Reply to: IR35 Business Entity Test

[northernladuk]

Anyone else thinking that renting a place near your contract of work will get you some points. As long as you have another home you're sorted - so if your renting somewhere anyway instead of a hotel then quids in.

Care to elaborate a little further so I can judge whether it is as ill thought through as first appears?

Let me quote the comment so you can work it out...

Does your business own/rent separate business premises which are separate from your home and client’s premises?

[Sockpuppet]

Anyone else thinking that renting a place near your contract of work will get you some points. As long as you have another home you're sorted - so if your renting somewhere anyway instead of a hotel then quids in.

[BoredBloke]

Has your business been unable to recover payment for work done during the last 24 months in excess of 10% of annual turnover?

What a stupid question. So I can only earn these points if I've managed to lose 10% of my turnover. Agencies can and do go bust, but many do not. The fact that we have to work through an agecy, where we are unaware of their ability to pay should be enough to show a degree of risk. I had the situation once where an end client owed be £30,000 - I got it back, but it took months.

Has your business invested over £1,200 on advertising, excluding entertainment in the last 12 months?

There is a business opportunity - set up a service that advertises your hundreds of limited companies for £100 a month. 2 points please!

[Contreras]

As someone who is hopefully starting thier first contract and LTD in the next couple of weeks, this list leaves me even more confused and concerned than I was before about IR35.
For a start, most of the higher scoring ones refer to things happening in the last 12 or 24 months. As a new contractor, by definition you would score zero on these.
...
I might do well to scrape maybe 6 or 8 points=high risk, so presumably "not a business"=inside IR35.

Nope. The law hasn't changed. Failing the business tests does not put you inside IR35.

[private123]

As someone who is hopefully starting thier first contract and LTD in the next couple of weeks, this list leaves me even more confused and concerned than I was before about IR35.
For a start, most of the higher scoring ones refer to things happening in the last 12 or 24 months. As a new contractor, by definition you would score zero on these.
With this proposal, are MoO and Control out of the window ? According to the new list I can be working from home, on a contract with little or no notice period, working when I want, fulfilling the contract using my own professional judgement, with no one telling me how or when to work, providing my own equipment, choosing to provide my own PII, with no corporate benefits or protection, whilst doing some small "fix/install" work for other customers (with the intention of building up a business for when the contract ends). And yet I might do well to scrape maybe 6 or 8 points=high risk, so presumably "not a business"=inside IR35. Presumably it would be hard to get investigation insurance as well.

[Contreras]

Nope the point is to act like a "proper" business.

Except that if you are a "proper" business then there's no need to act.

Does your plumber swap with his mate for a day on a large job for no real reason?

As long as the job gets done to the same standard and carries a warranty covered by the contracted individual/company then they wouldn't need to provide a reason, "real" or not.

On the other hand if they were my direct employee then you can be sure that it would not happen. Mainly because if they cock up then it becomes my problem.

For the record I'm not a supporter of the business tests in their present form specifically because some of the (other) tests can so easily be circumvented as suggested.

Remember that the idea was to have a set of 'binary' tests and if you exceed a defined threshold then you 'pass' and HMRC will look no further, without qualification, and without any grey areas for debate.

If it needs HMRC to take a view on whether certain actions are genuine business or sham behaviour then that brings no certainty whatsoever and the whole exercise is a monumental fail - for everyone.

[northernladuk]

Threads like this do us more damage than good IMO... HMRC reads them.... must be laughing in the aisles and HMRC HQ.

[SueEllen]

Well it's definitely NOT acting like an employee.

And that's the whole point, isn't it?

Nope the point is to act like a "proper" business.

Does your plumber swap with his mate for a day on a large job for no real reason?

If you worked out a swap with your mate because he had better knowledge in one area and you had it in another on your particular company projects and you could work it out so it took a day or two, then fair enough.

[northernladuk]

Well it's definitely NOT acting like an employee.

And that's the whole point, isn't it?

It is acting like two people trying to duck responsibility which is exactly what HMRC are after. We are talking business test here as well, not just IR35.

[Old Greg]

Real businesses don't worry about IR35. Ergo if you do you are inside.

[Contreras]

But that alone would not put you outside IR35 - having an arrangement with a mate whereby you do his job for a day and he does yours is not really acting like a business

Well it's definitely NOT acting like an employee.

And that's the whole point, isn't it?

[LisaContractorUmbrella]

Sometimes I think the biggest problem is not HMRC and IR35... it's us...

A vast majority will just see these quick fixes without understand what HMRC are trying to get at so furthering HMRC's belief we are an easy target... and we are just giving it to them on a plate

If they are investigating our procedures to try and prove we fudge them to our benefit, providing another fudge isn't going help our case is it.

They are trying to determine if we are a business and think like a business and all we can do is suggest how to exploit loop holes... That is a fail then.

[northernladuk]

Sometimes I think the biggest problem is not HMRC and IR35... it's us...

A vast majority will just see these quick fixes without understand what HMRC are trying to get at so furthering HMRC's belief we are an easy target... and we are just giving it to them on a plate

If they are investigating our procedures to try and prove we fudge them to our benefit, providing another fudge isn't going help our case is it.

They are trying to determine if we are a business and think like a business and all we can do is suggest how to exploit loop holes... That is a fail then.

[Notascooby]

But that alone would not put you outside IR35 - having an arrangement with a mate whereby you do his job for a day and he does yours is not really acting like a business

This is more a tick box passing exercise - if this was used to determine whether or not to investigate a company for IR35 then why not do something that is not exactly business like but would allow you to truthfully answer this is a positive light.

Think I might have to buy some company branded wheels for my commute to work to tick the £1200 advertising box too - That's +22 already - easy-peasy

[LisaContractorUmbrella]

Seriously? I am sure, substitution does not need to have any reasons behind it. I believe, I can send in a replacement on any day for any reasons, as long as I pay from my pocket.

But that alone would not put you outside IR35 - having an arrangement with a mate whereby you do his job for a day and he does yours is not really acting like a business