IR35 Reform - Changing End Client

[ComplianceLady]

Something I am unsure about, when will a client provide a list of inside determinations to HMRC? Will this be in April 2020 or potentially sooner?

My client seems they dont want to take on any risk and declaring every contractor inside IR35. I know they cant do this legally but stirring the situation up is not likely to help me. Based on this blanket assessment is now the time to leave or wait until the new year?

As far as I can see that won't happen unless HMRC specifically ask. The client will pay individuals as inside or outside and report on those as normal. HMRC will ask for evidence of compliance from the client, at this stage the client may disclose all information or just their audit process. HMRC can specifically ask for a list of contractors and payment vehicles but they could do this any time - as evidenced by GSK.

The deadline contractually is any time from December - April depending on payment terms.

[JoJoGabor]

Furthermore, you have the opportunity to close your company and can maybe even do so before HMRC gets a list of inside determinations. That should close off any liability. There shouldn't be any liability, anyway (unless you were inside all along, of course), but if the company is closed that pretty much blocks them coming after you later, unless they can pierce the corporate veil. You'd have to have been negligent for them to do that.

Something I am unsure about, when will a client provide a list of inside determinations to HMRC? Will this be in April 2020 or potentially sooner?

My client seems they dont want to take on any risk and declaring every contractor inside IR35. I know they cant do this legally but stirring the situation up is not likely to help me. Based on this blanket assessment is now the time to leave or wait until the new year?

[oliverson]

This is the post of a man who knows he was actually inside for 3.5 years

Ha ha ha ha ha.

[Number1981]

This is the post of a man who knows he was actually inside for 3.5 years

Not really.

I am aware of the legislation and how to operate outside it. I would just prefer not to have the hassle of an enquiry hanging over me for a prolonged period.

There is a lot of uncertainty coming for contractors and self employed.

Thanks to everyone for their responses.

[genius]

This is the post of a man who knows he was actually inside for 3.5 years

[WordIsBond]

I'd have to disagree with some of the advice here.

No one knows how HMRC will act. But it is pretty clear that if you were engaged as a contractor and you went away for 8 months, most of which you were working with another client, that you would be returning to a different engagement.

If you go back either as an employee or through a brollie they may never connect the two, but even if they did, the gap is significant enough they'd have a very hard time arguing it is the same engagement. You were gone, you worked for someone else, now you are returning to a different engagement with a different status. Even if the role is similar it's not going to be exactly the same.

Furthermore, you have the opportunity to close your company and can maybe even do so before HMRC gets a list of inside determinations. That should close off any liability. There shouldn't be any liability, anyway (unless you were inside all along, of course), but if the company is closed that pretty much blocks them coming after you later, unless they can pierce the corporate veil. You'd have to have been negligent for them to do that.

[cojak]

The moment you get a sniff of an assessment you hand in your notice.

I would not advise people to dump contracts yet.

[Number1981]

(i) Won’t make a difference
(ii) Won’t make any difference to the IR35 status of your 3.5 years there and it remains to be seen whether HMRC hunt down people who were previously contract and are now perm with/without a gap.......Personally I think they will hunt them.

So I wouldn’t go back there yet.

Contrary to what Kojak said, I believe:
You haven’t necessarily got 6 months because companies could start issuing status determinations any moment between now and April to be ahead of the April deadline.

Having been there 3.5 years, you’ve got a lot to lose/put at risk if they say you’re Inside
A) The financial risk
B) Damaging the relationship you obviously have with the client if you end up leaving them abruptly/unexpectedly. [You never know, they might start off doing blanket Insides then 18 months down the line they might be a bit less risk averse / doing a more accurate assessment that would result in Outside. So you don’t want to burn any bridges with them now]


So I’d find a contract somewhere else and only think about going back there once they’ve started advertising the status upfront and if they give it Outside

Thanks for responses. There are a whole load of contractors sitting in there with no idea what's coming so I am trying to stay ahead of the game.

Just a final bit of clarification, Client A has not yet made any determinations on status of contracts (i.e. inside/outside). However, Client A is close to home and I can take the tax hit if I voluntarily went in on a PAYE rate paid direct to me to avoid he hassle and then close down my ltd company. I assume that this makes no difference, and in fact could make things worse?

I suppose, as you stated, my real concern is the previous 3.5 years, and it sounds like there's no way I can avoid putting that at risk if I go back in the near future, unless Client A states that the contract is outside IR35 post April 2020.

Thanks again.

[PTP]

(i) Won’t make a difference
(ii) Won’t make any difference to the IR35 status of your 3.5 years there and it remains to be seen whether HMRC hunt down people who were previously contract and are now perm at same company with/without a gap.......Personally I think they will hunt them.

So I wouldn’t go back there yet.

Contrary to what Kojak said, I believe:
You haven’t necessarily got 6 months because companies could start issuing status determinations any moment between now and April to be ahead of the April deadline.

Having been there 3.5 years, you’ve got a lot to lose/put at risk if they say you’re Inside
A) The financial risk
B) Damaging the relationship you obviously have with the client if you end up leaving them abruptly/unexpectedly. [You never know, they might start off doing blanket Insides then 18 months down the line they might be a bit less risk averse / doing a more accurate assessment that would result in Outside. So you don’t want to burn any bridges with them now]


So I’d find a contract somewhere else and only think about going back there once they’ve started advertising the status upfront and if they give it Outside

[cojak]

You are confusing the 24-month travel and expenses rules with IR35. There is no gap in IR35.

There’s still 6 months to go though so I would accept the contract and then terminate in the New Year.

[Number1981]

Hello,

I was looking for some advice and guidance on the upcoming IR35 Reform as I am due to change end client.

In February 2019 I stopped providing services to client A after spending 3.5 years on the same assignment. This contract was in the private sector though my own limited company and outside IR35 (demonstrated by contract and working practices). I have since been working for client B for the last 6 months (outside IR35), however, this has not worked out and I am considering re-engaging with Client A. I have some concerns on this with respect to the upcoming IR35 reforms.

(i) Is an 8 month gap (by time I re-engage) a suitable time for the next engagement with Client A to be classed as a new assignment?

(ii) I am considering closing down my limited company and I think Client A will take a blanket approach on their contracts and set the status off all contracts as inside IR35. I would therefore like to engage with Client A on a PAYE basis and cut out any hassle come April 2020. The rate is enough to compensate for the increased tax. If I do this, will it have any effect on the previous assignment I was engaged with Client A on?

(iii) What precautions can I take? Use a different agent? Ask for specific clauses?..etc….

Thanks in advance.