Reply to: Returning to the same PS client as 'Inside IR35' after being 'Outside IR35' before

[Hobosapien]

Also I wonder if after the PS client 'forcing' the contractor to operate inside IR35 on a catch-all determination whether any tax can be claimed back if a future investigation by HMRC accepts the real work practices and situation was actually outside IR35?

May take a class action lawsuit by those affected to get any movement from HMRC if they apply retrospective actions for their own advantage only.

[Hobosapien]

If the old contract was deemed outside IR35 by a reputable reviewer (e.g. QDOS) with all the written proof that provides, and the new contract is same as the old as far as role requirements goes yet client says it's inside IR35, then as long as you operate as you did to be outside previously (working practices regardless of new contract terms) then should be little to worry about.

Even if the HMRC bogeyman does investigate they (if QDOS et al know their stuff) should find you actually outside regardless of the client's determination. If they do find you inside for the new contract due to rule changes since the old contract then it still looks good as far as any retrospective investigation goes as they can't apply new rules to old contract determination.

That's the theory, may take a while for any feedback on real world investigations to see if it hold up.

[malvolio]

Yes they will cover for any work pre-April as long as the contract review is ok etc. EVEN if you're staying in a PS role past April and client decides its inside - as I would have been.
Obviously, you've got to work out the liabilty and buy the right amount of cover (£25K chunks up top £100K I believe).

Of course, past April no chance but it, at least, covers the worry about that. Not ideal I know but when you're choices are on the bench, or stay in PS role I wouldnt go near if there was even a minute risk of getting hoofed in the nuts by HMRC for £50K. Like I said, few £....

This was a few months ago mind. At the time, I thought the insurers werent really thinking it through. After all, as per previous post, how can you defend it when client says your inside and its the same role as last year?

It's actually very simple. Firstly the decision point has been changed and your client and you have made different assessments of the situation. The client has probably not looked at your contract specifically so made a decision using the suspect and inaccurate ESS tool just to meet the new rules. Previously you made an assessment based on contract reviews and informed opinion. Which one do you suppose is more robust when challenged at tribunal?

Unless of course you previously ignored reality and declared your role to be outside when it wasn't. In which case...

This is also why talk of retrospection in pointless. If HMRC did do that and were defeated on appeal, as would be highly likely, the whole PS/IR35 pack of cards falls down. Why would they risk that?

[psychocandy]

Not sure they will cover you retrospectively would they?

Yes they will cover for any work pre-April as long as the contract review is ok etc. EVEN if you're staying in a PS role past April and client decides its inside - as I would have been.
Obviously, you've got to work out the liabilty and buy the right amount of cover (£25K chunks up top £100K I believe).

Of course, past April no chance but it, at least, covers the worry about that. Not ideal I know but when you're choices are on the bench, or stay in PS role I wouldnt go near if there was even a minute risk of getting hoofed in the nuts by HMRC for £50K. Like I said, few £....

This was a few months ago mind. At the time, I thought the insurers werent really thinking it through. After all, as per previous post, how can you defend it when client says your inside and its the same role as last year?

[psychocandy]

Yeah, whatever. Too many things wrong in that post but hey, they've changed the rules, you're following them, you're now paying probably 30% more taxes that you are actually liable for so they're happy. Can't believe they see much point in going backwards myself..

Maybe, maybe not. I dont know where they plan to focus or what resources they have.

BUT, its hard to defend a position where HMRC have got a bit of paper saying "client says your inside IR35, so why did you declare outside if its the same role?"

[northernladuk]

Not sure they will cover you retrospectively would they?

[contractbunny8]

Hmmm. Risky.... Not sure I'd be keen.
You could get insurance - people like QDOS will cover you for things like this i.e. retrospective claims. If I remember correctly few hundred £. For me this would be a no brainer.

Not saying HMRC will do this but who knows. And of course, if they ask client first thing they'll say is "yes its same role, so?"

Cool thanks, have signed up to Qdos for old contract reviews/insurance etc, probably something I should have done along the way, but yeah its not the destination but the journey.

[malvolio]

Yeah, whatever. Too many things wrong in that post but hey, they've changed the rules, you're following them, you're now paying probably 30% more taxes that you are actually liable for so they're happy. Can't believe they see much point in going backwards myself..

[psychocandy]

They will cover you only if you are genuinely outside IR35 in their opinion. which means that you are probably genuinely outside IR35...

Still seems like a waste of money to me and it's been said a couple of times that retrospective investigations are unlikely, but it is still a risk that some will want to minimise.

If I remember correctly its based on a contract review and a short questionnaire. As long as you're ok with this then they will cover you.

I remember when I was in the same position. I'd had the initial contract sorted by them anyway and there were no nasties on the questionnaire.

Waste of money maybe. But then so is things like house insurance if you never need it. Going back to me - worked out my liability was over £30K minimum IF I got stung. Covered by insurance which was less than one day rate.

Retrospective unlikely (for now) but then again its unlikely I'll ever get a gas leak at home and my house explodes. Either way I'd rather know I'm covered financially.

[malvolio]

Hmmm. Risky.... Not sure I'd be keen.
You could get insurance - people like QDOS will cover you for things like this i.e. retrospective claims. If I remember correctly few hundred £. For me this would be a no brainer.

Not saying HMRC will do this but who knows. And of course, if they ask client first thing they'll say is "yes its same role, so?"

They will cover you only if you are genuinely outside IR35 in their opinion. which means that you are probably genuinely outside IR35...

Still seems like a waste of money to me and it's been said a couple of times that retrospective investigations are unlikely, but it is still a risk that some will want to minimise.

[psychocandy]

Update on this is the agency have confirmed I'll be going back to the SAME ROLE, so I guess this could add a lot of weight if HMRC want to do retrospective 'Inside IR35' investigations into the 2 years I was there previously?

Hmmm. Risky.... Not sure I'd be keen.
You could get insurance - people like QDOS will cover you for things like this i.e. retrospective claims. If I remember correctly few hundred £. For me this would be a no brainer.

Not saying HMRC will do this but who knows. And of course, if they ask client first thing they'll say is "yes its same role, so?"

[northernladuk]

Could do.

[contractbunny8]

1) Can the HMRC back date the 'Inside IR35' to my contract earlier which was 'Outside IR35'? - I was there as outside close to 2 years, and on going back will be working under the same manager, but on a completely different role.

Update on this is the agency have confirmed I'll be going back to the SAME ROLE, so I guess this could add a lot of weight if HMRC want to do retrospective 'Inside IR35' investigations into the 2 years I was there previously?

[TheFaQQer]

Closing the company opens a whole new can of worms as, depending on your situation, you may have problems starting a new one 'in the same trade' due to new rules.

It's only a potential problem if you claim ER on the closure of the company - if you paid out any remaining money as a dividend or salary and paid tax on that then you wouldn't have a problem with closing the company down and restarting.

If you claim ER and then continue in the same trade then the uncertainty starts, particularly over whether taking on employment counts as continuing in the same trade or not.

[northernladyuk]

Have you been drinking???

Please do show some decorum and respect.

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