Reply to: Here we go again...IR35 determination

[BABABlackSheep]

My actual question would be why wait until January to MVL - you could start the process in November and use the argument that the way you decided (and were forced) to go inside meant you suspected running a limited company wasn't likely in the future.

After all you will only be asked this question if and when the next outside IR35 contract came along and all evidence when you closed the company was given the budget and this companies attitude that it was unlikely that many outside contracts were going to appear.

He said Jan as that’s when my contract is up. I could try and get another outside gig. Unlikely, after xmas, IR35 looming and a crap jobs market.

No, if I’m going to do it, I do it before I take any extension.

[eek]

Here's another option.

1. Operate the new contract inside IR35, and attribute your salary and pension contributions to it to mitigate the tax.
2. Keep all your evidence that the prior contract was outside.
3. If ever challenged, your defence is that on the first contract, you were told to make your own determination, on the second, the client said it was inside and so (even though the evidence pointed the other way) in the interests of being conservative you operated inside.
4. Start looking for a new role early.

This keeps your options open -- if no new outside contract comes up by January, you can MVL and go brolly. If you work quickly, you can hopefully get your first distribution in the current tax year and your second the following year. Might want to check with the MVL experts to see if that's feasible, though.

It also lets you position yourself as a responsible contractor who operates inside IR35 sometimes and outside sometimes based on the situation.

All that said -- don't ignore the possibility of ER being withdrawn, they have to get money somewhere. If you have a particularly large reserve, I'd lean towards just doing the MVL now so it is in process before the budget, and hopefully done before April.

If you had a contract review, and have a decent argument re: working practices, I don't think the "inside determination", which has no legal force, is all that damaging for the first contract. They told you to do your own determination. I think if you accept the new contract with them having giving you an inside determination at the start (even though it still has no legal force), the risk is much, much higher. I personally would not consider trying to operate outside in that scenario. But everyone has his own risk threshold.

My actual question would be why wait until January to MVL - you could start the process in November and use the argument that the way you decided (and were forced) to go inside meant you suspected running a limited company wasn't likely in the future.

After all you will only be asked this question if and when the next outside IR35 contract came along and all evidence when you closed the company was given the budget and this companies attitude that it was unlikely that many outside contracts were going to appear.

[BABABlackSheep]

Here's another option.

1. Operate the new contract inside IR35, and attribute your salary and pension contributions to it to mitigate the tax.
2. Keep all your evidence that the prior contract was outside.
3. If ever challenged, your defence is that on the first contract, you were told to make your own determination, on the second, the client said it was inside and so (even though the evidence pointed the other way) in the interests of being conservative you operated inside.
4. Start looking for a new role early.

This keeps your options open -- if no new outside contract comes up by January, you can MVL and go brolly. If you work quickly, you can hopefully get your first distribution in the current tax year and your second the following year. Might want to check with the MVL experts to see if that's feasible, though.

It also lets you position yourself as a responsible contractor who operates inside IR35 sometimes and outside sometimes based on the situation.

All that said -- don't ignore the possibility of ER being withdrawn, they have to get money somewhere. If you have a particularly large reserve, I'd lean towards just doing the MVL now so it is in process before the budget, and hopefully done before April.

If you had a contract review, and have a decent argument re: working practices, I don't think the "inside determination", which has no legal force, is all that damaging for the first contract. They told you to do your own determination. I think if you accept the new contract with them having giving you an inside determination at the start (even though it still has no legal force), the risk is much, much higher. I personally would not consider trying to operate outside in that scenario. But everyone has his own risk threshold.

I’m leaning towards this.

I can’t see how I can take a contract extension knowing full well the client has not only deemed the role as being inside, but also sent out a bloody letter saying so prior to me signing.

Also, I’m well aware of the potential tax implications on MVL and I have a decent war chest. Swapping to Brolly now, also gives me an opportunity to stay(or return) at this client if the market doesn’t improve next year. Anyone on April 5th previously outside will come under massive scrutiny.

As I have zero expenses because everyone is WFH till at least the end of my extension, its not like I’ll take a massive take-home hit anyway.

Going to take professional advice after todays bank holiday.

[WordIsBond]

Here's another option.

1. Operate the new contract inside IR35, and attribute your salary and pension contributions to it to mitigate the tax.
2. Keep all your evidence that the prior contract was outside.
3. If ever challenged, your defence is that on the first contract, you were told to make your own determination, on the second, the client said it was inside and so (even though the evidence pointed the other way) in the interests of being conservative you operated inside.
4. Start looking for a new role early.

