Reply to: HMRC Enquiries - How do they start?

[malvolio]

This thread makes me think I'd better get shifted and get IR35 insurance sorted.

Just join the PCG with Plus membership and stop worrying about any of it.

[psychocandy]

This thread makes me think I'd better get shifted and get IR35 insurance sorted.

[DeludedAussie]

I had a random PAYE review at the beginning of 2008, what then followed was a three and a half year IR35 investigation which has only recently been dropped. So don't rule out an investigation even if you never put a foot wrong, and make sure you have tax investigation insurance otherwise HMRC will grind you down!

Who insured you and did they pay out with no problem?

How much would it have cost if you did not have insurance

[Cr1spy]

I had a random PAYE review at the beginning of 2008, what then followed was a three and a half year IR35 investigation which has only recently been dropped. So don't rule out an investigation even if you never put a foot wrong, and make sure you have tax investigation insurance otherwise HMRC will grind you down!

Unbelievable! How much do you think a 3 1/2 year investigation cost HMRC?

Tax money well (mis)spent.

Well done for sticking it out and having the foresight to buy insurance.

That reminds me...

[srennocks]

I had a random PAYE review at the beginning of 2008, what then followed was a three and a half year IR35 investigation which has only recently been dropped. So don't rule out an investigation even if you never put a foot wrong, and make sure you have tax investigation insurance otherwise HMRC will grind you down!

[cojak]

I have insurance to cover the costs of professional representation and have already contacted them i just posted this for information as it appears to be a new approach

Many thanks zoomfwd, much appreciated.

[cojak]

You shouldn't be paying an accountant who isn't up to speed with IR35.

But as others have said PCG is good insurance.

[zoomfwd]

I have insurance to cover the costs of professional representation and have already contacted them i just posted this for information as it appears to be a new approach

[tarbera]

Depends

Speak to your accountant immediately. See HMRC at your accountant's premises, not your own.

If your Accountant is not up to speed on all things IR35 they may make things worse by landing you in it. !!!!


If you are a PCG member, give them a call then put your feet up and relax

[Martin at NixonWilliams]

I have just received a letter from HMRC which states

"Every year we check the records of a number of businesses to make sure they are accurate and that the businesses are paying the righ amount of Tax and National Insurance Constributions. We have now selected your business for a check, so I would like to visit your premises and look at your records. I will not be looking at all your records, just those that relate to determining whether the Intermediaries Legislation, popularly known as IR35, applies to an engagement or engagements"

They also want me to send copies of all contracts and sample invoices, timesheets to them within 14 days.

So, they are obviously starting directly with IR35. (Company being going 13 years and all accounts, vat etc always filed on time)

We know that there were only 20ish IT35 investigations last year but do we know how many checks of this nature there were ? (I'm assuming this isn't yet what was classified as an IR35 investigation)

I agree with what others have said, speak to your accountant immediately about this and ensure all correspondence goes through them.

If you have IR35 insurance or a similar product (PCG springs to mind?) then speak to them immediately too.

This could be something that can be ended quite quickly with the correct professional advice, however, if it goes pear shaped it could be very costly depending on your exact circumstances.

Martin

[malvolio]

Not a PCG member then? If you are, call the office and stand well back. If not, well it's too late now.

Don't send HMRC anything until you've got professional advice on what to do next. Hopefully you can head them off at the pass. If it all goes pear-shaped because you got a step wrong, you're looking at around £10ks of professional fees and a couple of years of worries, so be careful.

I'll flag the wording to the PCG team anyway. It is totally contrary to what we're being told is happening on the ground.

[cojak]

Speak to your accountant immediately. See HMRC at your accountant's premises, not your own.

[zoomfwd]

I have just received a letter from HMRC which states

"Every year we check the records of a number of businesses to make sure they are accurate and that the businesses are paying the righ amount of Tax and National Insurance Constributions. We have now selected your business for a check, so I would like to visit your premises and look at your records. I will not be looking at all your records, just those that relate to determining whether the Intermediaries Legislation, popularly known as IR35, applies to an engagement or engagements"

They also want me to send copies of all contracts and sample invoices, timesheets to them within 14 days.

So, they are obviously starting directly with IR35. (Company being going 13 years and all accounts, vat etc always filed on time)

We know that there were only 20ish IT35 investigations last year but do we know how many checks of this nature there were ? (I'm assuming this isn't yet what was classified as an IR35 investigation)

[Fred Bloggs]

It's a common myth that there is an IR35 investigation process. Investigations start as a result of either some discrepancies in your PAYE-related filings to HMRC, a standard VAT inspection or as one of a random set kicked off each week. As soon as Hector notices you're a filthy one-man contractor, he will inevitably send in the IR35 questionaire.

So one trick is to make sure all your returns are accurate and consistent. Don't give them an excuse to look in the first place.

Good advice, my strategy exactly. I always make sure I pay everything a few days early too.

[philip@wellwoodhoyle]

They are not going to ramp up investigations per se . What ther are going to do is use their new system to create target lists from defined criteria. This criteria can be that indicated in your post but also criteria such as the IR35 specific questions on the P35, Companies House info e.g. one or two person companies, PAYE/dividend split payments, frequency of dividend payments e.g. "salary like", etc, etc

With the closer integration of their IT systems, targetting with whatever criteria they deem is possible.

All true, but probably not much help to HMRC. Whatever "tools" they use to get their target list, it's still going to be huge and doesn't even begin to show which are likely to be caught by IR35 as there are plenty of IT contractors who are well out of it's clutches. I very much doubt that they'll simply start by selecting random "potential IR35 cases" from a list of tens of thousands of limited companies with just 1 or 2 director/shareholders with a trade classification of "consultant" - they'd be wasting so much time!

Same with S660 - plenty of legitimate husband/wife companies where both are working in the business - another huge list of tens of thousand of companies.

At best, they may start to use the new Xbrl tagging to try to select companies with few overheads compared to income or where there aren't the usual overheads of "proper" businesses such as advertising, staffing costs, goods for resale, etc.

But even then, it's needle in a haystack job, to try to hit a suitable target that will may within IR35 and even then, it's quite possible the contractor will have IR35-proof contract and working practices.

They'd be far more effective working backwards from the end client, i.e. find a big firm that takes on loads of contractors. Ask for a list of contractors. Ask for a sample contract and working practice details. Then if it looks like IR35 applies, just blanket everyone working for that big firm. I've heard of a few cases where they've done this kind of thing - not massive scale, but certainly where they've got a room-full of people doing the same work with the same contract - one down, all down!