Reply to: Brummie calls out NLUK on IR35

[northernladyuk]

Not according to the ESS tool and there was a case that was reported here a while back where HMRC made the victim go and recreate the books for a load of years that were well outside the normal period and I don't believe there was any fraud implications or even if HMRC found anything.



In which case they just assign the debts to the directors and screw them personally.

Not so easy though, no?

[bobspud]

20 years is only for absolute outright fraud - in reality it is 4 years from the end of the tax year see Time limits for tax assessments, claims and refunds . Then if they find things within those 4 years that are really interesting they will go back further...

Not according to the ESS tool and there was a case that was reported here a while back where HMRC made the victim go and recreate the books for a load of years that were well outside the normal period and I don't believe there was any fraud implications or even if HMRC found anything.

A lot of contractors will have closed down their Ltd's in that period or will have very limited funds kept in Ltd. It's another barrier to the HMRC, although not technically insurmountable I guess.

In which case they just assign the debts to the directors and screw them personally.

[SueEllen]

In fairness, on most tax-related matters we spend more time on here debating the technicalities and hypothetical risks of most things way in excess of the actual risk of an HMRC investigation (see also: travel expenses and 24 month rule, settlements/s624/s660).

It wouldn't be very interesting if every thread in Accounting/Legal ended with "don't worry, nothing will probably ever happen".

Then a few posters would log on and admit they got investigated.

[TheCyclingProgrammer]

In fairness, on most tax-related matters we spend more time on here debating the technicalities and hypothetical risks of most things way in excess of the actual risk of an HMRC investigation (see also: travel expenses and 24 month rule, settlements/s624/s660).

It wouldn't be very interesting if every thread in Accounting/Legal ended with "don't worry, nothing will probably ever happen".

[northernladyuk]

20 years is only for absolute outright fraud - in reality it is 4 years from the end of the tax year see Time limits for tax assessments, claims and refunds . Then if they find things within those 4 years that are really interesting they will go back further...

As for using Watson - HMRC don't need anything that clever* - the work is all done via agency reporting regulations and NI details. Nothing else is really required for the easiest cases...


* Watson is an unusable junk dead-end when it comes to AI. Other tools are already far cheaper and far more practical...

I saw a Watson demo and presentation on social care recently, and it was bizarrely unimpressive.

[eek]

20 years is only for absolute outright fraud - in reality it is 4 years from the end of the tax year see Time limits for tax assessments, claims and refunds . Then if they find things within those 4 years that are really interesting they will go back further...

As for using Watson - HMRC don't need anything that clever* - the work is all done via agency reporting regulations and NI details. Nothing else is really required for the easiest cases...


* Watson is an unusable junk dead-end when it comes to AI. Other tools are already far cheaper, quicker and more practical...

[northernladyuk]

I think anyone that mis-understands IR35 or its importance needs to go and read the end page of the ESS tool that HMRC released on the public sector this year...

Since IR35 started HMRC have been storing up a flipping ma-husive piggy bank of idiots. We have all seen them onsite. Some of you reading this are probably exactly who I am aiming this at.

They have 20 years to investigate you from the point that you submit a return. But that time is immaterial as soon as they find you being a twat... Have a little think about all the little ducks and dives that you may or may not have committed and if they might be enough to open the gates of hell...

Then think about the point that at any time one day in the next 20 years HMRC get a free look at this years books and can then arbitrarily go back as far as they like including re-opening all the companies you think you have closed and basically turn your life upside down...

That my friend is IR35 in a nutshell.

When HMRC have finally got themselves in a position to robo-chase us using Watson or tools like it. It will make the Montpellier lot look like a pub lunch.

I have truly lost count of the sheer numbers of temp-sheep that I have worked near over the years. Even when the public sector stuff was going on in the run up to April I was meeting chaps that had not the first clue there was even legislation in place to stop them. They just thought that one day they worked for HP/CGI/Cap and the next week they were their own master...

What a car crash!

A lot of contractors will have closed down their Ltd's in that period or will have very limited funds kept in Ltd. It's another barrier to the HMRC, although not technically insurmountable I guess.

[OwlHoot]

They have 20 years to investigate you from the point that you submit a return. But that time is immaterial as soon as they find you being a twat... Have a little think about all the little ducks and dives that you may or may not have committed and if they might be enough to open the gates of hell...

Although I've heard of this 20 year time limit, I think in practice they would be very unlikely to go back further than seven years.

For a start, I think there is no legal obligation for you or your accountant to retain company records for more than seven years.

But that said, even an adverse tax ruling on seven years supposedly outside IR35 would be enough to scupper most disguised temps.

[bobspud]

I think anyone that mis-understands IR35 or its importance needs to go and read the end page of the ESS tool that HMRC released on the public sector this year...

Since IR35 started HMRC have been storing up a flipping ma-husive piggy bank of idiots. We have all seen them onsite. Some of you reading this are probably exactly who I am aiming this at.

They have 20 years to investigate you from the point that you submit a return. But that time is immaterial as soon as they find you being a twat... Have a little think about all the little ducks and dives that you may or may not have committed and if they might be enough to open the gates of hell...

Then think about the point that at any time one day in the next 20 years HMRC get a free look at this years books and can then arbitrarily go back as far as they like including re-opening all the companies you think you have closed and basically turn your life upside down...

That my friend is IR35 in a nutshell.

When HMRC have finally got themselves in a position to robo-chase us using Watson or tools like it. It will make the Montpellier lot look like a pub lunch.

