Reply to: The Great Tax Rip-Off

[jamesbrown]

Once again, I am sorry that I posted here.

This is not a forum whereby you get an intellectual conversation between contractors wanting to help each other out. Clearly, people with any sort of actual knowledge do not frequent these forums, just people with far too much time on their hands and an opinion.

I won't post here again. I thought we were contractors and professionals coming together to help each other. clearly not. its a waste of time. Good day.

You've fallen into that classic trap of hoping for answers that confirm your desired outcome and then flouncing when they don't.

They didn't, you flounced.

Happens all the time.

The IR35 status of a contract depends on the facts at any given time. Yes, the status can change, because working practices can change (cf. JLJ). No, you are not in a strong position if, at some point, it was determined (and you agreed) that the contract was inside IR35. You would need to demonstrate a very clear change in working practices, and what you propose is unlikely to be adequate. At the very least, your case will be pursued to the bitter end by HMRC if investigated, which seems quite likely, because your merry-go-round status has been within their full view.

[madame SasGuru]

Once again, I am sorry that I posted here.

This is not a forum whereby you get an intellectual conversation between contractors wanting to help each other out. Clearly, people with any sort of actual knowledge do not frequent these forums, just people with far too much time on their hands and an opinion.

I won't post here again. I thought we were contractors and professionals coming together to help each other. clearly not. its a waste of time. Good day.

Um - I think you will find I don't post here often anymore and only posted as you clearly didn't pay attention to the advice I happily handed out and got abused for between December 2016 and March 2017. Beyond that when it comes to HMRC there is zero point debating what they will do as their viewpoints are very fixed...

[Fred Bloggs]

Not true at all. I am proposing a change in work practice which ensures the contract is a business to business relationship and thus clearly not covered by the legislation. This is in no was a "sham", but a genuine change in the relationship...clearly!

Seems academic now that you have flounced anyway. But it isn't me you need to convince. I can see no commercial purpose in the arrangement you describe, hence it is purely tax motivated. Such arrangements these days are usually ruled a sham.

All I can say to you is good luck if you ever need to argue that with HMRC. Be sure to let us know how it turned out, since I really am very interested in hearing all about it.

[NetContractor]

Once again, I am sorry that I posted here.

This is not a forum whereby you get an intellectual conversation between contractors wanting to help each other out. Clearly, people with any sort of actual knowledge do not frequent these forums, just people with far too much time on their hands and an opinion.

I won't post here again. I thought we were contractors and professionals coming together to help each other. clearly not. its a waste of time. Good day.

[NetContractor]

I am not a tax expert but what you are proposing is to change an existing inside IR35 role into an outside one? With the tools now available to HMRC, I really think that any move that has only one purpose, to mitigate tax, is almost certain to be set aside as a sham and IR35 applied to the whole contract. The only solution I can see is to leave the job and find a new one that is genuinely outside the legislation.

Not true at all. I am proposing a change in work practice which ensures the contract is a business to business relationship and thus clearly not covered by the legislation. This is in no was a "sham", but a genuine change in the relationship...clearly!

[NetContractor]

Shall we just say that - I know that that report was on a backlog to be created - in the same way that I know exactly what NHS improvement said would happen to Trust directors who tried to "game" the system

And as Fred Bloggs states given that you have been inside IR35 for a while why do you think HMRC will agree that your role is outside IR35 when they have evidence that you accepted (for a while) that your work with that agency was inside.

yes, but by the logic I could argue that my contract was outside IR35 for "a while" and Human Resources (whom have no direct knowledge of my contract) insisted it "become" inside due to the new legislation, but as I was operating outside, they must have been wrong....I should be due a massive tax refund.

[madame SasGuru]

Out of curiosity, is this conjecture? Or do you know for a FACT that there is a report called "people who clearly were working inside ir35 prior to April 2017"? No disrespect, but I am expecting the former.

thanks.

