Reply to: Roger Sinclair (Egos) on New HMRC IR35 guidance

[Raxme]

You only need to look at the garden office industry over the last 5 - 10 years ..... beautiful cocoon of peace and tranquility and moving into an office somewhere else or staying put and losing 10 points...

Everyone needs to stop looking at it from their own point of view (of trying to avoid IR35). The whole basis of the business tests (as released) are to avoid HMRC wasting their time on you if you are [in the probable minority of being] a "genuine" business. For "genuine", HRMC-speak means, unfortunately for them and their tax-gathering targets you found it rather easy to demonstrate (and document) that you are highly unlikely to be caught under IR35 so they'd better not waste their valuable time on you.

Of course, if you can get a high point count you were highly unlikely to have been much worried by IR35 anyway, so the tests are pretty much a waste of everyone's efforts.

What is useful from the tests and the other content of the guidance document is that you can gather a clear picture of the HMRC mindset, and it is doubly clear that they have not changed their position one iota - particularly in terms of the contract-by-contract approach - much against what was touted some weeks back.

Let's face it, HMRC are never ever going to change their spots until such time as they are forced to by their immediate masters. Even then, they'll just paint over their spots until the next time a government is short of cash.

Everyone: get over it; the tests have failed. Do what you can as per usual, insure yourself, get on with life

[bobspud]

You're looking at this the wrong way. Try it from Hector's position. If you have business premises, you are a business, end of. If you don't you may not be so let's look at some other indicators. If you have pointless business premises just to pass this test, we will disregard them.

The test is valid, in its own way, it's just that it cannot sensibly be applied to anyone in the knowledge-based economy.

You only need to look at the garden office industry over the last 5 - 10 years to see that millions of people want to work at home not in an office. I dare say that if I could find a way to build a silicon roundabout in the west country and pulled all the tech industry into a large warehouse to rent space and work freely it would be good for collaboration and quite a cool fun project however. I don't really want to. I want to work under my own control in my own environment partly because I am a grumpy git and partly because I used to clock up well over a thousand miles a week sitting on the M4 and other than a few catchup days a week I don't want to travel...

So I have the choice of renting out my beautiful cocoon of peace and tranquility and moving into an office somewhere else or staying put and losing 10 points...

[malvolio]

+ 1

I built a self contained office at my home for the purpose of securely housing my business equipement, and working under my own control on behalf of my clients. I have spent the last year working in this environment, for the 6 years prior to that I used a dedicated room in my house with a full office setup. I have reduced my carbon footprint

Setting up my office last year cost me (not my company) the equivalent of 10 years local shared office space... Why am I all of a sudden a second class just because I DONT WANT to use a shared office or business premises? there are plenty around me... I could not go to an open shared space and work on government classified documents. I would not feel safe leaving my equipment in a building shared with others. I do not want to have to spend an hour a day driving somewhere just to sit on my own. and I can work far more flexibly (choosing to walk across to my office late at night to catch up on issues rather than having to drive to my office)

IMO This test will be the first one to be revised and I look forward to seeing it torn to shreds at the first opportunity...

You're looking at this the wrong way. Try it from Hector's position. If you have business premises, you are a business, end of. If you don't you may not be so let's look at some other indicators. If you have pointless business premises just to pass this test, we will disregard them.

The test is valid, in its own way, it's just that it cannot sensibly be applied to anyone in the knowledge-based economy.

[bobspud]

The thing is that at the moment my office is in my home.

+ 1

I built a self contained office at my home for the purpose of securely housing my business equipement, and working under my own control on behalf of my clients. I have spent the last year working in this environment, for the 6 years prior to that I used a dedicated room in my house with a full office setup. I have reduced my carbon footprint

Setting up my office last year cost me (not my company) the equivalent of 10 years local shared office space... Why am I all of a sudden a second class just because I DONT WANT to use a shared office or business premises? there are plenty around me... I could not go to an open shared space and work on government classified documents. I would not feel safe leaving my equipment in a building shared with others. I do not want to have to spend an hour a day driving somewhere just to sit on my own. and I can work far more flexibly (choosing to walk across to my office late at night to catch up on issues rather than having to drive to my office)

IMO This test will be the first one to be revised and I look forward to seeing it torn to shreds at the first opportunity...

[xoggoth]

If you have your own business premises, which gives you 10 points

Would the shed do?

[malvolio]

One needs to ask: whose objective?

Why did anyone think it would be the Contractor's objective?

[/hindsight]

Read back a month or so. I never thought it was anything other than HMRC's objective; else why did they reject a proposal for a solution that actually worked?

[SueEllen]

Well, Lester doesn't work for HMRC.

However, if you read Private Eye, there are some long-term "interim" roles at HMRC which are being done by contractors. IIRC, the head of HR at HMRC operates through a Ltd.

