Reply to: What happens if the revenue call about IR35 but there's no money in the business?

[Old Greg]

SJD (an individual accountant, not company policy possibly) have recommended this as a way of reducing risk.

[Platypus]

Technically they could but they would have to have the company restored and prove wrongful trading to actually get the director to pay back the dividends so they could be taxed. Even then they are going to have a hell of a fight against a director who will claim that they acted in good faith. What if the company had more than one shareholder too? It's all pretty messy really.

But, they are devious bastard's at HMRC so maybe they'd use non disclosure to re open the company?

Seems to me they are more likely to search for easier targets.

[BolshieBastard]

Hi Folks

What is the position - in practice - if a company is closed down.

As I understand it, HMRC have to give the OK for the company to be struck out \ closed completely. They had their chance to perform any investigation up to that point.

Cant see how they could normally go after a company they agreed could be closed.

But, they are devious bastard's at HMRC so maybe they'd use non disclosure to re open the company?

[Wanderer]

Do they bother investigating contracts when the company is closed?

Technically they could but they would have to have the company restored and prove wrongful trading to actually get the director to pay back the dividends so they could be taxed. Even then they are going to have a hell of a fight against a director who will claim that they acted in good faith. What if the company had more than one shareholder too? It's all pretty messy really.

I don't think it's really talked about too loudly for fear that the cat will get out of the bag and people will start abusing the system by closing down their companies all the time....

[Old Greg]

Bent over with trousers round ankles I expect....

Enough of your marital initimacies.

Do they bother investigating contracts when the company is closed?

[northernladuk]

Hi Folks

What is the position - in practice - if a company is closed down.

Bent over with trousers round ankles I expect....

[Old Greg]

Hi Folks

What is the position - in practice - if a company is closed down.

[SimonMac]

Maybe this can help

<snip>

[malvolio]

One thought - I had both TLC35 and PCG but quit one because I was worried about being insured twice. e.g. if you have both travel insurance and home contents cover for items away from your home and you lose something on holiday the travel insurance will split the cost with your home insurance. Insurers often have clauses about sharing costs when the policy holder is insured twice - it might be worth checking what would happen in the event you do get investigated with TLC35 and PCG in place.

Well the obvious answer is drop TLC35 and go with Abbey Tax's Survive35 through the PCG, which gives exactly the same cover.

HTH

[Higgs Boson]

Thanks everyone.

Looks like there is no definitive answer, but it may be a risky strategy...

@jmo21 - sorry to break it to you, but it's not me in this situation. Like I said, i'm covering myself by PCG Pro membership + Qdos TLC35 - a £600 outlay, but only a day's work for peace of mind

Are you sure? The posts by Malvolio et al are comprehensive and non-ambiguous.

[northernladuk]

Thanks everyone.

Looks like there is no definitive answer, but it may be a risky strategy...

@jmo21 - sorry to break it to you, but it's not me in this situation. Like I said, i'm covering myself by PCG Pro membership + Qdos TLC35 - a £600 outlay, but only a day's work for peace of mind

No 'may be' about it. The fact there is no definitive answer makes it worth walking away.

[BolshieBastard]

Hi everyone

I was chatting to a fellow contractor the other day about the new IR35 taskforce (or whatever it is), and whether it was worth taking out extra insurance (eg Qdos's TLC35) just in case I got the dreaded letter. Almost all my contracts in the last 6 years are bordeline (eg with sub clauses, but needs client sign off, etc), and I'm also a pro PCG member, so this is something I don't take lightly.

Anyway, my friend told me that his way round it is just to leave no money in his IT business.

He now has two businesses - the first is his IT business, and the second is an investment business. Him, his wife, and the investment business are all shareholders in the IT business, and after paying dividends to all three there's never anything in the IT business.

So, if the revenue call, check out his old contracts, and find his IT business liable for IR35 then he believes there's nothing the revenue can do.

Is that correct? Is the way to beat IR35 simply to keep no money in the business? What would the revenue do in this situation?

Thoughts, etc, would be greatly appreciated.

Thanks
Lou

LOL!

Someone's is going to be in for a massive surprise if he does get investigated then!

[Lewis]

Thanks everyone.

Looks like there is no definitive answer, but it may be a risky strategy...

@jmo21 - sorry to break it to you, but it's not me in this situation. Like I said, i'm covering myself by PCG Pro membership + Qdos TLC35 - a £600 outlay, but only a day's work for peace of mind

One thought - I had both TLC35 and PCG but quit one because I was worried about being insured twice. e.g. if you have both travel insurance and home contents cover for items away from your home and you lose something on holiday the travel insurance will split the cost with your home insurance. Insurers often have clauses about sharing costs when the policy holder is insured twice - it might be worth checking what would happen in the event you do get investigated with TLC35 and PCG in place.

[LouC]

Thanks everyone.

Looks like there is no definitive answer, but it may be a risky strategy...

@jmo21 - sorry to break it to you, but it's not me in this situation. Like I said, i'm covering myself by PCG Pro membership + Qdos TLC35 - a £600 outlay, but only a day's work for peace of mind

[eazy]

HMRC Personal Liability Notices [PLN's]

Contracting and Personal Liability Notices (PLNs) from HMRC<snip>

Contractors may be vulnerable to PLNs because of IR35Contractors found to be inside IR35 and facing a claim against their company for unpaid income tax, NICs, interest and penalties could have the balance of the NICs claim transferred to them personally if HMRC considers the contractor to have been negligent in determining their IR35 status.

Worryingly for contractors, the definition of neglect used by HMRC to determine whether a PLN should be issued is based on case law. And the case law definition of neglect is sufficiently broad and vague that even simple mistakes, or mistakes that arose through a lack of knowledge, could qualify as ‘neglect’

Over the last few years, it is no longer sufficient to believe that IR35 does not apply. Reasoanble steps need to taken to confirm (Independent IR35 contract reviews) to avoid penalties of 30%.