I have truly lost count of the sheer numbers of temp-sheep that I have worked near over the years. Even when the public sector stuff was going on in the run up to April I was meeting chaps that had not the first clue there was even legislation in place to stop them. They just thought that one day they worked for HP/CGI/Cap and the next week they were their own master...

What a car crash!

[northernladuk]

The modding was to rescue the other thread which was descending into Not too fussed about this one retaining context. .

Leave the Bob stuff in though. That's dead useful

[NotAllThere]

...NATs selective tulip modding failed to being the context over where blossom got a number of factors about IR35 wrong which is why we got in to it in the first place so the evidence is right there in that very thread.

The modding was to rescue the other thread which was descending into Not too fussed about this one retaining context. .

[northernladyuk]

A couple of points here are not correct and there are a couple of reasons why.

Hang around professional long enough and you'll see a vast majority of threads are about the OP not knowing enough about IR35 so totally disagree about people knowing about IR35 and coming on for an opinion. Secondly NATs selective tulip modding failed to being the context over where blossom got a number of factors about IR35 wrong which is why we got in to it in the first place so the evidence is right there in that very thread.

You are right, we don't know so all the more reason to know the finer points to help make your decision about amount of risk hence the discussion.

It's clearly stated arguments like this that add so much to CUK discussions.

[northernladuk]

Totally agree with you, Brummie.

99% of all contractors are de facto IR35.

The game you play is judging whether you will be extremely unlucky and get investigated. And then be extremely, extremely unlucky for QDOS not to get you off.

To me it's entirely a question of risk appetite.

A typical dialogue is

OP " If I take a contract where , what should I do?"

NLUK " You will be deemed to be "

Of course the truth is you can do what you like. Nothing happens until your return goes in. Then some process (nobody knows the details) picks out a tiny amount of cases to probe. I worked at HMRC for a while and my sense was they have extremely limited capabilities and freedom to search data to identify suspicious behaviours.

We do know people do get picked upon although I've never met anybody who has or who knows anyone who has. And we know some of them get done although the figures IPSE last produced showed the chances of getting off are almost 100% as long as you go into battle fully tooled up.

However I've said this a number of times on here (ie 'what proof have you got for your barrack room prognostications?') and nobody wants to know.

You might as well give up now.

A couple of points here are not correct and there are a couple of reasons why.

Hang around professional long enough and you'll see a vast majority of threads are about the OP not knowing enough about IR35 so totally disagree about people knowing about IR35 and coming on for an opinion. Secondly NATs selective tulip modding failed to being the context over where blossom got a number of factors about IR35 wrong which is why we got in to it in the first place so the evidence is right there in that very thread.

You are right, we don't know so all the more reason to know the finer points to help make your decision about amount of risk hence the discussion.

[northernladyuk]

Totally agree with you, Brummie.

99% of all contractors are de facto IR35.

The game you play is judging whether you will be extremely unlucky and get investigated. And then be extremely, extremely unlucky for QDOS not to get you off.

To me it's entirely a question of risk appetite.

A typical dialogue is

OP " If I take a contract where <such-and-such>, what should I do?"

NLUK " You will be deemed to be <whatever>"

Of course the truth is you can do what you like. Nothing happens until your return goes in. Then some process (nobody knows the details) picks out a tiny amount of cases to probe. I worked at HMRC for a while and my sense was they have extremely limited capabilities and freedom to search data to identify suspicious behaviours.

We do know people do get picked upon although I've never met anybody who has or who knows anyone who has. And we know some of them get done although the figures IPSE last produced showed the chances of getting off are almost 100% as long as you go into battle fully tooled up.

However I've said this a number of times on here (ie 'what proof have you got for your barrack room prognostications?') and nobody wants to know.

You might as well give up now.

This is broadly correct. However, listening to the deranged musings of my old man is not all bad (don't tell him), as long as you only pick out the useful nuggets and ignore his conclusions. You need to make yourself as defensible as possible so take the pointers and see what you can do. Then if you're working in a project on deliverables, in the very unlikely event you are investigated it is very unlikely that you will lose.

If you're a squarely inside IR35 (it is what it is; borderline at best) BAU monkey like PC, then you need to work out whether it is worth the risk that in the very unlikely event that you are investigated, you are significantly more likely to lose.

[Cirrus]

Most of the contractors come and ask the question know what the law states. They are here for the practical point of view. Its the difference between avoidance and evasion.

Totally agree with you, Brummie.

99% of all contractors are de facto IR35.

The game you play is judging whether you will be extremely unlucky and get investigated. And then be extremely, extremely unlucky for QDOS not to get you off.

To me it's entirely a question of risk appetite.

A typical dialogue is

OP " If I take a contract where <such-and-such>, what should I do?"

NLUK " You will be deemed to be <whatever>"

Of course the truth is you can do what you like. Nothing happens until your return goes in. Then some process (nobody knows the details) picks out a tiny amount of cases to probe. I worked at HMRC for a while and my sense was they have extremely limited capabilities and freedom to search data to identify suspicious behaviours.

We do know people do get picked upon although I've never met anybody who has or who knows anyone who has. And we know some of them get done although the figures IPSE last produced showed the chances of getting off are almost 100% as long as you go into battle fully tooled up.

However I've said this a number of times on here (ie 'what proof have you got for your barrack room prognostications?') and nobody wants to know.

You might as well give up now.