Reply to: What are the odds?

[GhostofTarbera]

Would I want to stay at a client where I had been outside IR35 and now they said my role was inside?

In today’s market.

Depends..

If I’ve been there 3-6 months..might take the risk.
If I’ve been there 3-6 years...no freaking way.

All day every day

More chance getting hit by lightning than investigated


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[BABABlackSheep]

Would I want to stay at a client where I had been outside IR35 and now they said my role was inside?

In today’s market.

Depends..

If I’ve been there 3-6 months..might take the risk.
If I’ve been there 3-6 years...no freaking way.

[simes]

Purely a personal opinion but I'd say possibly 1-2% chance of being investigated. Once Joe's gone definitively inside HMRC are getting their full NI cut going forward, and that's what IR35 is all about really. I'd expect HMRC to now focus on whatever clients (whether public or private sector) are continuing to take people on outside IR35, and look to challenge this determination where they think they can win. Scaring a few big clients in that way will be a much bigger win for HMRC than going after Joe and his mates piecemeal.

While it is unclear how a contractor may be able to open up their own investigation to claw back taxes from a 'client predetermined' Inside position to the contractor's determination of an Outside position, would being investigated actually help in the long term, the process to educate clients as to what IR35 is all about?

I realise in saying this, the usual crowd will be jumping up and down and hurrying to their keyboards to slam the thinking but to date, all investigations into IR35 have solely been between contractor and HMRC. And I believe I am right in saying that the significantly larger percentage of wins have fallen in favour of the contractor.

Any investigations, whatever form these may take, post April, will Have to involve the client.

To this end, and to educate the Private Sector, the clients will need to see the process and understand the reality of investigations so that they too can get that confidence to win against the HMRC. Otherwise, clients may in perpetuity, remain scared and of blanketing mind.

What (currently) better way may there be in affording such? All this to say;

1. I am confident in my outside position and
2. I wouldn't be too concerned about an investigation and
3. I would happily involve the client.

[CompoundOverload]

As said above if you are working for a large client who have loads of contractors I suspect there is a higher chance you may get a fishing letter or an investigation. I'd put it at 50 - 60%

If you're working for a small company with a handful of contractors, I'd put it as low as 5%.

Of course with an outside to inside conversion doing the same role, you pretty much have 0 defence.

At least currently the chances of investigation are low and the chances of HMRC winning is also low.

Based on this - https://www.contractoruk.com/forums/...ge-though.html

7. Since the introduction of the public sector reform, and during consultations, the Government has listened to the views of stakeholders. On the basis of their feedback, it can confirm:
• The reform is not retrospective. As was the case in the public sector, HMRC will focus on ensuring businesses comply with the reform for new engagements, rather than focusing on historic
cases

Retro checks are not being looked into....

[Snooky]

For reference if you fill in your tax return correctly HMRC have 1 year from you tax return being submitted and while it's likely HMRC won't kick things off immediately to recover money from 2019/20 they will need to have everything under way by mid 2021.

Being slightly pernickety - AIUI, they have one year from the final tax submission deadline for a tax year (31 Jan), so for tax year 2019/20 they can issue an enquiry any time from receiving your 2019/20 tax return up to & including 31 Jan 2022.

Happy to proven wrong though.

[eek]

Not really, a good percentage of people will panic and just pay up


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And that's all that HMRC will want - some minion will proudly talk about £xm additionally raised when he comes up for promotion....

[GhostofTarbera]

As said above if you are working for a large client who have loads of contractors I suspect there is a higher chance you may get a fishing letter or an investigation. I'd put it at 50 - 60%

If you're working for a small company with a handful of contractors, I'd put it as low as 5%.

Of course with an outside to inside conversion doing the same role, you pretty much have 0 defence.

At least currently the chances of investigation are low and the chances of HMRC winning is also low.

Not really, a good percentage of people will panic and just pay up


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[JoJoGabor]

As said above if you are working for a large client who have loads of contractors I suspect there is a higher chance you may get a fishing letter or an investigation. I'd put it at 50 - 60%

If you're working for a small company with a handful of contractors, I'd put it as low as 5%.

Of course with an outside to inside conversion doing the same role, you pretty much have 0 defence.

At least currently the chances of investigation are low and the chances of HMRC winning is also low.

[krytonsheep]

note the (end client) information that isn’t asked for or reported.

Sounds like HMRC have got no idea where contractors are currently working then? Unless they do an IR35 investigation in to the client, which is what happened at GSK.

[eek]

I suspect they may go after contractors who've been around a long time and/or anyone who's stayed in the same gig for many years as they will represent the biggest financial tax gain.

Smaller joe bloggs may be targeted several years down the line.

Time limits stop HMRC from going after people several years down the line.

That's why HMRC will go on fishing trips to see who willingly pays up (as they don't have that long to do so) and then chase those similar (i.e. worked in the same place) to the ones who paid up.

For reference if you fill in your tax return correctly HMRC have 1 year from you tax return being submitted and while it's likely HMRC won't kick things off immediately to recover money from 2019/20 they will need to have everything under way by mid 2021.

[sira]

I suspect they may go after contractors who've been around a long time and/or anyone who's stayed in the same gig for many years as they will represent the biggest financial tax gain.

Smaller joe bloggs may be targeted several years down the line.

[technobabble]

Agencies

The OP didn't mention agencies, so I would say in that instance the chance is low, as there will just be an increase in PAYE and NIC receipts and HMRC will not know there is a change in the underlying arrangements

Reading that HMRC doc it applies to agencies, so where agencies are making those returns then HMRC will have detailed records to use to target providers.

The interesting question is how many / what % of agencies are complying and sending those returns to HMRC? I suspect that the larger ones are but not the smaller more dodgy ones.

[eek]

84G, p3.

http://www.legislation.gov.uk/uksi/2.../made/data.pdf

and this is the spreadsheet format that should be used

Employment intermediaries report template (CSV) - GOV.UK

note the (end client) information that isn’t asked for or reported.

[jamesbrown]

Does the information an agency provides to HMRC about a contractor include end client name / duration?

84G, p3.

http://www.legislation.gov.uk/uksi/2.../made/data.pdf

[krytonsheep]

The interesting bit about GSK wasn't the fact HMRC sent letters out, it was the fact HMRC had successfully identified who to send them to.

Does the information an agency provides to HMRC about a contractor include end client name / duration?