If caught IR35, how much you pay back?

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Protagoras replied

5 May 2023, 21:46
Originally posted by dogeson View Post

Hello,

My question is, suppose HMRC finds you retrospectively inside IR35. Do you have to pay back only NI and income tax?
Do they offset the tax bill by the amount that was already paid as corporation tax, dividend tax etc.?

Assuming that this refers to an engagement where you / your LtdCo was responsible for status determination ...

See Income Tax (Earnings and Pensions) Act (aka ITEPA), Part 2, Chapter 8

The basis of the calculation is set out in the Act.
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jamesbrown replied

5 May 2023, 13:26
Sheesh. Give it a rest already.
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northernladuk replied

5 May 2023, 13:06
Originally posted by sadkingbilly View Post

how many threads do you want on this??

He's thrashing around without much of a clue so he's having to ask everything because he doesn't know. Used to be like this every day back in the times of old when people were just playing at being outside IR35.
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northernladuk replied

5 May 2023, 13:05
Originally posted by dogeson View Post

Hello,

My question is, suppose HMRC finds you retrospectively inside IR35. Do you have to pay back only NI and income tax?
Do they offset the tax bill by the amount that was already paid as corporation tax, dividend tax etc.?

They will re-do your accounts as if it was a salary and you'll be liable for the difference you didn't pay. You say only, thats 42% on anything between 31 and 125k, 47k above 125k. Fines up to double the identified owed plus interest dating back to the beginning of contract, which will accumulate over the 3 or 4 years the investigations go on.

In the JLJ case he was deemed inside for 4 of the years of the case and his bill came to £141k. That was back in 2007 so if it happened today that figure would be significantly higher. That also doesn't count the costs of his defence but I can't remember if he had tax insurance.

BTW the tax insurance will only cover you if there is a good chance of winning. If you've ignored advice and not had your contract properly checked it's possible the insurance won't cover you.

Last edited by northernladuk; 5 May 2023, 13:09.
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sadkingbilly replied

5 May 2023, 13:04
how many threads do you want on this??
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dogeson started a topic If caught IR35, how much you pay back?

5 May 2023, 13:00
If caught IR35, how much you pay back?

Hello,

My question is, suppose HMRC finds you retrospectively inside IR35. Do you have to pay back only NI and income tax?
Do they offset the tax bill by the amount that was already paid as corporation tax, dividend tax etc.?
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