Decided I'm inside - Now accountant's saying I don't need to redress things

[northernladuk]

It sounds to me like he's suggesting I keep the 3 months I've done so far as being outside, and only count future service as inside. Wouldn't that be daft? Is there any reason for accountants to prefer that you are outside?

If you haven't paid dividends it prolly doesn't make any difference to the numbers and he can balance it all out over the rest of the year. Pretty clever/devious what they can do on paper. Easier to fudge the numbers going forward than spending time trying to proactively fixing it. As long as HMRC get what they are due at the end of the year I don't think they are that bothered about exact dates tbh.

[malvolio]

Yes, JLJ questioned the validity of the subs clause, but not in a way that would set any precedents. I wouldn't rely on JLJ to determine anything, to be honest.

Nor, come to that, do I really care what HMRC's opinion might be. The presence of a reasonably unfettered RoS that the client will honour is all that's needed - although clearly the more pointers you have regarding D&C and MOO the better of course.

[LisaContractorUmbrella]

Wasn't there a more recent case on RoS where the tribunal held that whilst there was a RoS, the contractor wouldn't have been able to provide a substitute because he didn't readily know anyone qualified/experience and available to be sent as a substitute at short notice, and so the RoS wasn't relevant, and they were found to be caught by IR35?

This wasn't IR35 but it was concerned with ROS and cost WW £23 mill HMRC win Weight Watchers case | Rodliffe Blog The one you are talking about (I think) is JLJ Services Limited vs. HRM&C

[philip@wellwoodhoyle]

Wasn't there a more recent case on RoS where the tribunal held that whilst there was a RoS, the contractor wouldn't have been able to provide a substitute because he didn't readily know anyone qualified/experience and available to be sent as a substitute at short notice, and so the RoS wasn't relevant, and they were found to be caught by IR35?

[Clare@InTouch]

I should've listened to NLUK's reply to this IR35 post I did 3 months ago

In the end I went Ltd
But looking back on what the working practices have been the 3 months I've been here so far, I think I match Dragonfly too much. and I've paid £200 for a review and didn't get a convincing pass. So I've now told the accountant that I'm inside while at this client and asked them to recalculate figures for me.

The accountant has now came back and asked me "what date would you like to start operating inside IR35 from? - you don't need to do anything about the last 3 months"


Am I misunderstanding something?
It sounds to me like he's suggesting I keep the 3 months I've done so far as being outside, and only count future service as inside. Wouldn't that be daft? Is there any reason for accountants to prefer that you are outside?

Could he be suggesting that the wages you've got set up for the year are already sufficient to cover three months of inside-IR35 work? Depends on how much you earn, how high your salary is and how much your allowable expenses are.

We don't mind if you're inside or outside, it makes little difference to us (although we'll do our best to advise on how you can change your working practices to be outside). All it means is an extra IR35 calculation at year end.

[LisaContractorUmbrella]

HMRC's opinion:

"Right of substitution and engagement of helpers
Some contracts give the worker a right to send a replacement or engage a helper. Where the worker has to pay that person this would be regarded as an indicator of self-employment. The degree to which it points in that direction would depend on the particular circumstances of each case. Relevant considerations would include whether the engager reserved the right to reject a substitute and whether the right was exercised on a regular basis.

The worker may, however, only have a right to propose a substitute rather than a right to actually send a substitute, and this would probably be seen as only a mild pointer to self-employment."

[TheFaQQer]

You may well be inside, I have no idea but 996% of genuine contractors aren't.

I expected a high percentage, but not that high!

[malvolio]

Thanks for your advice malvolio and minstrel

FYI
It was a weak pass
Weakened mainly by "a lightly fettered right of substitution where in reality the client would only really expect the individual", the control-what indicated by the contract saying the job is to ''backfill resource".
And the test on <removed> said I'm inside

I haven't paid any dividends yet

Depends how much you trust those tests, doesn't it. For example, case law states that a RoS is valid even if the client can refuse an offerred subbie on reasonable grounds - i.e they have to be satisfied they can do the job. There are no degress of having the right, you do or you don't. And since a permie never will, that's theoretically the end of the discussion: certainly it will weaken it enough for Hector to lose interest.

The point of having professional representation is to stop the investigation before it starts. All the extant losses on appeal have been where the case started with the worker defending themselves or using inexpert advice. Hence PCG cover (or Qdos if you insist) that takes over as soon as the brown envelope arrives is a no-brainer.

[PTP]

Thanks for your advice malvolio and minstrel

FYI
It was a weak pass
Weakened mainly by "a lightly fettered right of substitution where in reality the client would only really expect the individual", the control-what indicated by the contract saying the job is to ''backfill resource".
And the test on <snip> said I'm inside

I haven't paid any dividends yet

[malvolio]

I should've listened to NLUK's reply to this IR35 post I did 3 months ago

In the end I went Ltd
But looking back on what the working practices have been the 3 months I've been here so far, I think I match Dragonfly too much. and I've paid £200 for a review and didn't get a convincing pass. So I've now told the accountant that I'm inside while at this client and asked them to recalculate figures for me.

The accountant has now came back and asked me "what date would you like to start operating inside IR35 from? - you don't need to do anything about the last 3 months"


Am I misunderstanding something?
It sounds to me like he's suggesting I keep the 3 months I've done so far as being outside, and only count future service as inside. Wouldn't that be daft? Is there any reason for accountants to prefer that you are outside?

Dragonfly is a bad example to work from: all that said was that contract and reality have to align - which we all knew anyway. If you have a reasonably unfetterd right of substitution, or if you can refuse work and not get paid when there is no work to do, or you are free to deliver what the client needs in the way you see best then basically you are outside IR35. Also recalulating stuff isn't that simple, you have to unwind personal and corporate tax, reverse everything you've told HMRC and start all over again; not surprised the accountant is reluctant to do that.

You may well be inside, I have no idea but 996% of genuine contractors aren't. Mid-contract is not the place to change your mind. If you're really worried, stick the balance between inside and outside in a savings account in the event you're one of the 0.4% of people that has to pay up.

Then do what we said originally. Join the PCG, do what they advise and stop worrying about it.

[minstrel]

I've paid £200 for a review and didn't get a convincing pass.

Does this mean it was a fail or a weak pass?

If it was a weak pass then you may as well stay operating outside IR35, and set aside some cash for the slim chance that you are investigated and found to be inside.

I imagine it may not be possible to reclassify how your company was run for the last 3 months. For example, if you've paid yourself a dividend, you can't "undeclare" it.

[PTP]

I should've listened to NLUK's reply to this IR35 post I did 3 months ago

In the end I went Ltd
But looking back on what the working practices have been the 3 months I've been here so far, I think I match Dragonfly too much. and I've paid £200 for a review and didn't get a convincing pass. So I've now told the accountant that I'm inside while at this client and asked them to recalculate figures for me.

The accountant has now came back and asked me "what date would you like to start operating inside IR35 from? - you don't need to do anything about the last 3 months"


Am I misunderstanding something?
It sounds to me like he's suggesting I keep the 3 months I've done so far as being outside, and only count future service as inside. Wouldn't that be daft? Is there any reason for accountants to prefer that you are outside?