Reply to: Is going limited worth it if you are inside IR35?

[LandRover]

I was reading this thread with interest and then looked at the Employment Status Indicator test of Hector (HM Revenue & Customs:Employment Status Indicator )to see what is going to be their thinking.

The key two definitions (I took the test about 10-15 times and based on the ones that came up with self-employed as the result) which mark someone as self-employed is a) you need not be working regular hours but are expected to deliver to deadlines 2) ability to substitute

Actually substitution is one that immediately allows you as self employed. If you can't substitute then the working pattern (control). All experienced forum posters might already know this and apologies I am repeating what everyone knows. But, almost all contractors who I have been working with will be marked as employees. I work one engager a year (on an average) and then move on to another next year. Even that is not good according to that test.

Considering the tool has been updated mid 2010, if they ramp up the IR35 squad, it is going to be another mayhem...

My thoughts too.


And you only have to read stuff like this to be very very fearful if Labour win 2015 election.

http://www.taxresearch.org.uk/Blog/2...policy-review/

http://www.taxresearch.org.uk/Documents/UniteLabour.pdf

[contr7758301]

Employment Status Indicator

I was reading this thread with interest and then looked at the Employment Status Indicator test of Hector (HM Revenue & Customs:Employment Status Indicator )to see what is going to be their thinking.

The key two definitions (I took the test about 10-15 times and based on the ones that came up with self-employed as the result) which mark someone as self-employed is a) you need not be working regular hours but are expected to deliver to deadlines 2) ability to substitute

Actually substitution is one that immediately allows you as self employed. If you can't substitute then the working pattern (control). All experienced forum posters might already know this and apologies I am repeating what everyone knows. But, almost all contractors who I have been working with will be marked as employees. I work one engager a year (on an average) and then move on to another next year. Even that is not good according to that test.

Considering the tool has been updated mid 2010, if they ramp up the IR35 squad, it is going to be another mayhem...

[malvolio]

I think that's the problem, uncertainty again coming in 2013 Finance Bill. People thinking its carry on as usual could be in for a surprise imo. The ramp up of staff, the fact dedicated staff can process up to 1000 cases etc etc sends out a message in itself. Its the presumption of your caught now prove it...which if anyone thinking is not stressful, is operating in denial. Easy pickings is how HMRC are looking at freelancers and conractors...aimho.

But they can start as many as they like. If you are following good practice, have a sensible contract that matches reality, have a qualified review of the contract and quality PEI insurance cover, then HMRC still have to prove that you are liable to pay under IR35 rules, and you will take them to a least the tribunal to defend your position. And they will still come away with the same results ratio.

The law hasn't changed, nor has the process. "More" does not imply "Better".

[LandRover]

OK so we don't know what the exact wording is going to be just yet?

I think that's the problem, uncertainty again coming in 2013 Finance Bill. People thinking its carry on as usual could be in for a surprise imo. The ramp up of staff, the fact dedicated staff can process up to 1000 cases etc etc sends out a message in itself. Its the presumption of your caught now prove it...which if anyone thinking is not stressful, is operating in denial. Easy pickings is how HMRC are looking at freelancers and conractors...aimho.

[LisaContractorUmbrella]

I'm quoting Qdos's site...

OK so we don't know what the exact wording is going to be just yet?

[malvolio]

Do you actually know the wording for a fact?

I'm quoting Qdos's site...

[LisaContractorUmbrella]

It won't ask "Are you caught by IR35", it will ask "How much salary and dividends did you take if you are a PSC?". That proves nothing, especially if you're leaving money in the company, a pension fund or anywhere else other than your own bank account. So they still have to open an enquiry and the same old treadmill still applies; except that HMRC are under pressure to close inquiries that are clearly going nowhere.

Do you actually know the wording for a fact?

[malvolio]

I think they are likely to say 'prove it'

It won't ask "Are you caught by IR35", it will ask "How much salary and dividends did you take if you are a PSC?". That proves nothing, especially if you're leaving money in the company, a pension fund or anywhere else other than your own bank account. So they still have to open an enquiry and the same old treadmill still applies; except that HMRC are under pressure to close inquiries that are clearly going nowhere.

