Reply to: Umbrella -> Limited

[northernladuk]

Jeez

Talk about living by the sword and dying by it!

[Craig at Nixon Williams]

I think, Craig, we should be advising him to get an accountant?

Are you sure he's cut out for that?!

[Jessica@WhiteFieldTax]

When I reach 400 points I get taken off the list for say 5 years?

Why do you want taking off the list? Got something to hide?

I think, Craig, we should be advising him to get an accountant?

[Craig at Nixon Williams]

When I reach 400 points I get taken off the list for say 5 years?!

Why do you want taking off the list? Got something to hide?

[Maslins]

How much would it cost me for you to put my suggestion forward?

IR35 investigation credit proposal.

I supply HMRC the details of a raft of contractors that don't have a clue about IR35 and don't care. The type that are blatantly disguised permies and would be a very easy win for HMRC.
In return I get 10 points credit towards IR35 investigation exemption. When I reach 400 points I get taken off the list for say 5 years? A percentage cut of the tax gathered would be nice but I don't want to look greedy or mercenary
Maybe also 15 points for a disguised permie that hasn't got IR35 insurance?

Everyone is a winner!!

Like a much less exciting version of US dramas where people gain immunity from prosecution by dobbing in everyone else?

Do wonder whether HMRC might subtly do that kind of thing anyway.

[northernladuk]

Just for the record HMRC are using a risk based approach to selecting cases for IR35 investigation. A lot of research has gone into selecting a case before the letter is issued. HMRC refused to share their risk profiles with the IR35 Forum, which will come as no surprise! In our experience of defending IR35 cases here at Bauer & Cottrell the reason for selection is pretty obvious in most cases.

Kate Cottrell

How much would it cost me for you to put my suggestion forward?

IR35 investigation credit proposal.

I supply HMRC the details of a raft of contractors that don't have a clue about IR35 and don't care. The type that are blatantly disguised permies and would be a very easy win for HMRC.
In return I get 10 points credit towards IR35 investigation exemption. When I reach 400 points I get taken off the list for say 5 years? A percentage cut of the tax gathered would be nice but I don't want to look greedy or mercenary
Maybe also 15 points for a disguised permie that hasn't got IR35 insurance?

Everyone is a winner!!

[Craig at Nixon Williams]

Just for the record HMRC are using a risk based approach to selecting cases for IR35 investigation. A lot of research has gone into selecting a case before the letter is issued. HMRC refused to share their risk profiles with the IR35 Forum, which will come as no surprise! In our experience of defending IR35 cases here at Bauer & Cottrell the reason for selection is pretty obvious in most cases.

Kate Cottrell

On what we have seen the reason for selection is not at all obvious (and appears to be random selection), but we have not received many. Is there any way that you can expand on your experience of why the letters are being sent out?

Craig

[Kate Cottrell]

That was how we understood it however the new style of letters do not appear to be being sent as a result of any particular action or non-compliance, which fits in with the article in my previous post.

We have only had a few since IR35 came in, but the latest checks seem to suggest that the above is correct as they are unprompted, unlike checks for VAT and self-assessment etc which are generally prompted by carelessness or deliberate errors.

Just for the record HMRC are using a risk based approach to selecting cases for IR35 investigation. A lot of research has gone into selecting a case before the letter is issued. HMRC refused to share their risk profiles with the IR35 Forum, which will come as no surprise! In our experience of defending IR35 cases here at Bauer & Cottrell the reason for selection is pretty obvious in most cases.

Kate Cottrell

[Martin at NixonWilliams]

You could go with Accountax, as I did. They do contract reviews as well, and if the contract passes their review you can get their IR35 guarantee, which is equivalent to Qdos's TLC, albeit charged per contract rather than p.a. IIRC. PCG is another option for insuring cover for investigations.

I took the PCG accredited accountant course at Accountax - They have a very good record at defending IR35 cases against HMRC.

[Martin at NixonWilliams]

It shows the process but unless I am missing something (it's late) it doesn't actually mention what triggers the letters. My understanding was that you appeared on the IR35 radar due to some other action on you by HMRC. If that is wrong how do they target people? From a risk process we are unaware of or is it just going out willy nilly?

That was how we understood it however the new style of letters do not appear to be being sent as a result of any particular action or non-compliance, which fits in with the article in my previous post.

We have only had a few since IR35 came in, but the latest checks seem to suggest that the above is correct as they are unprompted, unlike checks for VAT and self-assessment etc which are generally prompted by carelessness or deliberate errors.

[northernladuk]

Not anymore, HMRC have changed the way that they carry out the enquiries. They are no longer full compliance reviews as they were before. Have a read of the article below by Kate Cottrell at Bauer & Cottrell, she explains the new process in full.

How to deal with an HMRC IR35 letter :: Contractor UK

It shows the process but unless I am missing something (it's late) it doesn't actually mention what triggers the letters. My understanding was that you appeared on the IR35 radar due to some other action on you by HMRC. If that is wrong how do they target people? From a risk process we are unaware of or is it just going out willy nilly?

[Zero Liability]

Have you had the contract reviewed? When I've spoken to them in the past about IR35 insurance they've stated moving from umbrella to ltd is no issue re IR35. So I am surprised they would not offer cover on that basis. I would certainly go back and ask why this is so. Or is this something you're assuming? The bit re PAYE concerns the end client, not an umbrella, which would be a separate employer to the end client, much like your ltd company is a separate one. All the insurance does is mitigate your losses if you are found inside IR35 in the event of a successful claim; having the contract and WP reviewed is more important for determining beforehand how to submit your accounts.

You could go with Accountax, as I did. They do contract reviews as well, and if the contract passes their review you can get their IR35 guarantee, which is equivalent to Qdos's TLC, albeit charged per contract rather than p.a. IIRC. PCG is another option for insuring cover for investigations.

[mickey]

IR35 is based on working practices. Going from brolly to limited is a commercial decision that would have no impact on how you do the contract work.

Most people leave swapping over until they start a new contract as they can get everything set up in the break, and it gives a clean start.

HMRC can resurrect a dead company in cases of fraud.

Thank you Clare.

I understand the theory, working practices and RoS. In practice qdos are not able to offer their tax liability cover on the basis of a too short break between PAYE and Ltd.

Who are the other providers of IR35 insurance I should be speaking with?

In the meanwhile, the absence of the tax cover leaves me with the only choice of going inside IR35 on this (longish) contract, right?

I understand the take home on the inside of IR35 is marginally better than an umbrella. Has anyone quantified the difference?

[Zero Liability]

Same here - We prepare letters for our clients to send on to HMRC informing them of their intention for the company to be struck off and I'm yet to see HMRC launch an enquiry as a result.

I agree that good behaviour in terms of filing returns & paying taxes will definitely help you. Having said that, the latest IR35 enquiries we have had seem to be for 'good' clients.

Martin

I guess they do have to also go for some good ones, both to avoid the appearance of only targeting people with dodgy tax affairs, and also because some of these contractors may be very juicy targets, since they seem to assess risk based on dividends taken relative to salary (and I would assume the absolute size of the dividends.)

[Martin at NixonWilliams]

Again bearing in mind we believe IR35 investigations come of the back of tax investigations, people with good accountants will be at less risk than those running their company badly and we won't have any sight of how many people this is will we?

Not anymore, HMRC have changed the way that they carry out the enquiries. They are no longer full compliance reviews as they were before. Have a read of the article below by Kate Cottrell at Bauer & Cottrell, she explains the new process in full.

How to deal with an HMRC IR35 letter :: Contractor UK