Reply to: Inside IR35 but Ltd Co

[Gonzo]

Sorry to resurrect an old thread but this one got me thinking.

I just started my Ltd and am searching for my first contract, I never plan to do a contract over 6 months, average contract is likely to be 3 months.
Also I plan to get the contracts checked for IR35 and amended if possible. Though even if they are inside IR35 then I will probably disclose them as outside. I understand the majority of investigation cases are for larger contracts, so my question is this, is what I am planning on doing consistent with other contractors here on the forum?

So, what you are saying is, that even if you are advised that you should be paying taxes under IR35, then you are going to ignore that and not pay them?

That is tax evasion and can land you in jail......

[wildkat]

...anyone?

[wildkat]

Sorry to resurrect an old thread but this one got me thinking.

I just started my Ltd and am searching for my first contract, I never plan to do a contract over 6 months, average contract is likely to be 3 months.
Also I plan to get the contracts checked for IR35 and amended if possible. Though even if they are inside IR35 then I will probably disclose them as outside. I understand the majority of investigation cases are for larger contracts, so my question is this, is what I am planning on doing consistent with other contractors here on the forum?

[Turion]

What's a PSC, by the way????

Dunno, meant LTD. Must have slipped on the keyboard

[TheFaQQer]

They sort by the SIC first then by other factors including co name. Having fancy and or computing type names rasies your profile. Faqqer, what's your co name BTW?

Want proof? As I said b4, I go by actual facts and what is more proof than the example of 'DragonFly Consulting'. Now if I were a Tax inspector, this name would jump out at me by a mile. Dragonfly Consulting what a juicy morsel this must be. Indeed it was and Gordo trousered 99K from this one.

To sum up: HRMC is the predator, the 1 man PSC is the prey. Stay low and inconspicuous.

My company name is not something that I am disclosing on here.

It does not feature the word Consulting, Computing, Solutions, Systems or anything like that, because the company does more than one thing, of which IT is just the main bit. It also gives me the flexibility to do anything different in the future that is non-IT related.

What's a PSC, by the way????

[Ardesco]

They sort by the SIC first then by other factors including co name. Having fancy and or computing type names rasies your profile. Faqqer, what's your co name BTW?

Want proof? As I said b4, I go by actual facts and what is more proof than the example of 'DragonFly Consulting'. Now if I were a Tax inspector, this name would jump out at me by a mile. Dragonfly Consulting what a juicy morsel this must be. Indeed it was and Gordo trousered 99K from this one.

To sum up: HRMC is the predator, the 1 man PSC is the prey. Stay low and inconspicuous.

No such thing as a PSC it lacks a legal definition, stop giving them more ammo for free!!!

I would also disagree with the fact that shutting down the company makes you immune, it may reduce your chances of being investigated, but it definitely will not make you immune.

[Turion]

They sort by the SIC first then by other factors including co name. Having fancy and or computing type names rasies your profile. Faqqer, what's your co name BTW?

Want proof? As I said b4, I go by actual facts and what is more proof than the example of 'DragonFly Consulting'. Now if I were a Tax inspector, this name would jump out at me by a mile. Dragonfly Consulting what a juicy morsel this must be. Indeed it was and Gordo trousered 99K from this one.

To sum up: HRMC is the predator, the 1 man Ltd is the prey. Stay low and inconspicuous.

[TheFaQQer]

Don't use terms like 'computing' or 'Consulting' in your co name. They specifically target such names.

I think that they are more likely to target companies based on your SIC rather than the name that you give your company.

Please provide links to backup your evidence.

[Fred Bloggs]

For the record, I largely agree with that post above mine.

[Fred Bloggs]

Your opinions are as valid mine. Unlike other posters I will not pretend to be an "expert" in every aspect of this foul legislation. What I will do is continue to work in genuine outside of IR35 contracts, terminating them if actual working conditions do not reflect the contractual conditions. This has happened once. Furthermore, I will limit my IR35 liability by not working more than a year on any single contract (so far my maximum is 10 months). Thus limiting my potential liability if a contract was tested and found failed. You can continue to live in your lala fairytale land where the law applies to single person contracting companies in a fair and equitable manner. The blunt truth is that compliance or not with IR35 is now a lottery with the weight tilted firmly in favour of the Gov't. If you want to pretend that by closing down your company five years before it is investigated will protect you as a Director of that company then please feel free to carry on. I'm happy with my strategy, presumably you remain happy with yours. Passing browsers will decide for themselves.

[Turion]

For the experts out there it's question time

Insolvency Act 1986 - Name an IR35 case where this is involved

Closed Companies - Name an IR35 case where HMRC has challenged a dissolved company or a ex-director of a disolved company.

Please provide links to backup your evidence.
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I go by facts only. Fact is IR35 is a lottery. A low profile will reduce chances of being caught. If you are caught/investigated circumstances beyond your control may screw you. For instance:

The recent lost IR35 cases for Dragonfly Consulting and MKM Computing relied on dubious information obtained from permies of the client co's. Both Ltd co's had operated for many years and were jucy targets (Dragonfly got stung for 99k).

Remember that you (1 man bands) are not business men and that the ltd co is just a method of working that is 'relatively' tax efficient.

I don't advocate closing a co every contract. Every 2 - 3 years is enough and you can use capital allowance to get your cash. Don't use terms like 'computing' or 'Consulting' in your co name. They specifically target such names. Keep contracts short. The shorter and more clients you have the better. Certainly if you stay in one place for 2 yrs+ you deserve to pay permie taxes.

[malvolio]

Purely out of interest, and not stirring this deliberately, BUT......


If I adopted this approach, and was investigated by HMRC, how much support could I reasonably expect from the PCG to help defend my case?

Good question. The PEI is predicated on defending you against tax assessment investigations (not just IR35). I'm fairly sure that the trigger for the investigation itself wouldn't be a parameter; the deal is you're covered for any aspect enquiry. If anyone gets into that position, then we'd get a definitive answer.

[SueEllen]

Then you must have less than 50% understanding.

While IR35 is a tax computed based on what a person should have paid in paye/ni, it is the miscreant Ltd co that hector pursues. Try reading up on the subject. It may help you understand better.

Now if the ltd co ain't there anymore...go figure.

Insolvency Act 1986

[TheFaQQer]

Under your scenario, you logically should open a new company for each contract (plus bank account and perhaps VAT registration) and close it on completion. Do you not think that Hector might see that as not having any commercial justification and hence it is purely a tax evading measure?

Purely out of interest, and not stirring this deliberately, BUT......


If I adopted this approach, and was investigated by HMRC, how much support could I reasonably expect from the PCG to help defend my case?

[ruth11]

OK, that's good. Out of interest, have you asked this question on their fora?

No, but I will now you mention it.