Determination rules and MVL timeline

[CanPayButWouldRatherNot]

I just think it relies on quite a few steps:
1) I don't think HMRC will know who your Ltd Co's clients are, they'll just know overall turnover figures.
2) I don't think HMRC will know who the end client is when you work for an umbrella. The umbrella is your employer, so in terms of PAYE submissions it will be the umbrella's name that HMRC know.
3) Moving from Ltd Co worker to umbrella worker will surely have some kind of different contract.
4) Even if HMRC know all the info, they'll also be aware that just because you've made this change does not mean your work was definitely inside IR35 before. It will cost them considerable time and resources to challenge.
5) They've already kind of "won" in that you're now paying all your taxes via PAYE.
6) You're looking to close your Ltd Co.

So for me it just seems unlikely HMRC will know what you've done, and decide that it's a good use of their resources to challenge historic stuff with a company that's trying to close as you're paying all the taxes of an employee going forwards, and they may well lose anyway if they did. I may be wrong and they might go all out for this, but personally I think it's doubtful. I anticipate they'll be looking at the bigger picture.

thanks for this post ... .sincerely hope this is the case as I think there are many like us in this boat

[Maslins]

How so Maslins - keen to understand as I thought the risk was a real one.

I just think it relies on quite a few steps:
1) I don't think HMRC will know who your Ltd Co's clients are, they'll just know overall turnover figures.
2) I don't think HMRC will know who the end client is when you work for an umbrella. The umbrella is your employer, so in terms of PAYE submissions it will be the umbrella's name that HMRC know.
3) Moving from Ltd Co worker to umbrella worker will surely have some kind of different contract.
4) Even if HMRC know all the info, they'll also be aware that just because you've made this change does not mean your work was definitely inside IR35 before. It will cost them considerable time and resources to challenge.
5) They've already kind of "won" in that you're now paying all your taxes via PAYE.
6) You're looking to close your Ltd Co.

So for me it just seems unlikely HMRC will know what you've done, and decide that it's a good use of their resources to challenge historic stuff with a company that's trying to close as you're paying all the taxes of an employee going forwards, and they may well lose anyway if they did. I may be wrong and they might go all out for this, but personally I think it's doubtful. I anticipate they'll be looking at the bigger picture.

[Paralytic]

Which agency you use etc doesn't matter. As I've already said, the determination is on the role. HMRC will get the information regardless of agency or who is doing the job. The role will be reported as inside and agency will report back to HMRC regardless which one.

And as I've already said, TygerTyger has said they are going PAYE, not inside IR35, so there is no role determination so there is no information for HMRC to get.

The increased risk would be if HMRC asked companies for the names of people who had moved from PSC to umbrella.

[northernladuk]

Which agency you use etc doesn't matter. As I've already said, the determination is on the role. HMRC will get the information regardless of agency or who is doing the job. The role will be reported as inside and agency will report back to HMRC regardless which one.

[TygerTyger]

Thanks NorthernLad and Paralytic for your replies.

To clarify/consider further. I was wondering if the risk of being on the 'radar' is reduced further by using a different agency for the PAYE piece.

So ... currently I'm outside IR35 with Agency A for the client and I've been offered PAYE via the same Agency A. However there are contractors working here via agency B. I'm wondering if I arranged to go PAYE via Agency B instead for the client that would mitigate a bit of the risk?

As for the future play, going inside IR35 would work for my personal situation I think. I'm fortunate to live in London area and a tube commute to most places so I'd look to go that route if rates are not insanely low. Expenses would be a tube and lunches so no different to perm life. However, I'd be looking at utilising the max pension allowance of 40k to further reduce my tax liability hit and also grow the pension pot. I'm closer to retirement than not but ... I'm not quite there yet ;-)

Good to hear your views on the switch agency route as mentioned above.

[Paralytic]

duplicate

[Paralytic]

It's going to be contract merry go round soon with everyone leaving gigs they can't commute to so although it's dead now I think it's going to get crazy soon. All inside gigs mind but still, plenty to choose from.

I can see the London market being hit the hardest here. People who currently commute and expense will simply find the cannot afford to do so. I suspect in other parts of the country where expenses are typically less, people will just take the hit until they see how the market pans out.

I really don't think getting attached to a client with 2 years outside and then determined inside a good idea and with all the people moving there should be enough roles not to.

