Reply to: Possible defense against retrospective investigation.

[LondonManc]

Two scenarios.

Both start with cast iron outside determination pre-April - working practices confirmed by client, QDOS-confirmed outside contract, nice evidence emails, etc.

Post-April:
1/ Accept the compensatory rate hike, but get a totally different contract referring to line manager, holidays, etc. Behave like a perm, too, taking advantage of staff discount offers where you can and so on - may as well take all the benefits that you can if you're inside.

2/ Try and aim for the outside determination but risk HMRC backtracking to pre-April determination because the contract and working practices look the same.

Personally, I'd go for option 1, demonstrating clear differences in your new method of engagement, especially if you can gather evidence that completely goes against your outside emails. Does the client understand that if you're inside, you should be treated differently?

[JohntheBike]

I think the real risk is you get hit with a APN for the previous years at the same organisation. Of course this will once HMRC win their first outside >> Inside permitractor switch.

yes, people forget that HMRC "won" an IR35 case at the FTT just a matter of a few weeks into the 2000 tax year. However, I was suspicious, as the defendant was an ex police officer, who represented himself as he was quite used to court appearances, as he claimed.

[BlueSharp]

For me this was a big factor, even if you have legal and liability cover you still get dragged through a potentially lengthy, stressful and time consuming investigation where the outcome is not clear. You may be ultimately in the right, but personally I could do without that in my life!

I think the real risk is you get hit with a APN for the previous years at the same organisation. Of course this will once HMRC win their first outside >> Inside permitractor switch.

[smatty]

Yes you can go to court against HMRC via tax tribunal. Takes years, costs £££££.

For me this was a big factor, even if you have legal and liability cover you still get dragged through a potentially lengthy, stressful and time consuming investigation where the outcome is not clear. You may be ultimately in the right, but personally I could do without that in my life!

[NeedTheSunshine]

I think so too. But at this stage, all this is untested or uncharted waters.

Bearing in mind in times past, once contractors were investigated by the HMRC, they had to go to court to get the proof, courtesy of legal minds instead of whatever shining lights pass for the HMRC minds. So too will it be necessary for the HMRC to lose a few rounds in court against the clients once they are investigated (if in fact there are any clients To investigate...!).

And to be frank, if Qdos has already passed as being fit for consumption a contract and working condition to be Outside, and then come April an arbitrary and random decision is made by the client to stick the contractor Inside, if as and when a route to court becomes available, it might be the contractor who has to instigate court proceedings.

I don't know if such a route to court is obviously available right now, but it will need a few rounds to include HMRC defeats and Client Decision reversals before we get to a position of sense.

Aren't you saying that the client is disagreeing with the outside decision though? So the client would testify that the working practices weren't in fact outside all along? Would any insurer really defend that case? If the working practices that you declared were outside and the client disagrees, what will your insurer say? Yes you can go to court against HMRC via tax tribunal. Takes years, costs £££££.

[simes]

Seriously, I think it will be very hard to show that pre-April contact was out of IR35, once client says it is inside (albeit for period after April).

I think so too. But at this stage, all this is untested or uncharted waters.

Bearing in mind in times past, once contractors were investigated by the HMRC, they had to go to court to get the proof, courtesy of legal minds instead of whatever shining lights pass for the HMRC minds. So too will it be necessary for the HMRC to lose a few rounds in court against the clients once they are investigated (if in fact there are any clients To investigate...!).

And to be frank, if Qdos has already passed as being fit for consumption a contract and working condition to be Outside, and then come April an arbitrary and random decision is made by the client to stick the contractor Inside, if as and when a route to court becomes available, it might be the contractor who has to instigate court proceedings.

I don't know if such a route to court is obviously available right now, but it will need a few rounds to include HMRC defeats and Client Decision reversals before we get to a position of sense.

[northernladuk]

I've already ironed this out with QDOS for my own personal position. They are prepared to cover me because they have assessed my current contract as outside.

And when an investigation starts and the client says they wouldn't really accept a sub etc etc and QDOS pull out.

[JohntheBike]

Yes, but it would have to occur in reality. If you’re doing the same thing in the same way, the risk is there, regardless of what the earlier contract said.

agreed

[jamesbrown]

I've already ironed this out with QDOS for my own personal position. They are prepared to cover me because they have assessed my current contract as outside.

I’m talking to the OP.

[jamesbrown]

agreed, but if there were major changes in the working practises, then this would be the case.

Yes, but it would have to occur in reality. If you’re doing the same thing in the same way, the risk is there, regardless of what the earlier contract said.

[JohntheBike]

For insurance purposes, there must be a reasonable prospect of success. In the circumstances you describe, there probably isn’t. You would be in a weak position, unless the client had not taken reasonable care with the SDS.

I've already ironed this out with QDOS for my own personal position. They are prepared to cover me because they have assessed my current contract as outside.

[JohntheBike]

Extremely unlikely without a dramatic change in working practices or negligence with the SDS (and there wouldn’t be if QDOS were involved).

agreed, but if there were major changes in the working practises, then this would be the case.

[jamesbrown]

So it would be perfectly possible for the client to decide that the role is inside from April and not compromise a pre April outside assessment.

Extremely unlikely without a dramatic change in working practices or negligence with the SDS (and there wouldn’t be if QDOS were involved).

[jamesbrown]

For insurance purposes, there must be a reasonable prospect of success. In the circumstances you describe, there probably isn’t. You would be in a weak position, unless the client had not taken reasonable care with the SDS.

[JohntheBike]

Seriously, I think it will be very hard to show that pre-April contact was out of IR35, once client says it is inside (albeit for period after April).

There appear to be some clients, mine included. who have engaged professional organisations like QDOS to assess the contracts. They can only do this on current contracts. So it would be perfectly possible for the client to decide that the role is inside from April and not compromise a pre April outside assessment.