Reply to: Limited Company in IR35

[malvolio]

Why do I bother....

"Office Holder" in this context has legal force. It is someone who occupies a substantive and enduring post within an organsiation, such as MD, CEO, CIO, whatever, and who has a direct say in the operation of that organisaiton. Apart from a very few independent interim managers, a freelance consultant ain't it.

£220 a day is the bottom of the payscales for Senior Civil Servant (itself a defined role, come to that) divided by 260. It is a good indicator of the incompetence at the heart of hte Treasury that this has been set as the baseline. It should have been based on the cost of employment, not the headline salary, and should therefore be at least £450.

Finally, it's up to the individual department to decide how to implement the Alexander horsefeathers, many seem to be taking the pragmatic view, quite a few are over-egging it, Student Loans - who started it all - are seriously taking the mickey (but then, if they had any real business intelligence, they wouldn't have got themselves in that position in the first place)

[IR35FanClub]

My understanding this is for public sector appointments and that an office holder is someone who on the governments pay scale is on the equivalent of a managerial grade. I think it was something around £223 a day. It applied if you are there for more than 6 months. My last gig was public sector and this had been brewing and they messed around getting my contract ready for review. I got given it on the last day of my previous 6 months, took the following monday off to get it reviewed and then didn't go back. There were too many red lights for me to say I was outside IR35. Not long after everyone else left when they were asked to provide evidence they were making their deemed payment or to subject themselves to HMRCs business entity tests.
a) Noone had made deemed payments as they up to that point had considered themselves outside IR35
b) If, for an example, you took the business entity test as a market trader, plumber, mobile car mechanic or even an IT contractor, you will come up as high risk, or medium if you do a few things like a business plan and your own invoicing. Unless you have done a subsitution, or lost 10% of your turn over on bad debt, or rent a premises you don't need, you can get enough points to be low risk.

[northernladuk]

Actually, re-reading it it could be that "office holder" means someone who owns a limited company, i.e. all of us. Fook knows what goes on inside HMRC/the government's heads.

But I thought that argument had been had and it wasn't or did I miss something? I thought the company in question was the client.

So far the definition is

Expert’s Answer: Whilst there is no statutory definition of 'office holder', there is a judicial definition of 'office' that is referred to in HMRC's status manual as a 'permanent, substantive position which had an existence independent from the person who filled it, which went on and was filled in succession by successive holders.'

from Contractors' Questions: Who are 'office holders

[Jessica@WhiteFieldTax]

Actually, re-reading it it could be that "office holder" means someone who owns a limited company, i.e. all of us. Fook knows what goes on inside HMRC/the government's heads.

See para 8 IR35 forum minutes Jan, HMRC have confirmed that's cock up not conspiracy.

[kingcook]

I thought the office holder argument was a slightly different kettle of fish to us? Was for the like of that senior guy at the student loans who had the ability to direct the organisation, not small LTD;s?

Actually, re-reading it it could be that "office holder" means someone who owns a limited company, i.e. all of us. Fook knows what goes on inside HMRC/the government's heads.

[northernladuk]

IR35 business entity tests published | AccountingWEB

Finance Bill could spell the end of IR35

http://www.hm-treasury.gov.uk/d/pers...s_and_IR35.pdf

Changes to ‘IR35’ legislation

The Government has announced changes to the intermediaries legislation (commonly called IR35) that will impact individuals who hold an office (an executive or non-executive director) on the board of a company and are paid via a personal service company (PSC). Historically, there has been a view that income received by a PSC does not fall within the existing IR35 legislation and is therefore not treated as employment income subject to PAYE. The changes announced today will bring individuals who hold an office through a PSC within the scope of the IR35 legislation.

