Reply to: IR35 Review

[SueEllen]

HMRC will now want to argue the point with the contractor that they should have known that their contract was IR35 caught and they deliberately evaded tax when they knew they were IR35 caught.

Isn't the issue your working practises due to what the client tells HMRC in writing as well as the contract?

So if the client says "refer to contact" and the contract puts you clearly outside IR35 then HMRC have nothing to fight with.

But if the client indicates you are outside IR35 due to some criteria i.e. you sent in a substitute or your work is fixed priced but your contract puts you inside IR35 due to it's poor wording then your defence have something to play with.

In both cases HMRC I would imagine quietly drop the case after causing you loads of stress as they know they won't win if they take it further.

On the other hand if the client says "refer back to the contract" and your contract is clearly inside, or the client answers HMRC's questions so you are clearly inside IR35 regardless of what the IR35 review says then you will have a fight on your hands.

[Wanderer]

So get some IR35 understanding and also review it yourself

That's a good point. I'm sure that many people here could review a contract just as competently as some of the specialists out there. To me, the value of a contract review is the bit of paper that says "outside IR35" that you file away.

I put in the same contract for an IR35 renewal with QDOS simply for peace of mind and the fact it didn't cost me anything. It passed the first time, and failed the second time.

In my opinion, that was a mistake.

A contractor who had their contract reviewed by independent specialists and found to be outside IR35 could claim that they didn't understand IR35 (it's complex and a grey area so that's a fair statement) and not being a tax lawyer, they took the specialist's opinion at face value. Even if they did lose the IR35 investigation, the defence team could argue against HMRC charging a penalty because the contractor took all the steps a reasonable person could have been expected to take.

The trouble is that if a contractor resubmits their contract for review and it fails then they have a dilemma. If they continue to trade outside IR35 then HMRC could seek heavier penalties because the contractor took professional advice and disregarded it. HMRC will now want to argue the point with the contractor that they should have known that their contract was IR35 caught and they deliberately evaded tax when they knew they were IR35 caught.

Without that second review, the defence could be that the contractor wasn't a tax specialist so they had a professional review done and acted in good faith.


Of course, all this presumes that an IR35 investigation will ever happen and that the contractor may lose it....

[escapeUK]

What did you ask? Maybe I should have started a new thread. I had my contract reviewed professionally when I first engaged with existing client, I am satisfied that my working practices reflect the contract. My questions was, is it good practice/advise to get the renewals professionally reviewed each time?

I have had the same contract reviewed with the same company at renewal and they found things they didnt agree with this time, where before they said it passed. Personally I do it as a sign of me having done due diligence.

Just read the post about mine, mine was with QDOS too!

[JoJoGabor]

I put in the same contract for an IR35 renewal with QDOS simply for peace of mind and the fact it didn't cost me anything. It passed the first time, and failed the second time. be aware that e IR35 reviewers do miss things from time to time, So get some IR35 understanding and also review it yourself

[Mearcat]

Please refer to post by NLUK for guidance but you haven't really answered what I asked - it's great that you have had your contract reviewed but is the contract an accurate reflection of what you actually do? e.g. if you broke your leg and couldn't work for a week do you know someone who could cover for you and would that person be accepted by the end client as a replacement for you until you were well enough to return? If the answer is no but you have a perfectly worded substitution clause in the contract it would be meaningless in the event of an IR35 investigation.

I can get someone to cover for me, surely you could try to find someone in this instance to cover.. If small businesses had to employ more than one person to cover then most would never have started in the first place, this arrangement is bad for business birth.

[northernladuk]

What did you ask? Maybe I should have started a new thread. I had my contract reviewed professionally when I first engaged with existing client, I am satisfied that my working practices reflect the contract. My questions was, is it good practice/advise to get the renewals professionally reviewed each time?

If nothing has changed why the bloody hell do you need to have it reviewed again? It's the same contract. Paying some guy to rubber stamp it again isn't going to help you in any investigations. You showed due diligence getting it reviewed to make sure it was outside IR35 in the first place. What will a second review prove if the contract has already passed scrutiny? Jeez...

[ContractIn]

Please refer to post by NLUK for guidance but you haven't really answered what I asked - it's great that you have had your contract reviewed but is the contract an accurate reflection of what you actually do? e.g. if you broke your leg and couldn't work for a week do you know someone who could cover for you and would that person be accepted by the end client as a replacement for you until you were well enough to return? If the answer is no but you have a perfectly worded substitution clause in the contract it would be meaningless in the event of an IR35 investigation.

What did you ask? Maybe I should have started a new thread. I had my contract reviewed professionally when I first engaged with existing client, I am satisfied that my working practices reflect the contract. My questions was, is it good practice/advise to get the renewals professionally reviewed each time?

[LisaContractorUmbrella]

Hi Lisa

I had my current contract reviewed at start of a contract and got a couple of clauses amended. However I haven't had the renewals reviewed. Is this something that should be done?

Cheers
Ci

Please refer to post by NLUK for guidance but you haven't really answered what I asked - it's great that you have had your contract reviewed but is the contract an accurate reflection of what you actually do? e.g. if you broke your leg and couldn't work for a week do you know someone who could cover for you and would that person be accepted by the end client as a replacement for you until you were well enough to return? If the answer is no but you have a perfectly worded substitution clause in the contract it would be meaningless in the event of an IR35 investigation.

[northernladuk]

Hi Lisa

I had my current contract reviewed at start of a contract and got a couple of clauses amended. However I haven't had the renewals reviewed. Is this something that should be done?

Cheers
Ci

Have you applied any common sense to this question?

[ContractIn]

Yes get it professionally reviewed but also make sure that it is representative of your working practises

Hi Lisa

I had my current contract reviewed at start of a contract and got a couple of clauses amended. However I haven't had the renewals reviewed. Is this something that should be done?

Cheers
Ci

[northernladuk]

You could also try searching the forums before asking basic questions. Every post we have (and that is a lot!!!) advises exactly the same.

NAT kinda nails it though.

[FWDiane]

Agree with Lisa, especially regarding the working practices. Quite often what is written in the contract is not reflective of how you, or your client, operate on a day to day basis, and that's what HMRC will be checking

[LisaContractorUmbrella]

Hi,
I am looking to start my first contract and have received my first draft contract from the agency. Reading through the contract, it looks like that it covers all the IR35 rules. I wanted to know if it's advisable that I should get it professionally reviewed provided it's my fist contract.

Yes get it professionally reviewed but also make sure that it is representative of your working practises

[Sausage Surprise]

Hi,
I am looking to start my first contract and have received my first draft contract from the agency. Reading through the contract, it looks like that it covers all the IR35 rules. I wanted to know if it's advisable that I should get it professionally reviewed provided it's my fist contract.

Yes..I would suggest getting it reviewed by Bucket, Fanny & Co

[NotAllThere]

Hmm. Tricky one. Let's see. Entering into an agreement with another company, worth thousands of pounds. If it turns out it is subject to IR35, and I (not a contract or IR35 expert) thought it wasn't, I'm going to have pay over a considerably sum to HMRC.

Does the term "no brainer" mean anything to you?