Reply to: NW forcing an IR35 contract review

[Sidekick]

Going forward once the possible shortfall grows to > £20k I will purchase an IR35 insurance policy which is relatively cheap considering the protection it provides.

The only issue with this solution is that you need to meet the conditions of the insurance - you should look into those now, as quite often it's not as simple as just making a payment. Your insurance is only valid while you keep the policy active and HMRC will go back years. Don't get me wrong, insurance is always good but it's not a substitute for doing the right thing from the start. As you're fairly new, there's a good opportunity to put the right working practices in place. It'll certainly make getting that insurance easier. Think of it like buying a deadlock for your front door - it's just a sensible and easy thing to do (and you can still buy contents cover!)

[captainham]

Which makes a contract review entirely pointless. And you won't know what the actual working practices are going to be until you start the gig.

I disagree. Having good working practices but a contract plastered all over with 'I am a disguised employee' is still not going to help (it just might take you longer to shake off HMRC but why give them a hook), plus a specialist review shows a level of due diligence being carried out (as you'd expect from a 'proper' business).

[malvolio]

For the moment I'm happy with my current setup. I can live with a small possibility of being investigated and then another small possibility of being asked to repay some tax. There is no way I can be 100% certain I'm safe and also I'm just starting trading so this shortfall will be small. Going forward once the possible shortfall grows to > £20k I will purchase an IR35 insurance policy which is relatively cheap considering the protection it provides.

Just join the PCG now and save the hassle altogether. There's more to life than IR35.

[qtech]

For the moment I'm happy with my current setup. I can live with a small possibility of being investigated and then another small possibility of being asked to repay some tax. There is no way I can be 100% certain I'm safe and also I'm just starting trading so this shortfall will be small. Going forward once the possible shortfall grows to > £20k I will purchase an IR35 insurance policy which is relatively cheap considering the protection it provides.

[VectraMan]

And contract clauses, whilst the starting point, also need to match up with your actual working practices...the contract on its own is also meaningless if you need to ask for time off, are controlled by client, etc etc.

Which makes a contract review entirely pointless. And you won't know what the actual working practices are going to be until you start the gig.

[LisaContractorUmbrella]

Primarily, I have two income streams IT contracting and professional photography.

Secondly, my IT contract has enough enough clauses added which are designed to negate the appearance of disguised employment.

Both the above give me reasonable grounds to believe I'm outside IR35.

Of course a professional IR35 review would help but is no guarantee that HMRC will arrive at the same conclusion.

Added clauses which are specifically for the purpose of creating an 'outside IR35' contract will be of almost no use in the event of an investigation - your working practises are what's important. Have you considered the degree of supervision, direction and control in the IT role, whether there is MOO and whether you have a right of substitution and if you have do you know someone who could fill the role in your absence? As others have said - the fact that you have 2 revenue streams is completely irrelevant

[Sidekick]

Primarily, I have two income streams IT contracting and professional photography.

Secondly, my IT contract has enough enough clauses added which are designed to negate the appearance of disguised employment.

I'm afraid Captainham is right on this one - HMRC will judge the photography and contracting individually. If your contract ticks the right boxes then you just need to focus on your working practices.

Louise

[captainham]

Two income streams is meaningless in the context of IR35 - it is judged on a contract-by-contract basis, so one could be inside and the other not, or any other permutation for that matter.

And contract clauses, whilst the starting point, also need to match up with your actual working practices...the contract on its own is also meaningless if you need to ask for time off, are controlled by client, etc etc.

[qtech]

As a matter of interest what within your working practises has led you to be convinced that you are outside IR35?

Primarily, I have two income streams IT contracting and professional photography.

Secondly, my IT contract has enough enough clauses added which are designed to negate the appearance of disguised employment.

Both the above give me reasonable grounds to believe I'm outside IR35.

Of course a professional IR35 review would help but is no guarantee that HMRC will arrive at the same conclusion.

[qtech]

Hi qtech - it is not our policy to force clients to have their contract reviewed, though we do recommend it. If you say, having reviewed the contract yourself, that IR35 does not apply then we will take your word for it.

If you have been advised otherwise then please send me a private message, or email me on craig@nixonwilliams.com with details and I will look into this for you immediately.

Thanks
Craig

Thanks Craig. My accountant has clarified the IR35 review is not compulsory.

[Jessica@WhiteFieldTax]

Maybe, although a few reputable accountants do offer free contract reviews. Personally, I think it's a worthwhile service when combined with an external review from one of the usual suspects (two opinions are often enlightening ).

Yes, we do reviews, although as a chargeable service to enable us to do it thoroughly and report properly. However whether the client wants to accept our opinion, is a separate issue. Different services.

[Jessica@WhiteFieldTax]

Very true but if their client comes in telling the accountants they are exempt then some strong guidance from the accountant would be in order

Accountants advise, clients decide...

[jamesbrown]

+1

Exactly the stance any reputable accountant should take.

If an accountant ever **tells** you your IR35 status rather than **asking** you for instructions, run a mile.

Maybe, although a few reputable accountants do offer free contract reviews. Personally, I think it's a worthwhile service when combined with an external review from one of the usual suspects (two opinions are often enlightening ).

[northernladuk]

+1

Exactly the stance any reputable accountant should take.

If an accountant ever **tells** you your IR35 status rather than **asking** you for instructions, run a mile.

Very true but if their client comes in telling the accountants they are exempt then some strong guidance from the accountant would be in order

[Jessica@WhiteFieldTax]

Hi qtech - it is not our policy to force clients to have their contract reviewed, though we do recommend it. If you say, having reviewed the contract yourself, that IR35 does not apply then we will take your word for it.

If you have been advised otherwise then please send me a private message, or email me on craig@nixonwilliams.com with details and I will look into this for you immediately.

Thanks
Craig

+1

Exactly the stance any reputable accountant should take.

If an accountant ever **tells** you your IR35 status rather than **asking** you for instructions, run a mile.