Reply to: Has anyone actually been investigated?

[andymalory]

Most people I work alongside are blissfully unaware of QDOS, IPSE and co - and sign whatever they're given.

This is so true. Most don't question anything! They just take what they're given.

[soyoh30298]

The longer time goes on, the longer I wonder if IR35 insurance is an industry unto itself, presenting a threat not unlike Chancel Repair Liability for its customers https://en.wikipedia.org/wiki/Chancel_repair_liability

Most people I work alongside are blissfully unaware of QDOS, IPSE and co - and sign whatever they're given. Makes me look like a right difficult...

Totally agree, opened an account to just comment on this
https://forums.contractoruk.com/ir35...deterrent.html

Just tired of the scaremongering

[northernladuk]

The longer time goes on, the longer I wonder if IR35 insurance is an industry unto itself, presenting a threat not unlike Chancel Repair Liability for its customers https://en.wikipedia.org/wiki/Chancel_repair_liability

Most people I work alongside are blissfully unaware of QDOS, IPSE and co - and sign whatever they're given. Makes me look like a right difficult...

From what I've seen from time to time on here a number of people have used the tax investigation element of the insurance if not the IR35 one. Many more people get tax enquiries than they do IR35. That is if the policy you have covers tax as well as IR35 of course but we've pointed a number of people to the IPSE and (I think) the QDOS tax helplines.

[PerfectStorm]

The longer time goes on, the longer I wonder if IR35 insurance is an industry unto itself, presenting a threat not unlike Chancel Repair Liability for its customers https://en.wikipedia.org/wiki/Chancel_repair_liability

Most people I work alongside are blissfully unaware of QDOS, IPSE and co - and sign whatever they're given. Makes me look like a right difficult...

[malvolio]

HMRC is focused on schemes and celebrities.
they don't have the resources to go after 20k/30k, which a typical contractor might be in grey area.

so, you should be fine. millions of contractors are working and they are important to the economy. people have bought expensive houses and any investigation will affect the housing market too, and so politicians don't dare to spoil it.

Can I come and live in your world. It sounds nice...

[dingdong]

There are lots of cases of HMRC issuing nudge letters to contractors about their IR35 status (e.g. the 1500 contractors at GSK). Most people keep quiet when HRMC is investigating them hence why you don't see much mention of it on here.... and you only see rich celebrities in the news as other people tend to settle!

Right now they are probably more focused on the MSC issue as a potentially huge new target for them

[PerfectStorm]

HMRC is focused on schemes and celebrities.
they don't have the resources to go after 20k/30k, which a typical contractor might be in grey area.

so, you should be fine. millions of contractors are working and they are important to the economy. people have bought expensive houses and any investigation will affect the housing market too, and so politicians don't dare to spoil it.

They did however go back to get people to pay for 'schemes' in the past

[RobScott]

Hello,
I'm reading here a lot about IR35.. but really, has anyone actually been investigated or it's just a scary deterrent?
Looking at the case history, that's about 1 or 2 a year? and targeting celebrities.
Like what are the real risks?

Juding by this article, it's close to zero. So why do people worry so much?

https://www.contractorcalculator.co....2610_news.aspx

HMRC is focused on schemes and celebrities.
they don't have the resources to go after 20k/30k, which a typical contractor might be in grey area.

so, you should be fine. millions of contractors are working and they are important to the economy. people have bought expensive houses and any investigation will affect the housing market too, and so politicians don't dare to spoil it.

[dogeson]

So what was teh point of ringing them if you weren't going to listen to them. Free advice, accountant doing IR35, nothing about actual working practices, ignoring advice and playing it lose. This iw what puts you at the top of the list for investigations.

I didn't fully ignore the advice. Basically they said: Hey, you do all this points and you're outside IR35. I went to the client, updated the contract, did everything they said.
Then: Hey, but the stock options are in your name. I went to the client, they said that there's no way legally to give them to entities (US laws and such). Reviewer didn't agree, so I called QDOS to confirm so I have a leg to stand on. Thus, Outside from all points (and working practices), inside from the reviwers opinion. From my POV, I did take reasonable care to be compliant. Also got a bunch of CEST tool assesments as well.
I'm not saying that it's full blown 100% outside ir35 by all means, but according to HMRC clauses and overall advice I get, I would say it's more than a marginal pass.
And given the fact that the client is overseas (which reduces the likelyhood of investigation and inside assesment) + I got insurance in place, I do think the risk is low.

[northernladuk]

so I called QDOS for a free advice and got an email from them as a confirmation, but the reviewer I have used didn't agree, so we kind of agreed to disagree on that one and I went with self-determination.

So what was teh point of ringing them if you weren't going to listen to them. Free advice, accountant doing IR35, nothing about actual working practices, ignoring advice and playing it lose. This iw what puts you at the top of the list for investigations.

But let's say I want to take on permanent employment, that would mean a WP and relationship change no? For example, I'll be subject to normal working hours, employment rights, control from the client etc.

Remember that bit I mentioned about understanding what you do properly? You've ignored professional advice because you know better than you ask that???

[dogeson]

Changing words in a contract means sod all when it comes to IR35 - the story isn't the contract it's how the actual contract (and day to day work) was conducted.

Basically if you are deciding that you are inside now it's going to be very hard to prove you haven't always been inside.

The thing I'm considering, is ok, my relationship with the client is Oustide IR35 at the moment, since I have RoS, MOO etc. and my WPs are compliant. But let's say I want to take on permanent employment, that would mean a WP and relationship change no? For example, I'll be subject to normal working hours, employment rights, control from the client etc.

