right to reject a substitute options and find out if that is the sole determining factor that a contract HAS to be inside or not.

Why do they think the substitution clause won't apply to you?

The tool has already been used and I think that is the determining factor as far as tool is concerned. This is a hypothetical case as I have tried convincing the client saying that I would be able to provide a substitute in case really required but they believe its not practical and they would not be really willing to accept a replacement although the contract does not have any mention of it. Furthermore with limited number of employees in my LTD company its seems hard to prove when and if HMRC comes knocking at the door. So, I don't really know what to do :-(

[DKB]

My client wants to play safe by declaring me inside cause they think right of substitution clause won’t apply.What options do I have?

• Leave the client and search elsewhere
• Join as a permanent employee
• Accept being inside which might open up the risk of retrospective inspection although I believe I am outside.
• Dissolve the current contract, join an umbrella/consultancy and come through it. Is it OK to change contract arrangements for this reason?

...Or you could highlight that there is an option 5 and that the end client could use something like the CEST tool HMRC have provided for exactly this purpose and click on the 'No, it's never happened' and 'Yes, we have the right to reject a substitute options and find out if that is the sole determining factor that a contract HAS to be inside or not.

Why do they think the substitution clause won't apply to you?

[northernladuk]

No you wouldn't. You have followed the right process and declared and accounted for inside. Totally safe.

[jkb99]

Pay your backdated IR35 tax + fines

I'm into contracting with this client for just little over six months period, have not filed any returns yet for new pvt ltd. My accountant believes its more riskier option to go from outside to inside than coming in through a consultancy, but I was more thinking on the lines of accepting it as inside (coz I need peace of mind and I'm tired of going back & forth with the client on this) and pay back dated taxes, not sure how much it is going to be but I'm assuming somewhere between 30%-40%. Is that correct? Would I still have to pay fines if I self declare /change my declaration now? Sorry for any silly questions, I am very new to this world of contracting.

[GhostofTarbera]

My client wants to play safe by declaring me inside cause they think right of substitution clause won’t apply.What options do I have?

• Leave the client and search elsewhere
• Join as a permanent employee
• Accept being inside which might open up the risk of retrospective inspection although I believe I am outside.
• Dissolve the current contract, join an umbrella/consultancy and come through it. Is it OK to change contract arrangements for this reason?

You have just declared yourself outside haven’t you ? So far

Client is grassing you in to HMRC as allways been a permietractor if they are asked - you have insurance in place don’t you?

Pay your backdated IR35 tax + fines




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[LondonManc]

Have you had an outside determination for your existing contract and working practices by someone like QDOS or have you determined it yourself and just signed what was given to you?

[northernladuk]

I've been asked to be more polite to repetitive questions so may I point the esteemed poster to the sticky at the top of this very page and request humbly that he reads it without me mentioning the fact the legislation hits in 4 weeks and that he may not actually be the first in this position so looking around a little might find him his answer and more. So I won't.

https://www.contractoruk.com/forums/...ould-i-go.html

Pointing out the poster was posting in the wrong part of the forums wasn't part of the request from up high however.

[eek]

My client wants to play safe by declaring me inside cause they think right of substitution clause won’t apply.What options do I have?

• Leave the client and search elsewhere
• Join as a permanent employee
• Accept being inside which might open up the risk of retrospective inspection although I believe I am outside.
• Dissolve the current contract, join an umbrella/consultancy and come through it. Is it OK to change contract arrangements for this reason?

3 and 4 are the same with the same risk of retrospective investigation via agency reporting.
2 is slightly better but you would still have a slight risk unless you are in a different role.
1 is a risk as the market is dire...

So take your pick

[jkb99]

My client wants to play safe by declaring me inside cause they think right of substitution clause won’t apply.What options do I have?

• Leave the client and search elsewhere
• Join as a permanent employee
• Accept being inside which might open up the risk of retrospective inspection although I believe I am outside.
• Dissolve the current contract, join an umbrella/consultancy and come through it. Is it OK to change contract arrangements for this reason?