This keeps your options open -- if no new outside contract comes up by January, you can MVL and go brolly. If you work quickly, you can hopefully get your first distribution in the current tax year and your second the following year. Might want to check with the MVL experts to see if that's feasible, though.

It also lets you position yourself as a responsible contractor who operates inside IR35 sometimes and outside sometimes based on the situation.

All that said -- don't ignore the possibility of ER being withdrawn, they have to get money somewhere. If you have a particularly large reserve, I'd lean towards just doing the MVL now so it is in process before the budget, and hopefully done before April.

If you had a contract review, and have a decent argument re: working practices, I don't think the "inside determination", which has no legal force, is all that damaging for the first contract. They told you to do your own determination. I think if you accept the new contract with them having giving you an inside determination at the start (even though it still has no legal force), the risk is much, much higher. I personally would not consider trying to operate outside in that scenario. But everyone has his own risk threshold.

[BABABlackSheep]

This to me is simply a calculation of risk.

I had a not too dissimilar situation myself:

1. Qdos reviewed outside contract & WP review
2. Very late inside determination by small client based on IR35 shield assessment and an admission that they'd blanketed all their offshore contractors inside due to their perceived inability to substitute.
3. Client proposes brolly and a 35% rate increase
3. Appeal
4. Voided without reply to appeal when legislation was postponed
5. Discussed situation with Qdos as I was considering walking. In particular I wanted their take on a voided client inside determination
6. Re-review contract with Qdos to further tighten contract
7. Balanced risk vs reward
8. Decided to remain with client

Assessing the risk is a personal choice. I weighed up the likelihood and severity and decided I was comfortable with the risk. Whilst I might have done a bit more to reduce the likelihood, essentially we're in the same boat. Many more will be too.

As an aside, my accountant had a chap join their team who had previously worked with "HMRCs IR35 compliance team". My accountant relayed his experience and expectations to me around the (at that time) impending legislation change which also fed into my decision. This is highly anecdotal and second hand so I don't intend posting the details but it did allow me to adjust my estimate of the "likelihood" side of the equation.

Thanks for taking your time in writing such a detailed response.

I’m considering my options in the next few weeks.

[GhostofTarbera]

This to me is simply a calculation of risk.

I had a not too dissimilar situation myself:

1. Qdos reviewed outside contract & WP review
2. Very late inside determination by small client based on IR35 shield assessment and an admission that they'd blanketed all their offshore contractors inside due to their perceived inability to substitute.
3. Client proposes brolly and a 35% rate increase
3. Appeal
4. Voided without reply to appeal when legislation was postponed
5. Discussed situation with Qdos as I was considering walking. In particular I wanted their take on a voided client inside determination
6. Re-review contract with Qdos to further tighten contract
7. Balanced risk vs reward
8. Decided to remain with client

Assessing the risk is a personal choice. I weighed up the likelihood and severity and decided I was comfortable with the risk. Whilst I might have done a bit more to reduce the likelihood, essentially we're in the same boat. Many more will be too.

As an aside, my accountant had a chap join their team who had previously worked with "HMRCs IR35 compliance team". My accountant relayed his experience and expectations to me around the (at that time) impending legislation change which also fed into my decision. This is highly anecdotal and second hand so I don't intend posting the details but it did allow me to adjust my estimate of the "likelihood" side of the equation.

Wow you are so IR35 caught


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[sludgesurfer]

This to me is simply a calculation of risk.

I had a not too dissimilar situation myself:

1. Qdos reviewed outside contract & WP review
2. Very late inside determination by small client based on IR35 shield assessment and an admission that they'd blanketed all their offshore contractors inside due to their perceived inability to substitute.
3. Client proposes brolly and a 35% rate increase
3. Appeal
4. Voided without reply to appeal when legislation was postponed
5. Discussed situation with Qdos as I was considering walking. In particular I wanted their take on a voided client inside determination
6. Re-review contract with Qdos to further tighten contract
7. Balanced risk vs reward
8. Decided to remain with client

Assessing the risk is a personal choice. I weighed up the likelihood and severity and decided I was comfortable with the risk. Whilst I might have done a bit more to reduce the likelihood, essentially we're in the same boat. Many more will be too.

