Reply to: IR35 - Reviewed by 2 accountants

[Zero Liability]

Interesting, but it can happen, since it's based on professional opinion. In that situation, I'd probably return to one or both with the source of the discrepancy and ask for their further input - I'm sure they'd be happy to provide it. It may be that one or other misunderstood something you wrote. Ultimately, though, some contracts and WP are going to be marginal and those cases will come down to how the reviewer/company is calibrated w/r to the advice they offer and perceived risk.

I've done so already, as I informed Accountax of the original review and its basis, and their reply was that it was pretty much a case of what you mentioned. I have purchased IR35 insurance (again, informing them of all this, and filling out their own WP questionnaire) and will try to get a CoA, however, to cover all bases. Not sure if the client's PM will be happy to sign one of these but it's worth a try as she is reasonable.

[Jessica@WhiteFieldTax]

Keeping less funds in the account has no bearing whatsoever on the possibility of an investigation. What it does do is ensure that if HMRC decide you're inside then the funds available for them to take in back taxes are limited - unless they decide to go after the directors/shareholders personally (in cases of fraud or negligence).

Concur, very concisely put.

[Clare@InTouch]

Is this true? Does keeping low funds in company account make you less likely to get a visit from HMRC? I thought they could come after the Director if they needed to?

Does anybody who has had experience of an IR35 investigation have any comments?

Keeping less funds in the account has no bearing whatsoever on the possibility of an investigation. What it does do is ensure that if HMRC decide you're inside then the funds available for them to take in back taxes are limited - unless they decide to go after the directors/shareholders personally (in cases of fraud or negligence).

[jamesbrown]

I am in a pretty similar situation as the OP. I had an initial review done by B&C, and then submitted the same info (including the info in the questionnaire) to Accountax, who came out with the opposite conclusion. I am planning to get a CoA from the client project manager, to try and mitigate risk.

Interesting, but it can happen, since it's based on professional opinion. In that situation, I'd probably return to one or both with the source of the discrepancy and ask for their further input - I'm sure they'd be happy to provide it. It may be that one or other misunderstood something you wrote. Ultimately, though, some contracts and WP are going to be marginal and those cases will come down to how the reviewer/company is calibrated w/r to the advice they offer and perceived risk.

[MickeyP]

Oh, thats frustrating.

Chat to your accountant about ways of mitigating funds at stake. Generally that means keeping as little in the company as possible.

Is this true? Does keeping low funds in company account make you less likely to get a visit from HMRC? I thought they could come after the Director if they needed to?

Does anybody who has had experience of an IR35 investigation have any comments?

[Jessica@WhiteFieldTax]

I am in a pretty similar situation as the OP. I had an initial review done by B&C, and then submitted the same info (including the info in the questionnaire) to Accountax, who came out with the opposite conclusion. I am planning to get a CoA from the client project manager, to try and mitigate risk.

Oh, thats frustrating.

Chat to your accountant about ways of mitigating funds at stake. Generally that means keeping as little in the company as possible.

[Zero Liability]

As others have said, working practices are vital, and any IR35 opinion without reviewing working practices is worth little or nothing.

Its also important to be honest about working practices; just putting on a questionnaire what you would like the position to be doesn't help; you need to be honest and document the working practices as they are and can be proved to be (and retain evidence to support that). That possibly means any pre contract assessment of IR35 status has to be provisional pending things actually settling down, depending on how confident you are and how much leverage you have.

Ultimately IR35 status is your decision, so you can ignore the reviews if you think your assessment is better - that comes down to your own personal attitude to risk.

I am in a pretty similar situation as the OP. I had an initial review done by B&C, and then submitted the same info (including the info in the questionnaire) to Accountax, who came out with the opposite conclusion. I am planning to get a CoA from the client project manager, to try and mitigate risk.

