Reply to: Real life IR35 stories...?

[mattock]

The big picture

I was contracting for 17 years and ended up in the city on 60ph.
In 2002 the IR informed me they wanted 26.5K plus normal tax and NI for the year (amounting to 40k). They disallowed my travel expences for six years. I sold my house and paid them, havn't worked since 2002. Funny how it always seems to be 26.5k. They pay me now to do nothing.

[tyut4669]

Not without re-reading an awful lot of court reports. At its simplest they made technical mistakes in the application of the law to a given situation that a proper advocate wouldn't have done. Although you can take the initial result to a tribunal, the tribunal can only agree (or not) that the initial judgement was aligned to the relevant statute and case law: you can't introduce new factors. So if in the original hearing they missed out that they had a rock-solid RoS, for example (they didn't, but you get the point), you can't then use that to change the ruling at a Tribunal. Hence, get professional advice as soon as possible.

I see basically, it is not some sorts of accounting mistakes or somethings like not getting the contract renewed, to put it simply, if they had got the some professional representation service right from the beginning that they received the letter from HMRC, they would have been fine.

[malvolio]

Is it possible to eloborate on the professional guidance. What were the kind of mistakes that landed them in trouble.

Not without re-reading an awful lot of court reports. At its simplest they made technical mistakes in the application of the law to a given situation that a proper advocate wouldn't have done. Although you can take the initial result to a tribunal, the tribunal can only agree (or not) that the initial judgement was aligned to the relevant statute and case law: you can't introduce new factors. So if in the original hearing they missed out that they had a rock-solid RoS, for example (they didn't, but you get the point), you can't then use that to change the ruling at a Tribunal. Hence, get professional advice as soon as possible.

[tyut4669]

Six, three of which were winnable had they taken professional guidance form the start and one which was sort of abandoned so Hector claimed a victory and PCG claimed a no decision made since it was supposed to go back for a retrial.

Is it possible to eloborate on the professional guidance. What were the kind of mistakes that landed them in trouble.

[LouC]

Interesting thread, thanks to everyone for responding.

Jubber - did you end up paying the revenue or fight your case to the end?

[centurian]

I'm curious to know how much the 1700 were earning?

I mostly do support and infrastructure stuff which doesn't pay as much as development or PM work, rightly or wrongly I assume I'm comparatively small fry so they leave me alone.

On the working basis that HMRC consider tax avoiders as thieves...

If you are a shopkeeper and you catch someone shoplifting red-handed, but for a small item. Would you simply let them off - because you know that others have probably stolen bigger amounts from you...

[malvolio]

I think he's asking for personal stories more than official stats.

Yes, I know what he's asking thanks.

1700 is seemingly pretty small as a % of contractors, do you have a figure for the total number for whom IR35 is relevant?

It's relevant to everyone who's a freelance as far as I'm concerned.

IF PCG are counting 1700 out of 20k members then that's 8.5% of the total. Apply that to the UK's 1.4 million freelancers, there are potentially 119,000 cases out there. I don't think we're anywhere near that number, but with an average lifespan of 5 years, it's not surprising they are not that many ongoing. New cases are launched at around 5 a week, by the way.

The point is that while we may be a little optimisitc about getting shot of it, it is still out there, it is real, and people need to guard against it.

[d000hg]

I could put you in touch with around 1700 PCG members who have. Does that help?

I think he's asking for personal stories more than official stats. 1700 is seemingly pretty small as a % of contractors, do you have a figure for the total number for whom IR35 is relevant?

[gingerjedi]

I'm curious to know how much the 1700 were earning?

I mostly do support and infrastructure stuff which doesn't pay as much as development or PM work, rightly or wrongly I assume I'm comparatively small fry so they leave me alone.

[Wanderer]

Sent me a letter saying I owed them some money - not very much - can't even remember how much (this was back in 2004). The most annoying thing about the process was that he sent back all my books, receipts, contracts etc in a big box which the postman left sitting on my doorstep all day.

Did you have to pay a penalty or just the taxes you avoided?

ps There's a lot of people out there making a healthy living out of the fear of IR35 though.

Including HMRC....

[Jubber]

Friday afternoon question this...

There's always a lot of stuff going round about IR35, but in my 10 years of contracting I've never actually met a contractor who's gone through the IR35 mill.

So, has anyone here been through the process?

Yep

How did the revenue actually find out the information? (going down to client sites? asking the managers? etc)

No - just sent me a letter saying that they wanted to conduct a 'PAYE Review' and turned up at my place on the agreed date. Took away all my books and contracts after asking me a list of pre-prepared questions off a sheet of A4.

What was the outcome?

Sent me a letter saying I owed them some money - not very much - can't even remember how much (this was back in 2004). The most annoying thing about the process was that he sent back all my books, receipts, contracts etc in a big box which the postman left sitting on my doorstep all day.

I guess I'm an ostrich when i comes to IR35 - I always read through the contract to make sure there's nothing damning in there, but neither have I turned a contract down because it's not had a substitution clause in there. Maybe i'm naive, but I just think that the fact that i've never had a contract longer than 9 months, always pay my VAt and tax on time, have never taken sick, holiday or overtime pay - all the benefits of being a permie - that I'm not a disguised employee.

IMO you'd be mad to turn down work because of the fear of IR35. Get the money then argue IF and when it ever happens. Mine was easy and pretty painless. There are others out there who I've read about in the press etc who have had a much worse time. I obviously meet a lot of contractors in my line of work and have yet to meet another one who has said they have had a visit.

ps There's a lot of people out there making a healthy living out of the fear of IR35 though.

[malvolio]

I am curious to know of what industries these cases are.

Does it matter? PCG is 45% IT, 40% engineering and 15% a whole range of smaller sectors. I suspect the cases cover the same range. And IR35 is not related to industries, merely small businesses.

[sy8111]

Six, three of which were winnable had they taken professional guidance form the start and one which was sort of abandoned so Hector claimed a victory and PCG claimed a no decision made since it was supposed to go back for a retrial.

I am curious to know of what industries these cases are.

[LouC]

Thanks Malvolio

[malvolio]

Just out of interest, out of those 1700 PCG cases, how many were successful? (for the revenue?)

Six, three of which were winnable had they taken professional guidance form the start and one which was sort of abandoned so Hector claimed a victory and PCG claimed a no decision made since it was supposed to go back for a retrial.