P35 Filing - Service Question

[Sockpuppet]

Comes up every year. The answer to this Question will not be the sole deciding factor in if you pass / fail an investigation. Or if they start one or if anything. You have to think there are millions of businesses in the UK. No-one is waiting for your answer to this question to scream "gotcha" when you fill it in. I used to worry about this question then I realised that it's such a badly worded question that it wasn't worth worrying about.

I regard either Yes / No or Yes / Yes as equally valid. I wouldn't answer No as its fairly clear that most of us are service companies.

[dagenheis]

Hi dagenheis,

There is sometimes a difference of opinion amongst accountants but I am unsure why as the criteria behind the question is quite simple!

Have a read of the following article, it should help you clarify your position:

Taxman clarifies service company question l HMRC definition of service company - P35 Q6 :: Contractor UK

If I can assist you further please do not hesitate to ask.

Martin

Cheers for sharing this.

Although I only have the contract with the agency (not with the end-client), the correct answers are Yes/No (part 1, part 2) for a typical LtdCo IT contractor operating outside IR35.


I also found Are you a service company? Contractors face IR35, MSC probe on P35 tax return :: Contractor UK

/*QUOTE

"It might be that… [answers to Q6] will not be used this year for the risk-profile but I am sure that there will be someone somewhere [in HMRC] interested in the response," said Mr Jones, a former Inland Revenue tax inspector.
*ENDQUOTE/

[cojak]

Your new accountant is right if you are working for a Ltd.

[Martin at NixonWilliams]

Hello,

For the P35 return last year, my last accountant answered the first part "are you a service company" as "No". As I changed accountant this year, my new accountant thinks that the first part should be answered as "yes" and second part as "no" based on the fact that I am the principal fee earner of the company.

However, he did mention that there can be a difference of opinion between accountants in terms of what contractors should indicate in response to this question.


Appreciate if some of the learned members/accountants can share their opinion on the right answers to these P35 questions for an IT industry Ltd Co contractor for clients through an agency. My contracts etc are outside IR35


These questions do sound like a way to profile people for IR35 based on this response although same question including dividend declaration is part of Self assessment anyway

Hi dagenheis,

There is sometimes a difference of opinion amongst accountants but I am unsure why as the criteria behind the question is quite simple!

Have a read of the following article, it should help you clarify your position:

Taxman clarifies service company question l HMRC definition of service company - P35 Q6 :: Contractor UK

If I can assist you further please do not hesitate to ask.

Martin

[dagenheis]

Hello,

For the P35 return last year, my last accountant answered the first part "are you a service company" as "No". As I changed accountant this year, my new accountant thinks that the first part should be answered as "yes" and second part as "no" based on the fact that I am the principal fee earner of the company.

However, he did mention that there can be a difference of opinion between accountants in terms of what contractors should indicate in response to this question.


Appreciate if some of the learned members/accountants can share their opinion on the right answers to these P35 questions for an IT industry Ltd Co contractor for clients through an agency. My contracts etc are outside IR35


These questions do sound like a way to profile people for IR35 based on this response although same question including dividend declaration is part of Self assessment anyway