From 6 April 2013 any payment to a PSC from a third party for the provision of an individual as an ‘office holder’ will be deemed to be employment income whether the PSC or the individual is registered as the office holder of the engager. This means that HMRC can invoke IR35 and seek recovery of tax under PAYE from the PSC when PAYE has not already been applied. This places office holders in the same position as contractors and other workers that currently have to apply IR35

I thought the office holder argument was a slightly different kettle of fish to us? Was for the like of that senior guy at the student loans who had the ability to direct the organisation, not small LTD;s?

[LandRover]

IR35 in 2013 Finance Bill

IR35 business entity tests published | AccountingWEB

Finance Bill could spell the end of IR35

http://www.hm-treasury.gov.uk/d/pers...s_and_IR35.pdf

Changes to ‘IR35’ legislation

The Government has announced changes to the intermediaries legislation (commonly called IR35) that will impact individuals who hold an office (an executive or non-executive director) on the board of a company and are paid via a personal service company (PSC). Historically, there has been a view that income received by a PSC does not fall within the existing IR35 legislation and is therefore not treated as employment income subject to PAYE. The changes announced today will bring individuals who hold an office through a PSC within the scope of the IR35 legislation.

From 6 April 2013 any payment to a PSC from a third party for the provision of an individual as an ‘office holder’ will be deemed to be employment income whether the PSC or the individual is registered as the office holder of the engager. This means that HMRC can invoke IR35 and seek recovery of tax under PAYE from the PSC when PAYE has not already been applied. This places office holders in the same position as contractors and other workers that currently have to apply IR35

[ELBBUBKUNPS]

Nope that's for everyone

When you say 'next year' are you refering to the tax return for tax year April 12- April 13 will that include the question ?

[LisaContractorUmbrella]

Is that not just for public sector gigs?

qh

Nope that's for everyone

[quackhandle]

HMRC tests are available and appears many bog standard freelancers will be caught.

http://www.hmrc.gov.uk/ir35/guidance.pdf

From next year contractors working through a PSC will have to declare their IR35 status on their self-assessment tax return, if they declare that they are outside, which is financially beneficial, they will be required to prove it to HMR&C. Before the new guidance, IR35 investigations were random to a certain degree but now those declaring that they are outside IR35 will be targeted and the burden of proof is on the individual and not on HMR&C.

Is that not just for public sector gigs?

qh

[LandRover]

Guidance for IR35 compliance

HMRC tests are available and appears many bog standard freelancers will be caught.

http://www.hmrc.gov.uk/ir35/guidance.pdf

From next year contractors working through a PSC will have to declare their IR35 status on their self-assessment tax return, if they declare that they are outside, which is financially beneficial, they will be required to prove it to HMR&C. Before the new guidance, IR35 investigations were random to a certain degree but now those declaring that they are outside IR35 will be targeted and the burden of proof is on the individual and not on HMR&C.

[Sausage Surprise]

Would it make sense to not pay any salary and pay corporation tax on the profit? if so, is the net amount that's left, mine to withdraw as cash?

******* hell.....

[Wanderer]

Would it make sense to not pay any salary and pay corporation tax on the profit? if so, is the net amount that's left, mine to withdraw as cash?

Make sure you haven't jumped to conclusions about your IR35 status. Invest in an IR35 contract review (you can get an accountant or one of the specialists to do this) and see what your status is before you go paying thousands in tax that you may not have to pay.

If you are IR35 caught, then see if there is anything you can do to restructure your working practices.

If you are definitely IR35 caught then you have to pay the tax as if it were salary, that's pretty much the end of the story. There is pretty much no workaround other than to stash it in a pension if you are that way inclined.

[Gemma at Qdos]

You need to get your contract reviewed and review your working practices. Once you have determined your status, then consider how your tax will work.

If you are 'inside' IR35 then you will need to pay tax/NIC as a deemed employee i.e all income minus the expense allowance.

Get your contract and working practices reviewed by a professional and an accountant that deals with limited company contractors.

There is a list of such accountants here; mod snip.

Hi Gemma, please read the T&Cs of this board as that looked dangerously like advertising.

[northernladuk]

How can I help you?

Not me that needs divine intervention on this thread