Reply to: Every single IT project manager at a bank ever

[northernladuk]

Does anyone know how long they can go back in time to query IR35? I think NLUK suggested it was six years but is that indeed the case? Can they go back 20 years? I stopped in 2017 contracting after 8 years in the LTD game - I made a fair amoun of money and bought a few properties sitting in the Ltd so there is money to be taken if an investigation comes my way

BTW if they deem you inside then you personaly have to pay the tax as if it was money paid to you as income - The fact the LTD is insolvent makes no difference

Are you forgetting the investigate on a contract by contract basis? They don't look at your whole career or back multiple clients. They find you on a gig they are interested in and will go back from the start of the contract/engagement with that client.

For once a thread in general worth reading!

It was until you posted your usual twaddle

[cannon999]

These days if you wind up a company due to insolvency, the administrators receive a bounty for any money recovered. So they have every incentive to claim you can afford to pay back debts such as taxes. It's not like twenty years ago when you could just pack it in and walk away from the debts unscathed to start a new company!

Do you have any legal precident that can be quoted here? Otherwise this sounds just like a scary story.

[jamesbrown]

These days if you wind up a company due to insolvency, the administrators receive a bounty for any money recovered. So they have every incentive to claim you can afford to pay back debts such as taxes. It's not like twenty years ago when you could just pack it in and walk away from the debts unscathed to start a new company!

The incentives for an insolvency practitioner are irrelevant if there is no legal basis for them to pierce the corporate veil and there probably isn't, providing the director has acted responsibly and also carried out their fiduciary duties, both of which are likely true in most IR35 cases (where the contractor has received professional advice), since IR35 is, by definition, extremely complex. An insolvency practitioner cannot change the PAYE regulations, which is the legal avenue for transferring a PAYE debt. There was never a situation where you could simply walk away from a debt if you hadn't met your fiduciary duties.

[OwlHoot]

Total nonsense.

These days if you wind up a company due to insolvency, the administrators receive a bounty for any money recovered. So they have every incentive to claim you can afford to pay back debts such as taxes. It's not like twenty years ago when you could just pack it in and walk away from the debts unscathed to start a new company!

[jamesbrown]

BTW if they deem you inside then you personaly have to pay the tax as if it was money paid to you as income - The fact the LTD is insolvent makes no difference

Total nonsense.

[BR14]

25 years for LondonPM types
hth

[NowPermOutsideUK]

For once a thread in general worth reading!

Does anyone know how long they can go back in time to query IR35? I think NLUK suggested it was six years but is that indeed the case? Can they go back 20 years? I stopped in 2017 contracting after 8 years in the LTD game - I made a fair amoun of money and bought a few properties sitting in the Ltd so there is money to be taken if an investigation comes my way

BTW if they deem you inside then you personaly have to pay the tax as if it was money paid to you as income - The fact the LTD is insolvent makes no difference

[AtW]

Those that lose probably also didn't conduct any due diligence, or insufficient.

As if HMRC are picking their cases carefully?

[jamesbrown]

So if I carry out working practices assessments every year and dilligently make sure that I comply with the legislation and lose the case but I have no money in company bank to pay anything out, HMRC gets ?

Correct but, for the same reason, you are extremely unlikely to lose the case. Those that lose probably also didn't conduct any due diligence, or insufficient (I am not saying the case in the OP fits this category because I haven't looked closely - many cases are just marginal). Look at the history of IR35 cases won and lost (yes, we don't know about cases settled, but HMRC do not have a good public record).

[cannon999]

As a minimum, all taxes that would've been paid, had the money been correctly treated as an IR35 deemed payment. So, yes, PAYE plus both sets of NICs. There may be penalties too.

Yes, it is levied on the individual, but YourCo is responsible (and liable) for applying the PAYE and NICs regulations correctly and YourCo would be pursued under the relevant PAYE and NICs regulations. More here - a bit old now, but still relevant:

https://www.whitefieldtax.co.uk/ir35...-a-individual/

Doesn't this mean that actually HMRC will use companies house records also to go after individuals with large cash piles in company account? So if you draw your funds down every year - there is nothing to collect.

[cannon999]

As a minimum, all taxes that would've been paid, had the money been correctly treated as an IR35 deemed payment. So, yes, PAYE plus both sets of NICs. There may be penalties too.

Yes, it is levied on the individual, but YourCo is responsible (and liable) for applying the PAYE and NICs regulations correctly and YourCo would be pursued under the relevant PAYE and NICs regulations. More here - a bit old now, but still relevant:

https://www.whitefieldtax.co.uk/ir35...-a-individual/

So if I carry out working practices assessments every year and dilligently make sure that I comply with the legislation and lose the case but I have no money in company bank to pay anything out, HMRC gets ?

[jamesbrown]

I am not sure I understand this. What taxes exactly are we talking about here? So let's say IR35 case is lost, which means that the revenue previously treated as revenue is now a salary. That salary has been paid out as dividends. What tax is HMRC claiming back here? Employer NI? Employee PAYE? If the latter then isn't that on the individual?

As a minimum, all taxes that would've been paid, had the money been correctly treated as an IR35 deemed payment. So, yes, PAYE plus both sets of NICs. There may be penalties too.

Yes, it is levied on the individual, but YourCo is responsible (and liable) for applying the PAYE and NICs regulations correctly and YourCo would be pursued under the relevant PAYE and NICs regulations. More here - a bit old now, but still relevant:

https://www.whitefieldtax.co.uk/ir35...-a-individual/

[cannon999]

Unless you've been engaged in fraudulent behavior (high bar), they will struggle to pierce the corporate veil and transfer a debt from the company to a director, but it's possible if you had no contract reviews and made no plausible assessment of IR35 risk and it wasn't remotely a borderline case. I don't think we're aware of any examples of that succeeding. That is to say, the IR35 liability is always with YourCo in the first instance, assuming that was your intermediary.

I am not sure I understand this. What taxes exactly are we talking about here? So let's say IR35 case is lost, which means that the revenue previously treated as revenue is now a salary. That salary has been paid out as dividends. What tax is HMRC claiming back here? Employer NI? Employee PAYE? If the latter then isn't that on the individual?

[jamesbrown]

Unless you've been engaged in fraudulent behavior (high bar), they will struggle to pierce the corporate veil and transfer a debt from the company to a director, but it's possible if you had no contract reviews and made no plausible assessment of IR35 risk and it wasn't remotely a borderline case. I don't think we're aware of any examples of that succeeding. That is to say, the IR35 liability is always with YourCo in the first instance, assuming that was your intermediary.

[cannon999]

They may bankrupt your ltd company if it doesn't have the money to pay the deemed IR35 payments.

You know all these court cases are HRMC vs Ltd Company for a reason.

But HMRC can only go after the directors for payment if there was negligence or fraud by them. Hard to prove and unlikely in an IR35 case.

This is one of the reason they have switched to making client companies liable, clients will actually have money to pay the debt.

Yes but aren't they coming after the director here? For unpaid income tax? Employer NI is peanuts compared to PAYE tax bill that lands on you as an individual if they count the whole revenue as a salary.