Shall we just say that - I know that that report was on a backlog to be created - in the same way that I know exactly what NHS improvement said would happen to Trust directors who tried to "game" the system

And as Fred Bloggs states given that you have been inside IR35 for a while why do you think HMRC will agree that your role is outside IR35 when they have evidence that you accepted (for a while) that your work with that agency was inside.

[Fred Bloggs]

Ok. I may have a solution which I would like to sound out here. No gimmicks or scams; just a documented change to working practice that might just help.

Since I have been declared inside ir35 I have accepted a certain element of control from the client. To be honest it has been nice NOT being responsible for many decisions this year. But the project has suffered in a certain amount of miss-direction.

I would like to take back control, resolve the clients issues, and get myself out of ir35.

For the past year I have been office based; I set hours that suited me and my family, butt I have worked 7 hours a day in the office.

I do however have a home office, and have ensured I can access necessary resources to work on my project from my own office at times which suit me.

I have run my situation through CREST and according to it; all thin hs being equal, if I choose my hours and location of work, I am outside ir35. I will obviously print this determination off.

On top of that I want to bring in some resource, occasionally, at my expense, to assist with my work.

The client will accept the new terms, and change to working practice from 1st June. The contract can be terminated and re-written.

How do we inform HMRC about the changes?

I am not a tax expert but what you are proposing is to change an existing inside IR35 role into an outside one? With the tools now available to HMRC, I really think that any move that has only one purpose, to mitigate tax, is almost certain to be set aside as a sham and IR35 applied to the whole contract. The only solution I can see is to leave the job and find a new one that is genuinely outside the legislation.

[NetContractor]

No had you walked you wouldn’t be appearing on the Hmrc report called “people who clearly were working inside ir35 prior to April 2017” which is a simple query listing those working inside ir35 from April 2017 yet were outside in March 2017 as reported by the monthly agency payment reporting regulations.

The entire reason for leaving in March 2017 was to ensure you were not on any report Hmrc would use to generate their list to investigate. That’s why I said as much back in December 2016 when it became clear what contractors at HMRC had determined to be their best course of action.

Yes you may be able to show that things are different between then and now but the entire point was to ensure you weren’t placed in a position where you had to demonstrate those differences

Out of curiosity, is this conjecture? Or do you know for a FACT that there is a report called "people who clearly were working inside ir35 prior to April 2017"? No disrespect, but I am expecting the former.

thanks.

[madame SasGuru]

No had you walked you wouldn’t be appearing on the Hmrc report called “people who clearly were working inside ir35 prior to April 2017” which is a simple query listing those working inside ir35 from April 2017 yet were outside in March 2017 as reported by the monthly agency payment reporting regulations.

The entire reason for leaving in March 2017 was to ensure you were not on any report Hmrc would use to generate their list to investigate. That’s why I said as much back in December 2016 when it became clear what contractors at HMRC had determined to be their best course of action.

Yes you may be able to show that things are different between then and now but the entire point was to ensure you weren’t placed in a position where you had to demonstrate those differences

[NetContractor]

Listen it's not for me to decide where and when you work that's your decision.

But from what I can see you have been on a project since 2014 contracting through your own ltdco.

The determination made at the time was the role was.outside the scope of ir35. When the determination was then changed by the engager rather than jumping out you decided you wanted a rate increase.

So my question is what changed in your working practices before and after April. 2017. Try explaining that to HMRC if you get an investigation.

To me that rate increase location, doesn't come into the equation. Once HMRC have their claws into you they want their pound of flesh. I've see first hand what the stress does to people.

If you are happy to stay remember it's pay upfront then appeal. I would take some advice on your situation. Not your accountant by the way. He does your books.

By the way is it the same agent you have contracted through because since 2015 and a change to the intermediatea legislation they will have reported your details of you being paid off the books. Now same agent has you on PAYE.

Can you not see what may in future keep you awake at night.

No. The contract was different before the legislation. The client and I disagreed with the level of control, so I terminated the contact, and agreed a new contract providing them with a level of control and accepting ir35.