[eek]

Yeah I said accountant, but really what I mean is the accountancy firm I use they provide professional IR35 review service. So initially they said my RoS is not right, and they provided the wording to make it unfettered. Same with MOO and Control, added a few new clauses there. Only on the share options we didn't agree, so I called QDOS for a free advice and got an email from them as a confirmation, but the reviewer I have used didn't agree, so we kind of agreed to disagree on that one and I went with self-determination.

Changing words in a contract means sod all when it comes to IR35 - the story isn't the contract it's how the actual contract (and day to day work) was conducted.

Basically if you are deciding that you are inside now it's going to be very hard to prove you haven't always been inside.

[dogeson]

So this is where diligence and understanding come in. Great start to be fair but..


NEVER.. and I mean NEVER, let your accountant deem your IR35 status. Firstly they rarely know enough about IR35 to be correct and secondly that looks like they are running your company for you so you've clear problems with MSC legislation. Get someone that is profession in IR35 law to do it.

Bad mistake but then you did mention QDOS. Do you know enough about IR35 to do that? Do you know what MoO or 'lack of' really is because a vast majority of people don't. Do you know what an unfettered right to substition is? Do you know if they will actually accept a sub because most sub clauses are considered shams by the courts.

Working practices trump contracts so it's what you will be doing that counts, not the contract. You could have a great contract and the minute you join they ask you to do a different piece of work and D&C hits from day one.

Again, take your accountant out of the loop, take their feedback and understand it but it's advice and nothing more.

You mention QDOS? Have you paid for a full contract review including working practices or just used some checklist they publish?

Yeah I said accountant, but really what I mean is the accountancy firm I use they provide professional IR35 review service. So initially they said my RoS is not right, and they provided the wording to make it unfettered. Same with MOO and Control, added a few new clauses there. Only on the share options we didn't agree, so I called QDOS for a free advice and got an email from them as a confirmation, but the reviewer I have used didn't agree, so we kind of agreed to disagree on that one and I went with self-determination.

[northernladuk]

So this is where diligence and understanding come in. Great start to be fair but..

Understood yep, make sense. The way I'm working now for a US client. I did make a contract review (not with QDOS) which kind of showed some problems, then I amended the contract to be IR35 compliant (RoS, MOO, control). It was still deemed inside by the accountant I used (like, everything green, but one point red), they said it's "marginal fail", because I can get stock options as individual. I called QDOS and apparently I can get NSOs as individual.
https://www.contractorweekly.com/tax...d-share-alike/

NEVER.. and I mean NEVER, let your accountant deem your IR35 status. Firstly they rarely know enough about IR35 to be correct and secondly that looks like they are running your company for you so you've clear problems with MSC legislation. Get someone that is profession in IR35 law to do it.

The accountant didn't agree, but I deemed myself Outside IR35 anyway since I have all the 3 pillars + OK from QDOS that options are ok.

Bad mistake but then you did mention QDOS. Do you know enough about IR35 to do that? Do you know what MoO or 'lack of' really is because a vast majority of people don't. Do you know what an unfettered right to substition is? Do you know if they will actually accept a sub because most sub clauses are considered shams by the courts.

Working practices trump contracts so it's what you will be doing that counts, not the contract. You could have a great contract and the minute you join they ask you to do a different piece of work and D&C hits from day one.

But I do understand that there's a risk still. HMRC may say, hey, but the accountant said it's inside, why are you outside? So I have to bring all up all my arguments. I got an insurance, but anyway, I hate the whole risk thing and losing my sleep over it.

Again, take your accountant out of the loop, take their feedback and understand it but it's advice and nothing more.

You mention QDOS? Have you paid for a full contract review including working practices or just used some checklist they publish?

[dogeson]

The answer is very few. The JLJ case is one but it's very old. We've a couple of people on this forum that have been investigated but nothing came of it. Regardless of the result you really want to avoid being investigated. It can take three or four years, and could be involving potential penalities of 100's of K depending on your situation. From what the few people have fed back on here is that even through they were cleared it was a horrible period during the investigation.

So if you are asking to find out if next to no one gets investigated so you can bend the rules and 'get away' with stuff then I think that's a very bad idea. The few people that get investigated are the ones doing this. If you are doing things properly, got a good knowledge of IR35, run your business diligently then the risk of them spotting something will be next to absolute zero.

I believe IR35 investigations are triggered from other indescretions that put you on the radar, so if you go around thinking you can do what you want you'll never get caught then you are putting yourself in that group. If you do stuff properly you won't if you get me.

All that said, and as others have said, the landscape has changed significantly so times now are competely different to the old days when everyone was outside and HMRC (quite rightly) didn't believe that can't be the case.

We don't know what will happen in the future and whether HMRC will apply anything retorspectively or the liability can be passed down the chain or whatever so do play it loose, do it properly and don't be the one that they pick on to test the process.

Understood yep, make sense. The way I'm working now for a US client. I did make a contract review (not with QDOS) which kind of showed some problems, then I amended the contract to be IR35 compliant (RoS, MOO, control). It was still deemed inside by the accountant I used (like, everything green, but one point red), they said it's "marginal fail", because I can get stock options as individual. I called QDOS and apparently I can get NSOs as individual.
https://www.contractorweekly.com/tax...d-share-alike/

The accountant didn't agree, but I deemed myself Outside IR35 anyway since I have all the 3 pillars + OK from QDOS that options are ok.

But I do understand that there's a risk still. HMRC may say, hey, but the accountant said it's inside, why are you outside? So I have to bring all up all my arguments. I got an insurance, but anyway, I hate the whole risk thing and losing my sleep over it.