[MadDawg]

I have just had my day rate increased and the agency has issued a new contract . This new contract has exactly the same terms and length as the previous contract, the only difference being the change in rate. I had the previous contract reviewed for IR35 compliance. Do I need to have the new contract reviewed even if it is the same terms and conditions as the previous contract? Just weary of ticking the 'took all reasonable measures' box. Thanks.

If you had the original reviewed, I'd say no need to have the new one renewed. Take care on working practices though - as you're there longer it's easy to slip into 'permie' ways!

[trotters57]

HMRC Contract Copy

A friend of mine recently got a contract through an agency for an IT role at HMRC. It's obviously well written from an IR35 viewpoint but not really different to any other contract I've seen.
HMRC take on contractors on exactly the same basis as every other organisation/business.

[jffinancial]

Accountants perspective

As an accountant my position with IR35 is always to offer advice with the caveat that in reality the client knows the day to day working practices of their contract better than I do. I will tell them whether I think from my perspective there is a risk and why and they will usually come back with a defence. I will also refer them to Qdos so they can take up insurances or get a full contract review if they wish.

I do keep a record on my systems of my clients that are close to IR35 risk so that I can review their positions / nudge clients on a periodic basis.

John Falcon
JF Financial Management

[TykeMerc]

I have just had my day rate increased and the agency has issued a new contract . This new contract has exactly the same terms and length as the previous contract, the only difference being the change in rate. I had the previous contract reviewed for IR35 compliance. Do I need to have the new contract reviewed even if it is the same terms and conditions as the previous contract? Just weary of ticking the 'took all reasonable measures' box. Thanks.

If the terms and conditions are the same and you're happy that you've checked it thoroughly I'd say there's no cause for concern, just sign it.

[jamesbrown]

I have just had my day rate increased and the agency has issued a new contract . This new contract has exactly the same terms and length as the previous contract, the only difference being the change in rate. I had the previous contract reviewed for IR35 compliance. Do I need to have the new contract reviewed even if it is the same terms and conditions as the previous contract? Just weary of ticking the 'took all reasonable measures' box. Thanks.

An increase in day rate has no bearing, so if the contract was deemed outside before, it is now. You may want to revisit your working practices though, as this is the critical part, and there is case law to support a change in IR35 status if the working practices shift over time. Also, if you had an accountant review the contract before, I'd have a specialist do it now.

[Cosmokramer]

I have just had my day rate increased and the agency has issued a new contract . This new contract has exactly the same terms and length as the previous contract, the only difference being the change in rate. I had the previous contract reviewed for IR35 compliance. Do I need to have the new contract reviewed even if it is the same terms and conditions as the previous contract? Just weary of ticking the 'took all reasonable measures' box. Thanks.

[Jessica@WhiteFieldTax]

As others have said, working practices are vital, and any IR35 opinion without reviewing working practices is worth little or nothing.

Its also important to be honest about working practices; just putting on a questionnaire what you would like the position to be doesn't help; you need to be honest and document the working practices as they are and can be proved to be (and retain evidence to support that). That possibly means any pre contract assessment of IR35 status has to be provisional pending things actually settling down, depending on how confident you are and how much leverage you have.

Ultimately IR35 status is your decision, so you can ignore the reviews if you think your assessment is better - that comes down to your own personal attitude to risk.

[Andrew@Wisteria]

Will QDOS review your accounts for you? No they won't so I wouldn't be totally convinced by an an accountants review for IR35. I would want one from an IR35 specialist such as QDOS or B&C.

Out of interest what reasons did they give for being in and out. IR35 is a minefield and alot of opinion has to be applied. Not only that most elements bar the big 4 tend to be flags, not complete pointers. The wording of the sub clause can cause contention for example. If it hints that the client has the ability to refuse a sub for no reason QDOS will suggest you change it to them only refusing subs that are unsuitable.

Post the comment that makes it inside and lets see what the masses here say.

You could of course research the element that they say is inside and understand it properly first so you can make your own opinion.

Agree with NLUK, accountants should stick to tax/accounts, areas they are qualified in!