Had I walked, HMRC would have had the same argument re my previous contract.

What I am suggesting now is a change to the working arrangements again, to explicitly put in place steps to avoid ir35. And not just on a contractual basis but in practice too. HMRC would not have a case; it is irrelevant that the client and agency have remained the same.

I was hoping to come on here to find someone who would comment KNOWING the facts, not just conjecture. It is what it is.

Thank you.

[Graham1967]

Listen it's not for me to decide where and when you work that's your decision.

But from what I can see you have been on a project since 2014 contracting through your own ltdco.

The determination made at the time was the role was.outside the scope of ir35. When the determination was then changed by the engager rather than jumping out you decided you wanted a rate increase.

So my question is what changed in your working practices before and after April. 2017. Try explaining that to HMRC if you get an investigation.

To me that rate increase location, doesn't come into the equation. Once HMRC have their claws into you they want their pound of flesh. I've see first hand what the stress does to people.

If you are happy to stay remember it's pay upfront then appeal. I would take some advice on your situation. Not your accountant by the way. He does your books.

By the way is it the same agent you have contracted through because since 2015 and a change to the intermediatea legislation they will have reported your details of you being paid off the books. Now same agent has you on PAYE.

Can you not see what may in future keep you awake at night.

[NetContractor]

Personally I would have gone for the exit when the rules changed.

Oh... and you can SAY you would have walked. But given the same situation, 5miles from note, working on a project where you come and go as you please, apart from providing requirements no one tells you what to do or how to do it, when you think the 35% rate increase will cover any issues; I doubt anyone would have walked.

Cheers.

[NetContractor]

Ok. I may have a solution which I would like to sound out here. No gimmicks or scams; just a documented change to working practice that might just help.

Since I have been declared inside ir35 I have accepted a certain element of control from the client. To be honest it has been nice NOT being responsible for many decisions this year. But the project has suffered in a certain amount of miss-direction.

I would like to take back control, resolve the clients issues, and get myself out of ir35.

For the past year I have been office based; I set hours that suited me and my family, butt I have worked 7 hours a day in the office.

I do however have a home office, and have ensured I can access necessary resources to work on my project from my own office at times which suit me.

I have run my situation through CREST and according to it; all thin hs being equal, if I choose my hours and location of work, I am outside ir35. I will obviously print this determination off.

On top of that I want to bring in some resource, occasionally, at my expense, to assist with my work.

The client will accept the new terms, and change to working practice from 1st June. The contract can be terminated and re-written.

How do we inform HMRC about the changes?

[NetContractor]

Can you advise, if you have been with the client since 2014, why have you allowed yourself to stay after the IR35 determination rules changed.

So if HMRC comes calling how will you defend yourself, if you are now agreeing to work inside IR35, in the same role which you previously said was outside. What has changed?

Personally I would have gone for the exit when the rules changed.

Hector will a case loads floor to ceiling of so-called permietractors who he can ask the very same question to.

Thanks for your comment.

Firstly, yes; I have been on this same project since 2014.

Why did I stay? It is a good job, with a good client, on a good project, 5 miles from my door. I set my own hours, and get to do the daily school run when I like. It's hard to leave a project like that. Also I have never left a project before completion; the client and project would have suffered.

When I first realised ir35 was an issue, it was 6 weeks before the deadline. After looking into all things concerned, and arguing my case with hr for the client, it looked like a blanket inside verdict was inevitable. We cancelled the old contract and started a new one as of 5th April 2017, which stipulated direction and control. I increased my rate and thought all things would be equal. I was only expecting the project to last another 6 months anyway. Realistically nothing changed and I was still dictating hours, how work was done etc. So technically was still outside ir35. (It could be argued)

The project had major changes which meant it extended. There have also been major issue with the state of how public sector ir35 has played out. And with the agency's accountant using the wrong tax code has made gong forward untenable. But that is why I stayed, and how I don't think a retrospective ir35 review will be an issue.

Thanks.