Question Re Small Co exemption

[eek]

If you are HMRCs sight lines don’t give them a reason to go for you while this work is potentially outside it’s not worth the risk of treating it that way.

[Lance]

My advice has been to forget the exemption and act a larger firm on this one.

I think this is a bad idea.
Act like it's your problem. Not like it's the client's.
Especially when the small company exemption is defined like this

The definition of what is a ‘small business’ is taken from the Companies Act 2006 and will apply to limited companies, LLPs, unregistered companies and overseas companies.

a wealthy individual does not fit any of those.

You might be right, but as this only really about liability for getting it wrong, assume the worst.
Get an SDS from the client anyway as that will be useful evidence.

[courtg9000]

This to me is simple.
Small company exemption applies. Therefore the OP has to be diligent.
It should be very simple to demonstrate lack of SDC as only the OP knows how the work is to be done, so cannot be directed or controlled.

Nothing really to sweat about. HMRC are going to have far bigger fish to fry.

My advice has been to forget the exemption and act a larger firm on this one.
He also has the potential issue that HMRC might want this one leaked to the press if they did get claws in.
That has implications for him and whoever does the work potentially.
I have nothing to worry about as I won't be doing the work! - If I ever did come out of retirement (very unlikely, there is limited capacity for consultants who can't walk!) it would not be back to IT.
SDC could be an issue as the client knows exactly what they want. Whilst I don't think it is a massively complex job with the exception of some point in time currency handling and logging the client will want it just so.

[Lance]

This to me is simple.
Small company exemption applies. Therefore the OP has to be diligent.
It should be very simple to demonstrate lack of SDC as only the OP knows how the work is to be done, so cannot be directed or controlled.

Nothing really to sweat about. HMRC are going to have far bigger fish to fry.

[northernladuk]

This client has always been ok with me. Less so with those who try and rip him off or try and take the mickey.
Accept a sub? - very unlikely certainly not an unfettered one.
He knows what he wants and will want everything just so, having said that he has two ears and knows what ears are used for so if there is an issue it will be workable.
As for actual co's I suspect he can't run through any of the co's he's invested in, so contract will be to him. The only thing his investments have to with the job is that info will be held about them on the system to be developed.
I WILL NOT be doing the work as I am now very retired. This one is very much open.
He's asked me for advice. I thought I would run it through here as a sanity check. I have already said that I reckon HMRC will take the view that the rules apply.

Odd one isn't it. Upside to that is all sorts of weird and wonderful deals could be negotiated with someone like that (assuming you deliver and he's happy).

Interesting situation that one.

[courtg9000]

You say he's a former client so you'll know best but I'm always wary of these setups. They might be ultra high worth but that doesn't always mean they just chuck money about and I find they tend to be very arrogant and rough shod in their business dealings. They'll be very entrepreneurial and rules won't matter to them. That causes issues with getting your money if they don't fancy paying and would also leave you in the lurch when it comes to any agreements around IR35, SDS's and the like.

I can't image working for someone like that can really be outside. Will he accept a sub? I very much doubt it. Will he want to direct and control you? I'm absolutely sure he will. If you took the exact scenario and put it in a big corporate environment I'm sure it could be outside. With a situation like yours I'm not so sure. Difficult situation.

Will it not depend who you are contracted to with regard small co's? Will he contract you with a proper company and that can be judged on size and turn over? Will he use a shell one just to suit you but has no business bearing on what you do?

Sorry to put all this down. This situation is way out of my risk profile so would struggle to take a gig like this personally. Others love it and it's a dream I guess but when it comes to adhering to legislation and be done properly I'd say that rarely happens for these gigs.

So who knows? Tough one and I'd want to see the detail before making any conclusion.

That said if he is one of those types then kinda like LM's comment. Why not do the work in return for a new car or something. No cash, no paper trail and you get something you needed for the same cost? He might be willing to put something like that through the books so some benefit to him? Dunno. Just guessing. If these people don't believe in following the rules then look for other possibles that may not be options with corporates?

This client has always been ok with me. Less so with those who try and rip him off or try and take the mickey.
Accept a sub? - very unlikely certainly not an unfettered one.
He knows what he wants and will want everything just so, having said that he has two ears and knows what ears are used for so if there is an issue it will be workable.
As for actual co's I suspect he can't run through any of the co's he's invested in, so contract will be to him. The only thing his investments have to with the job is that info will be held about them on the system to be developed.
I WILL NOT be doing the work as I am now very retired. This one is very much open.
He's asked me for advice. I thought I would run it through here as a sanity check. I have already said that I reckon HMRC will take the view that the rules apply.

[courtg9000]

Yep, that's what I thought.
I can't see this realistically being more than about £20-25k if that even for God's gift to software development. So a large envelope full of used fivers might be viable

[northernladuk]

You say he's a former client so you'll know best but I'm always wary of these setups. They might be ultra high worth but that doesn't always mean they just chuck money about and I find they tend to be very arrogant and rough shod in their business dealings. They'll be very entrepreneurial and rules won't matter to them. That causes issues with getting your money if they don't fancy paying and would also leave you in the lurch when it comes to any agreements around IR35, SDS's and the like.

I can't image working for someone like that can really be outside. Will he accept a sub? I very much doubt it. Will he want to direct and control you? I'm absolutely sure he will. If you took the exact scenario and put it in a big corporate environment I'm sure it could be outside. With a situation like yours I'm not so sure. Difficult situation.

Will it not depend who you are contracted to with regard small co's? Will he contract you with a proper company and that can be judged on size and turn over? Will he use a shell one just to suit you but has no business bearing on what you do?

Sorry to put all this down. This situation is way out of my risk profile so would struggle to take a gig like this personally. Others love it and it's a dream I guess but when it comes to adhering to legislation and be done properly I'd say that rarely happens for these gigs.

So who knows? Tough one and I'd want to see the detail before making any conclusion.

That said if he is one of those types then kinda like LM's comment. Why not do the work in return for a new car or something. No cash, no paper trail and you get something you needed for the same cost? He might be willing to put something like that through the books so some benefit to him? Dunno. Just guessing. If these people don't believe in following the rules then look for other possibles that may not be options with corporates?

[ladymuck]

https://www.bdo.co.uk/en-gb/insights...nies-exemption

I suppose the section under unincorporated businesses would be applicable.

Unincorporated businesses (not including LLPs) will only need to consider the turnover test to establish whether they are small, and it will only be by reference to the last financial year ending at least 9 months before the start of the tax year.

The IR35 rules must be applied from the start of the tax year following the financial year in which the turnover limit is exceeded, provided that financial year ended at least 9 months before.

Similar rules apply to sole traders but the test is based on the calendar year ending before the start of the tax year.

I personally would be inclined to pay cash and keep it all under the radar

[courtg9000]

Who will be issuing the contract?

Mr HNW personally or one of his companies?

Going to be him.

[ladymuck]

Who will be issuing the contract?

Mr HNW personally or one of his companies?

[courtg9000]

Background. Had a call from a former client about him contracting someone to do some stuff on investment monitoring/management software for him. My former client is Very UHNWI. Probably worth more than double a max Euromillions win, if not far off! He is proposing to engage and pay the contractor (a developer) as an individual paying a ltd co. Much in the same way he pays for most things. Contract at the moment will be hourly rate. He reckons that because he is an individual even though he owns a stack of companies, the small co exemption will still come into play.

My take is that because he is so loaded HMRC will see it differently and thus come after the contractor as rules apply. If you ran it through the tool (i haven't, don't believe client has) it would probably be inside.

What are people's thoughts?