Reply to: First batch of HMRC IR35 compliance letters out

[meanttobeworking]

So did anybody get one of these?

[psychocandy]

IMHO this is not about winning in court but about scaring people into playing it safe. That makes them a great deal.

Exactly. A bit like dodgy private parking tickets....

They can scare enough people into paying up with no arguments. Those who kick up a fuss (ignore in the case of parking tickets) they wont bother with.

[northernladuk]

I'm independent and willing to travel, why should a 'specialist' get a tax break? The current situation where 'every numpty and his dog is piling in' comes down to the market not wanting to employ people yet HMRC wants to tax them as employees.

How is this different from the market not wanting to employ a specialist?

But it appears to me that it is that market change that has caused HMRC to sit up and take notice. Contractors supplied a valuable service in days gone by but now it is becoming the norm to take on temp staff in this method. MOO and Sub might have been a viable concept in the past but as this market grows they become less and less viable and we slip closer and closer to inside IR35 as standard. That coupled with HMRC see their income slipping due to more people working as this flexible workforce I just think it is hardly surprising they are more eager than ever to clamp down.

That willingness travel and work independently is what makes you a specialist contractor in my example. Now it is just full of people that are not wanting to travel, have no idea about the difference between contractor and perm and don't understand the way they work. That is why I am not surprised HMRC are not pleased with 'contractors'. Does that make more sense?

Am not saying what is happening is right or wrong, just saying it isn't surprising big changes are afoot.

[gingerjedi]

Looking at the attitude of some people coming in to contracting now you can hardly blame them. Where contracting was a term for a specialist working in quite a unique way to the rest of the workforce, independent, specialist, willing to travel and so on, I am sure they were happy with the situation.

Now every numpty and his dog is piling in we see more posts now from people that want to go umbrella because they can't be bothered with the hassle. That alone would tell me (if I were HMRC) things have changed in contracting and it needs re-looking at.

I'm independent and willing to travel, why should a 'specialist' get a tax break? The current situation where 'every numpty and his dog is piling in' comes down to the market not wanting to employ people yet HMRC wants to tax them as employees.

How is this different from the market not wanting to employ a specialist?

[northernladuk]

I think you are right, in a way, HMRC don't really like the idea of 'contractors' in general - they seem to think that there are 2 boxes, one for people who are employed by big companies and big companies and if you don't fit in either category you are fair game.

Looking at the attitude of some people coming in to contracting now you can hardly blame them. Where contracting was a term for a specialist working in quite a unique way to the rest of the workforce, independent, specialist, willing to travel and so on, I am sure they were happy with the situation.

Now every numpty and his dog is piling in we see more posts now from people that want to go umbrella because they can't be bothered with the hassle. That alone would tell me (if I were HMRC) things have changed in contracting and it needs re-looking at.

[LisaContractorUmbrella]

Spectacular missing the point here. HMRC know they'll frighten more contractors into brollies or deeming themselves caught than the number of investigations they'll open.

That is what this is about, getting as many contractors into brollies, paying more tax either via that vehicle or self deeming IR35 caught rather than wasting manpower investigating ltd co's.

I think you are right, in a way, HMRC don't really like the idea of 'contractors' in general - they seem to think that there are 2 boxes, one for people who are employed by big companies and big companies and if you don't fit in either category you are fair game.

[SussexSeagull]

One strategy would be to pay yourself not the minimum salary say 20 grand a year, sure you pay some extra NIC's but I bet you have a good chance of getting off the target list, and you still save a lot of NI.

Also I reckon the idea floated of several contractors in a co. would help, means your company profile is more like a normal co.

I presume they look for one man co's earning minimum salary.

Anyway these would be options if the new IR35 regime proved to be a problem.

I don't think that would make much difference in catching the eye of the HMRC (although with the HMRC who knows?) but at least the earnings you paid PAYE and NI would at least be ring fenced against future HMRC investigation so reducing risk going forward.

[BolshieBastard]

Spectacular missing the point here. HMRC know they'll frighten more contractors into brollies or deeming themselves caught than the number of investigations they'll open.

That is what this is about, getting as many contractors into brollies, paying more tax either via that vehicle or self deeming IR35 caught rather than wasting manpower investigating ltd co's.

[mickael28]

+ the 2.5k public services contractors who have already had there details passed over to HMRC.

Do you have a link with more info about this?

[Waldorf]

Given that there are 3 teams of 12 people, I reckon they will open somewhere in the region of 1,000 - 1,500 enquiries between them per year. So based on an estimated target population of 500,000, I would say your chances of an enquiry are circa 0.2% - 0.3% per year.

There are a few estimated variables in there though and I am happy to be corrected if anyone has any better guesses.

PUMA

With a total of 36 people and upto 1500 enquiries, then each person is only expected to handle about 40 cases a year, so less than 1 a week! Hardly a big workload is it.

[Old Greg]

IMHO this is not about winning in court but about scaring people into playing it safe. That makes them a great deal.

[gingerjedi]

if it was about the money they wouldn't bother going after anyone. the difference if its won and then paid is prob negligible.

So HMRC are in the business of investigating to prove they're right rather than raise revenue?

Going on past 'victories' (5 out of 1500 last time it was on the PCG site) it's a huge waste of money, not negligible.

[Bumfluff]

Given that there are 3 teams of 12 people, I reckon they will open somewhere in the region of 1,000 - 1,500 enquiries between them per year. So based on an estimated target population of 500,000, I would say your chances of an enquiry are circa 0.2% - 0.3% per year.

There are a few estimated variables in there though and I am happy to be corrected if anyone has any better guesses.

PUMA

+ the 2.5k public services contractors who have already had there details passed over to HMRC.

[moggy]

It should be in the tax payers interest, they can't just go around in pursuit of 'victories' if it's costing more than they win.

if it was about the money they wouldn't bother going after anyone. the difference if its won and then paid is prob negligible.

[THEPUMA]

I wonder how big the 'first batch' is? If it's say 5000 and past performance is an indicator I'll be retired by the time they get around to releasing the second.

Given that there are 3 teams of 12 people, I reckon they will open somewhere in the region of 1,000 - 1,500 enquiries between them per year. So based on an estimated target population of 500,000, I would say your chances of an enquiry are circa 0.2% - 0.3% per year.

There are a few estimated variables in there though and I am happy to be corrected if anyone has any better guesses.

PUMA