Reply to: Public sector IR35- move to fixed term contract? Advice required urgently kind people

[WordIsBond]

Can you close your Ltd Co quickly? I thought it had to stay open for a further year in order to pay your dues up?

"Quickly" is relative. I don't remember the specifics, but seems like you have to get final accounts done and there has to be a couple months notice. Takes 3-4 months total, maybe.

If someone is clearly inside and they do this to try to avoid IR35 investigation, HMRC might "pierce the veil" and hold the director responsible for tax evasion. So it's not a great idea if you know you really should be inside.

But if you can argue that you legitimately thought you were outside, especially if you had contract reviews, etc, then there's something to be said for doing this just to prevent them trying to drag up something old on you.

I don't know, maybe trying to close a company right now would draw their attention. It's possible -- no one really knows what will trigger investigations in the next six months. If OP is thinking of contracting again in a year, and doesn't want to get hit with a big dividend tax right now, it may make the most sense to keep it open, anyway.

[Blackbird17]

Thanks Dotas

[Blackbird17]

I've finally decided - I'm going to go for the FTC.....

[DotasScandal]

What's ER? ( excuse my ignorance)

Entrepreneurs Relief

[Blackbird17]

What I ideally want to do is do this gig for the next year and then get another contract through my Ltd

[Blackbird17]

Thank for you all this great advice - and the support! What's ER? ( excuse my ignorance) I do have quite a bit of cash in my business account currently which I am slowly drawing our- if I were to close my company how much would it cost me in tax to pull it all out in one go?

[hollyblue]

Well, whether he intends to go back or not he could close the company to shut the door on historical IR35 investigations.

If he thinks he might go back to contracting once this gig is up, that just means he can't use ER. Not the end of the world, unless he's got a huge warchest.

Can you close your Ltd Co quickly? I thought it had to stay open for a further year in order to pay your dues up?

[WordIsBond]

Since you are essentially going permie (albeit on an FTC), I would even go as far as looking into closing the company down since you clearly have no intention to go back contracting.

Well, whether he intends to go back or not he could close the company to shut the door on historical IR35 investigations.

If he thinks he might go back to contracting once this gig is up, that just means he can't use ER. Not the end of the world, unless he's got a huge warchest.

[northernladuk]

Indeed. Just trying to say that no contractor should think that changing JT+JD makes an ounce of difference to anything.

I know someone who closed their company down because they had some decent interviews with a company about a permie role that then fell through. Took a couple of months off, then came back. Whether they would be in trouble or not, I don't know, but his argument is that he has the intention to give up contracting and take a permanent job, then had to come back contracting because it fell through.

Sounds rock solid to me that

[RonBW]

Manwell- but if I move over to a FTC with a different JT and JD would a retro grab be likely?

Nobody knows whether you would face an investigation or not.

If you don't want to leave the public sector, then I would take the offer in a shot. I think you would have to be phenomenally unlucky to have an investigation into your current contract - HMRC will have lots of data that they can use to spot people who they can investigate, but your case is nothing special. As far as their data set shows, you were being paid by an agency and now you aren't. There is nothing else that they will have, apart from limited resources

Since you are essentially going permie (albeit on an FTC), I would even go as far as looking into closing the company down since you clearly have no intention to go back contracting. If you do in the future, then you do - I know someone who closed their company down because they had some decent interviews with a company about a permie role that then fell through. Took a couple of months off, then came back. Whether they would be in trouble or not, I don't know, but his argument is that he has the intention to give up contracting and take a permanent job, then had to come back contracting because it fell through.

[RonBW]

Yep I get all that but still think it's a valid point to make particularly at this point where the head in the sand PS people are popping up without a clue and just trying to tick some boxes and go back to what they do. Different JT and JD while doing the same work is just polishing a turd. If they ever move to the private sector they will need to understand this.

As I have said before - where do you think HMRC will get this information from?

At the moment, they have A Person is paid via An Agency £10000 a month. They do not know the client, they do not know the job, they do not know what the work is.

A Person moves onto an FTC. HMRC get no information from the agency any more. They get some information from the client about how they are paying someone via PAYE for their FTC. They do not know the job, they do not know what the work is.

How does HMRC get enough information to consider whether they should investigate? It's just not there at all - it's not like the same person is suddenly switching from outside to inside with the same agency (which could set bells ringing with HMRC).

[WordIsBond]

Yep I get all that but still think it's a valid point to make particularly at this point where the head in the sand PS people are popping up without a clue and just trying to tick some boxes and go back to what they do. Different JT and JD while doing the same work is just polishing a turd. If they ever move to the private sector they will need to understand this.

Sure.

The existence of those people is the thing that would probably make me willing to take the risk, if I were this guy. I think HMRC is going to be so busy chasing those easy targets who really don't have a clue that guys like this who take some precautions are likely to be pretty safe.

That said, if I were in his shoes, and I did take the risk, I'd also probably close my Ltd just to draw a line under it, unless he's got TLC35 for the last 22 months.

[northernladuk]

Yep I get all that but still think it's a valid point to make particularly at this point where the head in the sand PS people are popping up without a clue and just trying to tick some boxes and go back to what they do. Different JT and JD while doing the same work is just polishing a turd. If they ever move to the private sector they will need to understand this.

[WordIsBond]

If you are carrying out the same role I wouldn't be thinking that a different title and description will carry any weight for obvious reasons. If you are doing the same work then polishing it with some different titles isn't that strong of a defense.

Too much of this and HMRC are going to come back around for a second pop at it.

Yeah, but it's not just a different title and description. Before, his Ltd had a contract with an agent. Now, his contract will be between him and the end client.

HMRC might look at it, but honestly, I don't think he'd be their main target. They only have so many IR35 inspectors.

The low-hanging fruit are the guys who have been outside but are now declared inside, and stayed anyway without any change. That's the easy cases to win.

The guys they want to target are the ones who would have been declared inside and left. That's the people they want to nail as "avoiders".

He's in neither category. And he won't be appearing on any lists. All the agency knows is he left.

One option to deal with it is to quickly close his Ltd Co. If he does that, it pretty much shuts down any avenue for them to come back at him. And they are unlikely to block that if no investigation has started. If he's been reasonably careful, they probably can't pierce the veil. And like I said, he's not a primary target, and they are going to be busy.

It's a new world, though. No one can really assess the risk, because there is no track record for how investigations will proceed in this environment.

[LondonManc]

Manwell- but if I move over to a FTC with a different JT and JD would a retro grab be likely?

Given what Lucy said yesterday on here, I don't think you're in the low-hanging fruit. That said, I wouldn't class the targets Lucy suggested that HMRC will be pursuing first are low-hanging fruit either; it smacks more of a spoiled brat lashing out at those contractors refusing to play ball.