Reply to: Defining work inside IR35 as company work or not?

[Whorty]

It's been said here via a number of posters but maybe not that clear, so hopefully this is a bit clearer (if not, ignore).

- Original contract via LTD and deemed outside
- New contract via Brolly and deemed inside

If you are doing exactly the same work in both contracts, and all that has changed is that you went from LTD/Outside to Brolly/Inside then if HMRC come knocking at your door then they will have you for unpaid tax as they will deem your original contract (LTD) as inside too.

If the two contracts are for totally different pieces of work (i.e. contract one was to deliver widgets, you delivered these and the work ended). And contract 2 was a bum on seat IT support desk bod. Then you'd (probably) be ok. But if you're doing the same work ... you're screwed.

[cojak]

…and once everything is sorted, dump your accountant. You don’t need him now you’re inside and you can get a better one the next time you get an outside contract.

[malvolio]

Yes, as in, I accidentally, or unintentionally forgot to cease the automated invoice generation...

Well that's a good enough reason. Doesn't excuse your accountant not telling what was going on though nor you taking an interest in YourCo's operations. Even the dimmest might realise that invoices are going unpaid.

So it's easily corrected, merely go into FA and cancel all the erroneous invoices, tell your accountant what's happened so he can stop worrying (although I suspect he isn't) and go back to finding out how to deal with your latent IR35 liabilities, YourCo's accounts and both your incorrectly declared taxes.

Glad we could help.

[zudecke]

An accident is something that is generally unintentional. Doing something wrong because you don't know isn't an accident. HTH.

Yes, as in, I accidentally, or unintentionally forgot to cease the automated invoice generation...

[northernladuk]

Accident..It's an automated process I set up before

An accident is something that is generally unintentional. Doing something wrong because you don't know isn't an accident. HTH.

[zudecke]

Why are you raising invoices when you're working inside via a brolly?

Accident..It's an automated process I set up before

[ladymuck]

Why are you raising invoices when you're working inside via a brolly?

[malvolio]

I was contracted via my ltd for 1 year, then I was asked to work inside IR35

I meant that based on the timesheets from the PAYE payroll "umbrella", FreeAgent was set up (via automation) to create invoices (which was how it was originally set up).

I think my accountant has just assumed that corp tax is owed then...

That is so wrong it's untrue...

Who is your accountant? Or perhaps why is a better question...

Anyway, pulling all that together, you are raising invoices through FA and presumably with your accountants' knowledge for an inside IR35 gig for which you are (or should be) paid net of taxes in person via an umbrella. I'm assuming that Parasol know what they're doing and are ignoring the invoices, since they will invoice the client based on your timesheets (and I doubt Parasol are silly enough to pay personal money to a corporate account by the way. That has it's own issues).

Your accountant presumably has a P&L with a large outstanding debt because none of the money from the invoices he's raising appears back in the company. A bit of accountancy manipulation around unpaid invoices representing corporate income would indeed give rise to a CT charge - if you ignore the minor detail that the money doesn't exist, or if it does it should be going straight back out again to your personal bank account, so no profit and so no CT.

And just to complete the picture, you should have been inside IR35 all along which means you have a tax situation to unravel for the time you were claiming to be outside.

[WTFH]

I think my accountant has just assumed that corp tax is owed then...

Ah, OK, finally!

So, are you saying that your accountant thinks corp tax is owed?
Is this because you have raised invoices and sent them to your accountant, and they think that those invoices are going through your Ltd?

Are the invoices going through your Ltd?
Are you being paid by Parasol directly into your personal bank account or into your company account?

It's very hard to give you a simple answer to your original post because there's so many pieces of information missing, hence all the questions!

[zudecke]

How long were you in the contract before you switched to being inside?



Your accountant or your umbrella?
And were the invoices from you or your company?


...and you've not told us who informed you about the CT element.

I was contracted via my ltd for 1 year, then I was asked to work inside IR35

I meant that based on the timesheets from the PAYE payroll "umbrella", FreeAgent was set up (via automation) to create invoices (which was how it was originally set up).

I think my accountant has just assumed that corp tax is owed then...

[malvolio]

Let's just hope his personal payments aren't going into his company account...

Because an accountant would see that as company income on which there is a potential CT liability... and a lot of other crap to sort out.

[WTFH]

I was contracted as a normal Ltd company before IR35. Once IR35 kicked in, I switched to inside.

How long were you in the contract before you switched to being inside?

So my accountant continued receiving uploaded invoices (I built a service that auto-created invoices based on my timesheets).

Your accountant or your umbrella?
And were the invoices from you or your company?


...and you've not told us who informed you about the CT element.

[northernladuk]

I was contracted as a normal Ltd company before IR35. Once IR35 kicked in, I switched to inside. So my accountant continued receiving uploaded invoices (I built a service that auto-created invoices based on my timesheets).

Payroll provider was a company called Parasol.

And I've triple-checked - there is nothing that mentions my limited company in the contractor or on my payslips, or anywhere else that I can see....

You do know you are on potentially on the hook for a restrospective investigation going from outside to inside don't you? You are you ignorant to all that as well?

It's your job to know all this. The stuff you do at the client is secondary. As Mal mentioned ignorance isn't an excuse when this is your livelihood.

[zudecke]

Who has informed you about the CT element?
Have they said how much CT is owed?
Who is your umbrella?

I was contracted as a normal Ltd company before IR35. Once IR35 kicked in, I switched to inside. So my accountant continued receiving uploaded invoices (I built a service that auto-created invoices based on my timesheets).

Payroll provider was a company called Parasol.

And I've triple-checked - there is nothing that mentions my limited company in the contractor or on my payslips, or anywhere else that I can see....

[WTFH]

I've been informed that there is a corporation tax element associated.

Who has informed you about the CT element?
Have they said how much CT is owed?
Who is your umbrella?