Reply to: HMRC Insider News

[Paralytic]

And as I've said elsewhere and repeatedly, I think the risk is low if you can get your company closed before HMRC come knocking.

This, and a look at what your risk is. If you've been at the client < 12 months, and have some funds set aside, I'd be tempted to take the risk. But if you've been at the client for 3, 4, 5+ years....

[LondonManc]

In respect to IR35, HMRC can be viewed as any other debt collection agency; they will take a view as to whether the cost of the chase is worth the prize at stake.
Any self-determination of outside with a QDOS-approved contract and working practices will be at the bottom of the pile.
Any self-determination of outisde that are now inside are, in the eyes of HMRC (and not unreasonably so), an admission that the self-determination was incorrect; any failure to challenge the determination with good evidence will demonstrate a lack of care and attention and you'll be front and centre on the list.

Why IT first? Best paid, highest likelihood of inside. Will be interesting to see how many foreign contractors flee, never to work here again rather than face the taxman and his bill.

[WordIsBond]

If this is part of a campaign to target those who've gone from outside to inside (or outside to brolly, or outside to perm), the first target is likely public sector people. The clock is running, if they want to go after them.

There has, as of yet, been no sustained campaign against them, or we'd have heard about it.

Although I think the risk is very high of these investigations, I think people who are making the move now probably have some time to get their companies closed. I could be mistaken. I wouldn't go outside to inside, personally. But I think if these kinds of investigations start they will start with the public sector people so that they don't escape the net before the clock runs out. The private sector people may have time to close their companies.

And as I've said elsewhere and repeatedly, I think the risk is low if you can get your company closed before HMRC come knocking.

[WordIsBond]

I have been syphoning the max into a pension last two years, but don't think that will protect you should they come a knocking.

A pension contribution is exempt from IR35 liabilities in the year in which it is made. It won't help with prior years. Anyone who thinks they can reduce their IR35 hit from prior years by making pension contributions now is likely to be unhappy.

[mogga71]

I have been syphoning the max into a pension last two years, but don't think that will protect you should they come a knocking.

I am talking to my accountant this afternoon about something else so will mention this to him.

But I think the general consensus was that as absolutely no deductions are taken before the Pension payments for anybody (including permies with SS) then they will be exempt from the investigations.

[jsnetman]

I am at a major bank and like yourself, most contractors on my floor have been there for more than 5 years ... not me though. A lot of them are now talking about this very issue of possible outside to inside investigations. indeed, should they even bother doing an MVL any more .... as can these people easily be identified and cross matched with outside to inside switchers meaning their very appealing 10% ER tax rate will come back and bite them and leave them with a big tax burden and fine in a couple of years.

Discussion had moved towards the possibility of instead paying a stack load of their money into their SIPPS as if HMRC come calling such money will be deemed fine and no tax and fines will need to be paid on that part apparently. Problem is how few contractors actually have any form of Pension in place. It shocked me.

As you rightly point out, its all about a persons appetite for risk.

I have been syphoning the max into a pension last two years, but don't think that will protect you should they come a knocking.

[mogga71]

It boils down to your appetite to risk, if you've been in contract at same client for 2 years it maybe is acceptable to take the risk, if you've been there 3 years or more then the risk gets much greater in terms of financial penalties and back taxes should they do aggressive investigations. Vast majority at my place are 5+ years including me.

I am at a major bank and like yourself, most contractors on my floor have been there for more than 5 years ... not me though. A lot of them are now talking about this very issue of possible outside to inside investigations. indeed, should they even bother doing an MVL any more .... as can these people easily be identified and cross matched with outside to inside switchers meaning their very appealing 10% ER tax rate will come back and bite them and leave them with a big tax burden and fine in a couple of years.

Discussion had moved towards the possibility of instead paying a stack load of their money into their SIPPS as if HMRC come calling such money will be deemed fine and no tax and fines will need to be paid on that part apparently. Problem is how few contractors actually have any form of Pension in place. It shocked me.

As you rightly point out, its all about a persons appetite for risk.

[jsnetman]

Thats exactly the problem though isn't it? ... it's not certain.

It boils down to your appetite to risk, if you've been in contract at same client for 2 years it maybe is acceptable to take the risk, if you've been there 3 years or more then the risk gets much greater in terms of financial penalties and back taxes should they do aggressive investigations. Vast majority at my place are 5+ years including me.

[mogga71]

If that is your line of thinking, and you (or anyone else) are going to base your finances and actions based off that, then you are doomed / waiting for a big nasty surprise.

Secondly, if they can present that they have collected a lot of taxes from who they call tax dodgers (past outside to now inside tax-dodgers), they will earn a lot of respect in public eyes.


Finally, your idea that chasing people who think they are outside post April 6th, is not a valid one - since there is no thinking involved here anymore... its all about client / fee-payer taking that responsibility and issuing a SDS written statement, so the real consultants will be ok if they are doing IR35 outside business.
The clients will setup proper WPs and SoWs and there won;t be any point in investigating these.

The correct and obvious thing that HMRC will do is to chase all of the past outside to now-insiders (with the same client), and that will get them loads of cash.. that is for certain!

Thats exactly the problem though isn't it? ... it's not certain.

[eek]

It's possible. It may even be likely. It's not certain.

We don't know - HMRC have 4 years to trigger things off and the public sector changes were done 3 years ago.

[Amanensia]

The correct and obvious thing that HMRC will do is to chase all of the past outside to now-insiders (with the same client), and that will get them loads of cash.. that is for certain!

It's possible. It may even be likely. It's not certain.

[CosmicWave]

HMRC repetitively said they will not be doing retrospective investigations so isn't it more likely these new staff will be set on those who think they're outside?

I'd expect them to give it a few years before opening cases on the switcheroos. At least to save them looking like barefaced liars if they start next week.

If that is your line of thinking, and you (or anyone else) are going to base your finances and actions based off that, then you are doomed / waiting for a big nasty surprise.

Secondly, if they can present that they have collected a lot of taxes from who they call tax dodgers (past outside to now inside tax-dodgers), they will earn a lot of respect in public eyes.


Finally, your idea that chasing people who think they are outside post April 6th, is not a valid one - since there is no thinking involved here anymore... its all about client / fee-payer taking that responsibility and issuing a SDS written statement, so the real consultants will be ok if they are doing IR35 outside business.
The clients will setup proper WPs and SoWs and there won;t be any point in investigating these.

The correct and obvious thing that HMRC will do is to chase all of the past outside to now-insiders (with the same client), and that will get them loads of cash.. that is for certain!

[BlueSharp]

HMRC repetitively said they will not be doing retrospective investigations so isn't it more likely these new staff will be set on those who think they're outside?

I'd expect them to give it a few years before opening cases on the switcheroos. At least to save them looking like barefaced liars if they start next week.

No. It's a target driven culture and people switching from outside to inside are low hanging fruit so will be targeted by staff to hit the KPIs.

[simes]

HMRC repetitively said they will not be doing retrospective investigations so isn't it more likely these new staff will be set on those who think they're outside?

I'd expect them to give it a few years before opening cases on the switcheroos. At least to save them looking like barefaced liars if they start next week.

Bless.

[AnthonyQuinn]

do you Really think HMRC cares about public perception of them?

Without nay prejudice or being judgemental, HMRC's KPI is raising tax. The more money they raise the better their performance. This will then be doled out to various departments who will need to spend it in a way that the public approves of.

If HMRC says that closing this tax loophole has let us tighten the noose on 24000 tax dodgers every year and raise XXXX extra from these scum, will their public perception improve or suffer?