Think of all the taxpayers money they are saving on NI and final salary pension payments.

Unfortunately the government were stupid and got caught......

[TheFaQQer]

KUATB. That's why Danny Alexander's demadning an investigation into hiring practices across the Civil Service and all this sudden focus on wealthy contractors only paying 20% income tax when everyone else has to pay 40%... Can I suggest a Google for Lester at SLC.

Well, Lester doesn't work for HMRC.

However, if you read Private Eye, there are some long-term "interim" roles at HMRC which are being done by contractors. IIRC, the head of HR at HMRC operates through a Ltd.

[Raxme]

So we won't chase the companies we already aren't chasing and will continue to chase the ones we already are. Which kind of defeats the objective.

One needs to ask: whose objective?

Why did anyone think it would be the Contractor's objective?

[/hindsight]

[Raxme]

"You don't get it"

Roger's postings and some replies in Another Place make reference to the fact that these "risk" ratings are not about your (the contractor's) risk - they are about HMRC's risk of missing a payday.

Did anyone think it was going to be anything else? Well, yes, I had hopes, but not high hopes; this is HMRC after all.

It works like this: if you get 20 points or more and can provide the evidence, then you are more than likely a waste of their time.

End of.

Simples!

[BlasterBates]

My accountant and I were having a bit of a chuckle about the HMRC tests, when he came out with this corker:



Not heard that one, but it really wouldn't surprise me!

Yes but they would have their own premises, and probably fixed price contracts, so all above board.

[malvolio]

My accountant and I were having a bit of a chuckle about the HMRC tests, when he came out with this corker:



Not heard that one, but it really wouldn't surprise me!

KUATB. That's why Danny Alexander's demadning an investigation into hiring practices across the Civil Service and all this sudden focus on wealthy contractors only paying 20% income tax when everyone else has to pay 40%... Can I suggest a Google for Lester at SLC.

[GillsMan]

My accountant and I were having a bit of a chuckle about the HMRC tests, when he came out with this corker:

They should look closer to home after all of these reports of HMRC’s own staff using limited companies and ignoring IR35!

Not heard that one, but it really wouldn't surprise me!

[BlasterBates]

They may have but that's not how to use them. If you can engineer a genuine Low Risk score, then give the evidence to HMRC and they will leave you alone for three years. If you can't - and most of us won't be able to - then say nothing and rely on the usual protections.

And you don't do anything anyway until HMRC tells you there is an investigation being opened.

It's not about engineering a low score, its about engineering the way you work with the client. Lets say you rent an office and spend a few hours a week, that's not a scam, that's a change to the way you're working with the client. Quite evidently a judge would be helped in his decision that your working independently because at least part of your work would be in your own office (Lime IT vs Justin).

Take the case of Usetech vs Young the contractor there had the same contract for several years, the judge decided that the first 3 years he was outside IR35 and the rest of it was inside IR35. This means a contractor woke up one morning worked more or less as he did the day before but overnight had "become" a disguised employee, i.e a subjective decision had to be made.

In other words subtle changes in the way you work can mean the difference between being outside or inside; so should you go ahead and have your company logo on your letters, spend a bit on advertising and have a website even though you don't need one.....absolutely.

Forget rational IT design thought processes....think legal beagle. You're in a different world. I remember in a seminar a while back someone saying your chances of being judged not guilty has more to do with the consistency of your case than anything else. If you are innocent but your story doesn't add up you're more likely to be convicted. That's why there is a relationship between getting off the hook and how much you spend on a lawyer (which of course supports the case of having insurance and getting good representation).

Listen to the case for the prosecution and you don't defend yourself or get a cheap lawyer you'll be found guilty, because in the end the facts don't speak for themselves, as we would all like to believe.

Forget innocent vs guilty....think winning your case.

[BolshieBastard]

Plus I think people still don't get what these business tests are all about. It allows the business owner to self assess themselves for their own piece of mind. Spending money on office space/advertising or otherwise re-interpreting the question is just fudging it for yourself.

If HMRC come knocking, they will only take a cursory look at your results - and will disregard anything remotely artificial - the rules around IR35 have not changed !!!

Maybe I'm in a big minority here, but I don't see a problem with these business tests - as long as you understand what they are for - it's a business self test, not an IR35 test.

Most of us here are going to be high/medium risk if they are honest with themselves - FFS that's half the point of this forum. Fudging the answers to "put" yourself into low risk doesn't actually lower your risk profile - it just gives you a false sense of security and probably makes you more complacent.

Sorry but if you believe that pap about HMRC leaving you alone for 3 years, then, that's up to you.

Recent events have proved HMRC to be nothing less than lieing bastards where taxation is concerned.

I wouldnt trust them one jot.