The poster you refer to is not going 2 years outside to determined inside. Its 2 years outside to no determination and a policy decision to engage with contracts via Umbrella/PAYE only.

I'd assume there's a reduced risk of an HMRC investigation here, since there's no determination to share with HMRC.

However, if HMRC do investigate for some other reason, I suspect the impact could be pretty much same as moving outside to inside.

[northernladuk]

It's going to be contract merry go round soon with everyone leaving gigs they can't commute to so although it's dead now I think it's going to get crazy soon. All inside gigs mind but still, plenty to choose from.

I really don't think getting attached to a client with 2 years outside and then determined inside a good idea and with all the people moving there should be enough roles not to.

[TygerTyger]

Personally I don't particularly feel that drifting from Ltd Co worker to umbrella worker at the same client is a big risk.

How so Maslins - keen to understand as I thought the risk was a real one.

I'm in a similar predicament to the OP. My gig ends soon and I have an option to go PAYE for a 'short term' - possible 2/3 months I am guessing but feeling quite wary about this - same client, role, etc versus previous outside IR35 status for 2 years here.

I'm actively looking as a new contract elsewhere would be the perfect out ... but as the market is dead my real options are boiling down to take the PAYE or bench time.

[PTP]

Determination is in the role NOT you. If the role will exist after you they still have to make the determination.

I bet you've covered this before, but could you remind me why you think that is?

Yes the role will exist after you, however they are supposed to do another determination reflecting any differences in individual working practices.

[GhostofTarbera]

Are you inside or outside IR35 right now or just whinging it and saying you are outside ?


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[Maslins]

To answer your second question, our sister company MVL Online tends to suggest 4-6 weeks to get first distribution of ~75% of the company's funds, and 4-6 months to get clearance and pay out the balance. That latter timescale is currently higher than it has been historically, hopefully HMRC will get back on top of things and it will come down again.

If your fear is that:
- your client does a determination in (say) Feb 2020,
- you've already left and are going through an MVL,
- HMRC somehow find out about the determination and try to scupper your MVL,
then personally I think you're being paranoid.

Personally I don't particularly feel that drifting from Ltd Co worker to umbrella worker at the same client is a big risk.

[northernladuk]

Determination is in the role NOT you. If the role will exist after you they still have to make the determination.

[ChimpMaster]

Having spent some time digesting the issues discussed here, including the very excellent stickies, I still have the following questions regarding April 2020 which hopefully someone may be able to answer:

1. Is the end client always required to make a status determination, even if the contractor has terminated their limited company contract and moved to an umbrella arrangement, or are determinations only required for contractors operating through a limited company?
2. What is the typical time taken to complete an MVL?

Background: I've already told the client I won't be staying past the end of Feb and therefore not to do a determination for me. However the contract pays well and the market is absolutely dead out there, so a fallback - albeit potentially riskier - option would be for me to switch to an umbrella at contract renewal time (1 Jan) and then push through an MVL on my Ltd Co ASAP to try and minimise the likelihood of any retrospective HMRC antics.

Feel free to shoot me down but, if you do, I'd very much appreciate you explaining clearly why this is an impractical or just plain stupid option. I'm not asking anyone to make my decisions for me, just trying to gather as much useful info as possible.

TIA

Personally I would not feel comfortable switching to a brolly and staying at the same client. It just looks too obvious a move and HMRC will no doubt view the ER claim with suspicion.

If the client needs you then get them to make your contract and working conditions fall outside of IR35, if possible I mean.

[Snooky]

Having spent some time digesting the issues discussed here, including the very excellent stickies, I still have the following questions regarding April 2020 which hopefully someone may be able to answer:

1. Is the end client always required to make a status determination, even if the contractor has terminated their limited company contract and moved to an umbrella arrangement, or are determinations only required for contractors operating through a limited company?
2. What is the typical time taken to complete an MVL?

Background: I've already told the client I won't be staying past the end of Feb and therefore not to do a determination for me. However the contract pays well and the market is absolutely dead out there, so a fallback - albeit potentially riskier - option would be for me to switch to an umbrella at contract renewal time (1 Jan) and then push through an MVL on my Ltd Co ASAP to try and minimise the likelihood of any retrospective HMRC antics.

Feel free to shoot me down but, if you do, I'd very much appreciate you explaining clearly why this is an impractical or just plain stupid option. I'm not asking anyone to make my decisions for me, just trying to gather as much useful info as possible.

TIA