[LisaContractorUmbrella]

So the conversation will be something along the lines of "According to my working practices and in the light of both case law and this review from a respected professional I'm outside. Now what?". Or are HMRC going to take everyone who says they are outside to court regardless?

I think they are likely to say 'prove it'

[malvolio]

I don't know Mal - with the introduction of the mandatory IR35 status declaration on the SA form it's going to be more a case of you proving you are outside if that's what you claim

So the conversation will be something along the lines of "According to my working practices and in the light of both case law and this review from a respected professional I'm outside. Now what?". Or are HMRC going to take everyone who says they are outside to court regardless?

[LisaContractorUmbrella]

So? Don't confuse motion with progress. They still have to prove you are inside.

I don't know Mal - with the introduction of the mandatory IR35 status declaration on the SA form it's going to be more a case of you proving you are outside if that's what you claim

[centurian]

Furlough is a term often used by banks to describe this scenario where they are told not to come in. It is applied to contractors. I have seen it happen on multiple occasions. Its a cost cutting exercise.

Banks are always a bit of a different animal. Banks do use the term Furlough to describe when they don't want people to come into work - and almost always means unpaid.

What they call it in their own internal documents is not important - it's how it is used.

At one end of the scale, if they say that they want to close the office over Christmas - and permie's and contractors should take the time off, this offers no help on IR35, although it probably doesn't hinder either. This has happened to me on a gig.

At the other end of the scale, if they say "There's nothing more to be done this week - don't bother coming in tomorrow, or getting paid - see you next week", you have IR35 nailed to the cross - previous court judgements have been won on this point, so this isn't just a gut feeling interpretation.

What most bank do - is somewhere in between. They tell you that they do not want you for x days, either a fixed set of dates, or within a short window and this only applies to contractors. This certainly helps with IR35, as it demonstrates there was clearly no obligation to keep finding work and paying you. But it isn't quite the silver bullet in the above paragraph.

However, some banks are now having "leave policies" for contractors saying that contractors must schedule a minimum amount of leave per contract. IMHO, this does not help MOO, because it sets out at the beginning what the expectations and obligations are.

[malvolio]

IR35 compliance team created in May 2012 has the capacity to manage well in excess of 1,000 IR35 reviews a year.

Contractors could be facing a huge increase in the number of IR35 reviews handled by HMRC’s IR35 compliance unit, growing from the 230 forecast for the end of the 2012/13 tax year to over a 1,000 in 2013/14.

Contractors may see HMRC IR35 reviews quadruple within a year, warns IR35 expert

So? Don't confuse motion with progress. They still have to prove you are inside.

[LandRover]

Its going to get increasingly difficult for many going forward...

IR35 compliance team created in May 2012 has the capacity to manage well in excess of 1,000 IR35 reviews a year.

Contractors could be facing a huge increase in the number of IR35 reviews handled by HMRC’s IR35 compliance unit, growing from the 230 forecast for the end of the 2012/13 tax year to over a 1,000 in 2013/14.

Contractors may see HMRC IR35 reviews quadruple within a year, warns IR35 expert

[malvolio]

Sorry, to make this simple.

If you are told to take time off as furlough. Is that an indicator of being inside or outside IR35 as you see it?

I'll make it equally simple. It depends why. It also depends if you get paid or not. And it depends on who makes the decision. consider:

!. Client tells you to go home , you're not needed, but we'll pay you anyway.

2. Client tells you to go home, and we won't pay you.

3. Client asks if you can suspend your sevices for a while and you agree

4. Client has no work and sends you home unpaid

5. Client has no work and sends you home with pay

6. Client has no work so gives you something else to do...

7. You suggest to the client that you won't come in over Christmas

Get the point? It's not a black and white answer, but 3, 4 and 7 are probably OK, the rest, in varying degrees, are not. Assuming you are taken to court. And assuming you don't have a deent contract aligned to your real working practices. And assuming you have professional representation.

Getting bored now.