Reply to: IR35 - Media Scaremongering?

[malvolio]

I read Kate's article in the CUK newsletter yesterday and must admit, felt a bit worried afterwards.

Upon reflection, Kate does seem to be as guilty as HMRC in terms of trying to instill fear regarding IR35.

TBH, from my limited knowledge/experience of IR35, I find it difficult to determine exactly what precautions you can take either contractually or in working practices that will mitigate any risk if you are ever investigated as the general impression is that the guidelines are ambiguous and therefore subject to (HMRC's) interpretation at the time of an audit.

Based on that, is there really anything you can do to protect yourself?

You should take that article with a pinch of salt. It is slightly inaccurate on several points. However you are right, the guidance is ambiguous; that's why it needs a court to decide the merits of any given case.

Don't forget, though, as I said earlier in this thread, the win/loss ratio is only bad for appealed cases, and most (but not all) of those have started off with contractors not having professioanl guidance in the original case. Down on the ground it's massively in our favour.

[zedAccounts]

All this "scaremongering" is a good thing in my book. It's kept me on my toes, made me read up on the subject and make sure my paperwork and working practices are outside IR35.

ZED.

[smalldog]

there is nothing you can do to protect yourself since the government have taken to changing legislation retrospectively. You could put all the measures in place possible, only to find tomorrow, they change the rules going back in time and what was legal and within the rules this or last year, is all of a sudden rewritten to make you illegal and/or breaking the rules. There is no protection against that apart from dont work round it in the first place.

[Clippy]

I read Kate's article in the CUK newsletter yesterday and must admit, felt a bit worried afterwards.

Upon reflection, Kate does seem to be as guilty as HMRC in terms of trying to instill fear regarding IR35.

TBH, from my limited knowledge/experience of IR35, I find it difficult to determine exactly what precautions you can take either contractually or in working practices that will mitigate any risk if you are ever investigated as the general impression is that the guidelines are ambiguous and therefore subject to (HMRC's) interpretation at the time of an audit.

Based on that, is there really anything you can do to protect yourself?

[malvolio]

Never given it a thought to be honest with you Mal..

Too late now, nominations have closed. Stick in the diary for next year!

[cojak]

And one who really ought to be up for a CC place. Go on, you know you want to....

Never given it a thought to be honest with you Mal..

[smalldog]

An excellent first post, sloverid.

However, I don't think it's the MEDIA who are scaremongering about IR35, it's the Inland Revenue. The more fear they can spread, the more money they take. They must have made billions out of this with no change in the law and at little cost to them. Just take on a few high profile cases and hopefully win a few and then everyone will roll over and pay up the extra IR35 taxes.

I think there are a lot of contractors who preach the "fire and brimstone" line on IR35 while quietly working outside it themselves. As long as the IR35 bluff is working and a fair portion of contractors accept that they are caught by it then the IR will leave the others along. Once the cat is out of the bag that IR35 is a complete sham and you can trade outside it with impunity then the IR will come up with some enforcement or change the law (retrospectively if they could).

It's like the EBTs. Dodgy as hell but legal. Everyone says don't do it but there are loads of people taking the chance. No doubt they will change the law one day and stop it but until then they want to put the fear of god into people. When too many people start exploiting loopholes then they have to close them down - especially when people make a business out of helping tax payers exploit loopholes.

The tax system seems to be like a massive leaky bucket. There is water pissing out of leaks everywhere and when one gets big enough they try to plug it with a bit of cloth.

they can and they do, look at BN66 or Section 58 of the finance act. Retrospective tax measure going back to 87 announced a few years back that some people are challenging through the courts, including the likes of PWC and KPMG

[malvolio]

Have you considered how many companies there are whose business is built on the existence of IR35....?

Incidentally, HMRC don't set the laws, Parliament does.

[Wanderer]

An excellent first post, sloverid.

However, I don't think it's the MEDIA who are scaremongering about IR35, it's the Inland Revenue. The more fear they can spread, the more money they take. They must have made billions out of this with no change in the law and at little cost to them. Just take on a few high profile cases and hopefully win a few and then everyone will roll over and pay up the extra IR35 taxes.

I think there are a lot of contractors who preach the "fire and brimstone" line on IR35 while quietly working outside it themselves. As long as the IR35 bluff is working and a fair portion of contractors accept that they are caught by it then the IR will leave the others along. Once the cat is out of the bag that IR35 is a complete sham and you can trade outside it with impunity then the IR will come up with some enforcement or change the law (retrospectively if they could).

It's like the EBTs. Dodgy as hell but legal. Everyone says don't do it but there are loads of people taking the chance. No doubt they will change the law one day and stop it but until then they want to put the fear of god into people. When too many people start exploiting loopholes then they have to close them down - especially when people make a business out of helping tax payers exploit loopholes.

The tax system seems to be like a massive leaky bucket. There is water pissing out of leaks everywhere and when one gets big enough they try to plug it with a bit of cloth.

[malvolio]

cojak - PCG Member...

And one who really ought to be up for a CC place. Go on, you know you want to....

[cojak]

Penalties rarely apply.

Up until now, that is.

Since penalities seem to be earned for almost anything these days, that might well change.

cojak - PCG Member...

[MaryPoppins]

I'm not sure I completely agree that IR35 is a terrible thing. Some elements of it probably aren't right, but in general I think that contractors should act like contractors as much as possible.

A Ltd Co is the best (legal) way to maximise income, but to me, it doesn't quite fit our one man band type requirement.

Disguised permies sitting in the same role for years, earning more than the actual permies around them, should be challenged.

[malvolio]

1. About 1.4 million. Or 4.5 million if you count non-freelance workers like small businesses and traders.

2. 50-60 at most.

3. 95% plus of those with representation. Closer to zero if you DIY

4. The contractual earnings are recalculated to get the IR35 total due, then PAYE, NICs and CT already paid is deducted to get a net payment, and interestest added. Penalties rarely apply.

Now join the PCG. Where do you think I got the data from?

[northernladuk]

Bit of a heavy question this one. It is hardly going to be answered by us I don't think. One thing I will add is that this has been discussed on a massive scale on here with posts ranging from have you been investigated to why would you ever admit you are inside IR35 which give a lot of great insights that may further answer your fears. I dont think a couple of lines from each of us in this thread will really answer the in depth question you have leveled.

HTH

[cojak]

I'm sure Mal will..