Reply to: Working Practices

[cojak]

IR35 - It's not over yet

I would suggest reading this article from Kate Cottrell (of Bauer & Cottrell), it has some interesting conclusions...

[escapeUK]

I don't want to get too negative here. IR35 can be avoided and the odds of being "caught" are very low. But if you're an unlucky bugger and get an HMRC inspector that has got out of bed the wrong side and decides to go after you - and just one of your former colleagues decides to stitch you up - you've got a tough battle on your hands.

Id rather fake my death and or leave the country forever than pay £99k personally, hence my forum name

[centurian]

Id hate my fate to be in the hand of some of my brain dead colleagues.

That's part of the problem. It doesn't matter what your contract says, or what your belief of your working practices are. If your colleagues perceive you as an employee, that's quite a few nails in the IR35 coffin for you.

It was a major consideration in the Dragonfly case. His 'managers' basically contradicted him and the judge latched right onto that.

I don't want to get too negative here. IR35 can be avoided and the odds of being "caught" are very low. But if you're an unlucky bugger and get an HMRC inspector that has got out of bed the wrong side and decides to go after you - and just one of your former colleagues decides to stitch you up - you've got a tough battle on your hands.

[centurian]

Thinking about the Dragonfly case. Was the contractor ordered to pay the employee NI, he obviously couldnt be made to pay the employer contributions as he was ruled to be an employee of AA.

He was ruled to be a "diguised employee", which meant that the last structure in the chain of companies to supply him to the AA (Dragonfly) was liable - and as a director of said company, the debt might have been transferrable to him personally if Dragonfly didn't have enough cash.

I'm not sure how much (if any) of the £99K he actually handed over as this was before the transfer of debt rules came in.

But yes, if you lose, your LtdCo is liable for employers NI. That's why they will only deal with us as LtdCo's instead of sole traders.

[NotAllThere]

Thinking about the Dragonfly case. Was the contractor ordered to pay the employee NI, he obviously couldnt be made to pay the employer contributions as he was ruled to be an employee of AA.

No. It was ruled that, had it not been for the intermediary, he would have been an employee. There was an intermediary, so he wasn't an employee, but he was caught by IR35. He is therefore required to calculate his company's gross income from the contract, deduct 5%, and pay the appropriate eenic, ernic and income tax, plus interest and penalties.

[original PM]

Id hate my fate to be in the hand of some of my brain dead colleagues.

be afraid be very afraid

[escapeUK]

I think a good acid test would be if HMRC asked one of your colleagues at the client company.

If they said: "Ah yeah, bob was a contractor... " happy days.

If the answer was "he worked here - he was part of the furniture" I imagine you've got problems, regardless of what the contract says?

Id hate my fate to be in the hand of some of my brain dead colleagues.

[jim2406]

I think a good acid test would be if HMRC asked one of your colleagues at the client company.

If they said: "Ah yeah, bob was a contractor... " happy days.

If the answer was "he worked here - he was part of the furniture" I imagine you've got problems, regardless of what the contract says?

[escapeUK]

Look at the effort required for Dragonfly - and while it might have set a precedent on some points, HMRC can't simply carte-blanche apply it to every contractor


At the moment, we're kind of in a stand-off situation with HMRC, so I think the measured cautious approach you are using is quite valid.

Thinking about the Dragonfly case. Was the contractor ordered to pay the employee NI, he obviously couldnt be made to pay the employer contributions as he was ruled to be an employee of AA.

[centurian]

I guess the msg is clear, IR35 is pretty unenforceable

Oh, I think it's quite enforceable. Just that the effort required to chase one individual almost certainly outweighs what they get from it.

Look at the effort required for Dragonfly - and while it might have set a precedent on some points, HMRC can't simply carte-blanche apply it to every contractor

This is why they pursued the BN66 crowd because they could nab 1000s of contractors in one go.

At the moment, we're kind of in a stand-off situation with HMRC, so I think the measured cautious approach you are using is quite valid.

[escapeUK]

I personally would not take a role within IR35 (by which I mean contract) without charging the client a third more on top of my day rate. Id make it very clear I was doing that too, and if they wanted a third discount all they had to do was use my contract. I suppose Im not really "hungry" and could live quite comfortably for years without working, it puts me in a very strong position as my last permie employer found out when I gave notice the day after he pssed me off.

I guess the msg is clear, IR35 is pretty unenforceable, if it werent they would just methodically go through each contractor one by one and QDOS and others wouldnt be offering cheap insurance against this chance if they werent pretty sure it wouldnt happen.

I just want to avoid any "gotchas", I know they are all pretty much made up, just trying to get a feel for what others do to give that extra feeling of safety.

[northernladuk]

Erm, surely if your contract is IR35 friendly then just work to your contract and you should be in the clear no?? Are you talking about further distancing yourself while working? if so then.....

There are things you may be forced to do that may look like your are inside IR35 but can easily be argued out don't forget. You can get too anal about this.
For example. Using company provided laptops, phones and email address. Although these are enforced by the client it is becuase they have certain security and connection process and protocols. Your laptop just won't be allowed on their system so you have to use theirs. They will not push their mail to a personal blackberry so you have to use theirs. These will NOT affect your IR35 as you not under direction, just complying to policy.

This is pretty important to bear in mind because you can quite easily piss the client off trying to go overboard to be out of IR35 when the role actually is.

Of course if the role is well within IR35 you are probably going to make yourself unpopular trying not to be. Bearing in mind many many roles are well within and people wont admit it and there are so few investigations then I wouldn't go too far with this to be honest.

[centurian]

WTF !

Yeah - at a bank as well - just shows how much HMRC know about the real world.

[HairyArsedBloke]

What HMRC look for

There is one tea break in the morning of 30 minutes and one in the afternoon, both of 30 minutes,

WTF !

[centurian]

What HMRC look for

Didn't much like example 1.

I bet about 80%+ of developers fall into this scenario - although HMRC like to call us "computer programmers"


Also without wanting to wind up the ladies on this forum, check out Example 3 as a case of extreme political correctness. How many female kitchen fitters do you know of.