As an aside, my accountant had a chap join their team who had previously worked with "HMRCs IR35 compliance team". My accountant relayed his experience and expectations to me around the (at that time) impending legislation change which also fed into my decision. This is highly anecdotal and second hand so I don't intend posting the details but it did allow me to adjust my estimate of the "likelihood" side of the equation.

[jamesbrown]

The company sent an email saying all determinations were void. Contractors perform your own, which I did.

Now its sent another saying, previous evaluations stand.. wtf!!

Yeah, but you knew what they thought. Like you said, they determined your contract was inside.

At that point, you were taking a very big risk, regardless of whether they pulled their assessment because it was no longer necessary. Their opinion didn't change. Just the go live date for the legislation.

So, according to them, you were inside all along.

I hope your own assessment was backed by a professional contract/wp review, otherwise you haven't even done the due diligence.

In short, you're pretty stuffed. It's mostly your fault too, I'm afraid. Worse, since it's a big company, they probably have a lot of contractors onsite and it won't be long before this reaches HMRC. The best you can hope for is that their assessment is baseless and you have the proof. I doubt it.

[BABABlackSheep]

Of course it would. This is as obvious as the nose on your face. It was void because the requirement for it was put back... Keyword 'put back' . It is not because the roles have changed or a new assessment was made.

The put back date is looming and they are picking up where they left off. No doubt this was going to happen. You won't be the only one this will happen to but unfortunately you are one of the first.

You are absolutely right.

[simes]

Ok.. I’m with a client who blanketed all contractors inside IR35 last year.. before I joined.

Just as I joined IR35 got pushed back. All the contractors here are still outside.

My own determination for my particular role was Outside.

Company just sent an email out.. everyone blanketed inside again.

I have a new contract on the table till end of the year..

So.. what do I do..

..thoughts?

Can you confirm the following?

1. Is the client Private Sector? Am guessing yes.
2. Ref the email, are they blanket assessing everyone as being inside, OR, are they just saying they refuse to use contractors? If the former, one should be able to report them to the (probably ambivalent) HMRC.
3. Before going down that route, within said email, is there any provision to make them aware that they have to actually assess, and that they should, by April, confer following the completion of an SDS?
4. Have you got a name from whom the email came? Sound like they need to be educated. Easier said than done in a large blue chip.

Failing any bright ideas, keep renewing as Outside to April and if they want to chuck you Inside before then, remind them it is neither their right nor obligation to do so.

And before I get shot down in flames, I am completely aware that in large part, you might just end up in shouting at the moon. But, until one tries to educate, there won't be any education.

[GhostofTarbera]

Ok.. I’m with a client who blanketed all contractors inside IR35 last year.. before I joined.

Just as I joined IR35 got pushed back. All the contractors here are still outside.

My own determination for my particular role was Outside.

Company just sent an email out.. everyone blanketed inside again.

I have a new contract on the table till end of the year..

So.. what do I do..


A) tell Mr HMRC I got it wrong for the last 6 months and pay up.
B)Switch to Brolly and hope they don’t come calling. Stick around.
C)As per B, but close ltd down in Jan
D)Stay outside till Jan and swap
E)Stay outside to Jan, leave.. try get another contract
F)Get the hell out now
G)Get the hell out now and MVL
H)Stay, swap to brolly next March if they keep me on(probably will)

..thoughts?

You have probably really been inside all along


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[sadkingbilly]

Its a big company.

1) I’ll speak to my accountant.

2) As far as I’m aware, no SDS was sent to HMRC.

My concern is what do I do with this new contract?

take it, and put money aside to cover you if HMRC come calling.
in the current climate, anything's better than nothing.

[ladymuck]

Its a big company.

1) I’ll speak to my accountant.

2) As far as I’m aware, no SDS was sent to HMRC.

My concern is what do I do with this new contract?

SDS doesn't go to HMRC

[northernladuk]

The company sent an email saying all determinations were void. Contractors perform your own, which I did.

Now its sent another saying, previous evaluations stand.. wtf!!

Of course it would. This is as obvious as the nose on your face. It was void because the requirement for it was put back... Keyword 'put back' . It is not because the roles have changed or a new assessment was made.

The put back date is looming and they are picking up where they left off. No doubt this was going to happen. You won't be the only one this will happen to but unfortunately you are one of the first.

[Scruff]

Is this a large company working in the Defence industry, per chance?