Reply to: Advice on choosing Umbrella or PAYE for my contract? Details inside.

[lucyclarityumbrella]

This is down to the tax avoidance was not illegal, tax evasion was - then HRMC changed their mind

[eek]

Is that like when they've previously said okay to schemes then come for contractors a few years later when they realised there would be blood in the water?

I don't remember HMRC saying schemes were fine - they merely kept quiet while the promoters lied that HMRC HAD approved them via issuing DOTAS numbers

[LondonManc]

have a look at this:

https://www.gov.uk/government/public...ing-rules-ir35

"HMRC will focus on ensuring compliance with the new rules, rather than investigating past arrangements

HMRC will not open a new compliance enquiry into a contractor’s return for tax years before 6 April 2021 in circumstances where:

• a client decides that a contract is within the off-payroll working rules (IR35)"

so the switch is not going to cause a risk for previous tax years.

Is that like when they've previously said okay to schemes then come for contractors a few years later when they realised there would be blood in the water?

[eek]

You may believe what HMRC say others take a very different viewpoint (often after a very expensive lesson).

[michaelC]

risk the "outside > inside" switch and the repercussions that could bring.

have a look at this:

https://www.gov.uk/government/public...ing-rules-ir35

"HMRC will focus on ensuring compliance with the new rules, rather than investigating past arrangements

HMRC will not open a new compliance enquiry into a contractor’s return for tax years before 6 April 2021 in circumstances where:

• a client decides that a contract is within the off-payroll working rules (IR35)"

so the switch is not going to cause a risk for previous tax years.

[drob1984]

Easier said than done if the market is dead, the warchest hasn't been maintained or is running low and it's the only gig you've got on the table.

Understand where you are, this will be the second time in twelve months where this has now happened to me. But its the nature of being a contractor/freelancer, you could be culled at any moment and so have to be ready to jump on the next thing. Like you, I am worried how long I may be out of work, but I'd rather take something in screwfix or B&Q to tide me over than risk the "outside > inside" switch and the repercussions that could bring.

[lucyclarityumbrella]

A blanket ban is legal, ruling everyone inside is not.

Assuming the blanket ban pushes the contractor through an umbrella, it places it outside of scope of IR35, and therefore there is no legal obligation to increase the rate either ie the employment costs can get pushed down the chain, rather than being absorbed by the client or in the simplest case an uplift in the rate to cover it.

[simes]

Many thanks sir. Appreciated.

[eek]

I do wonder about this perceived Risk. Clearly, at present, we just don't know.

However, if the client has just blanket banned PSCs without any evidence of having undergone any investigation into your working habits, I wonder what possibly might be the outcome.

Clearly their decision was not based IR35 knowledge and so, if you were investigated, I also wonder if actually, your working practices were, and indeed still are, to be found Outside IR35, I wonder if that would ever favourably change the landscape of your being arbitrarily forced Inside, somehow.

I would like to see such a case while, currently, we have no method of bringing about our own case to reclaim tax if we later deem ourselves Outside, in the way HMRC did with contractors if they deemed us Inside.

Not true.

Once again quoting from the HMRC IR35 for agencies workshop I attended on Friday.

If an SDS is appealed and the contract is found to be outside the previous RTI submissions can be updated / corrected and the correct payments made. This means it is actually possible to recover NI payments if they were incorrectly deducted.

However this assumes you are using your own limited company and have receiving deemed payments through you limited company (which is quite an assumption given how tax inefficient it would be)

But if you had attended the workshop the sane approach for a client is to ban the use of PSCs (to avoid IR35 being an issue) and insist on people being paid by the agency or via an umbrella company. And banning the use of PSCs is not the same as a blanket declaration that everyone is inside. A blanket ban is legal, ruling everyone inside is not.

[simes]

Hi everyone,

I am aware by staying I risk an investigation by HMRC but I am in a tricky situation where I need the money in the tough economy to support my family and kids. When the right opportunity comes I will leave.

I do wonder about this perceived Risk. Clearly, at present, we just don't know.

However, if the client has just blanket banned PSCs without any evidence of having undergone any investigation into your working habits, I wonder what possibly might be the outcome.

Clearly their decision was not based IR35 knowledge and so, if you were investigated, I also wonder if actually, your working practices were, and indeed still are, to be found Outside IR35, I wonder if that would ever favourably change the landscape of your being arbitrarily forced Inside, somehow.

I would like to see such a case while, currently, we have no method of bringing about our own case to reclaim tax if we later deem ourselves Outside, in the way HMRC did with contractors if they deemed us Inside.

[LondonManc]

Problem is he says he's only got 'reasonable evidence' which is no good. He's also struggling a bit with the IR35 knowledge and how to stay safe so further throws in to doubt that evidence and we haven't quizzed him on his working practices yet.

If his client has decided they never intended RoS to be used or expects D&C then he's stuffed whatever he does.

Where you are absolutely correct, looking at this post (and his other duplicate one) I think you might be getting his hopes up a bit too much.

IMO whatever he does he's outside to inside and there is no getting away from the fact. Even if he thinks he is HMRC won't and all this can only be sorted out during an investigation which isn't pleasant.

It certainly isn't my intention to raise hopes, more to give a difficult but realistic path to provide a distinction between the two statuses.

Given the announcement in the budget today, £100million for HMRC to spend on at least 1000 tax investigators, anything that changes/increases your NI contributions moving forwards, get out.

Easier said than done if the market is dead, the warchest hasn't been maintained or is running low and it's the only gig you've got on the table.

[drob1984]

Given the announcement in the budget today, £100million for HMRC to spend on at least 1000 tax investigators, anything that changes/increases your NI contributions moving forwards, get out.

[northernladuk]

At its highest level, will the new contract be outside IR35 or inside, based on the client's determination? You can still use an umbrella but be outside. Let's assume they say inside. What you need to establish is that there is enough difference between your way of working under the old contract and the new contract to prove that everything that made your contract outside is no longer applicable. Have a look through this guide to see what things will be different and get them confirmed with the client: https://www.qdoscontractor.com/ir35/...mpliance-guide

Problem is he says he's only got 'reasonable evidence' which is no good. He's also struggling a bit with the IR35 knowledge and how to stay safe so further throws in to doubt that evidence and we haven't quizzed him on his working practices yet.

If his client has decided they never intended RoS to be used or expects D&C then he's stuffed whatever he does.

Where you are absolutely correct, looking at this post (and his other duplicate one) I think you might be getting his hopes up a bit too much.

IMO whatever he does he's outside to inside and there is no getting away from the fact. Even if he thinks he is HMRC won't and all this can only be sorted out during an investigation which isn't pleasant.

[LondonManc]

Hi LondonManc ,

Yes I have reasonable evidence that I am/was Outside IR35 up to 31 March 2021.

Can you please explain the bit:

In practical terms what do I need to do?

At its highest level, will the new contract be outside IR35 or inside, based on the client's determination? You can still use an umbrella but be outside. Let's assume they say inside. What you need to establish is that there is enough difference between your way of working under the old contract and the new contract to prove that everything that made your contract outside is no longer applicable. Have a look through this guide to see what things will be different and get them confirmed with the client: https://www.qdoscontractor.com/ir35/...mpliance-guide

[ChrisHadfield]

What IR35 cover have you go? Can you prove your existing outside IR35 is genuinely Outside IR35?

If you're going to continue, this must be a priority, surely. Establish your evidence, agree your working practices "as is" with the client (i.e. "as is" being outside).
Then, get your client to issue a statement that they intend to take advantage of the situation by applying things to your new contract that will benefit them as part of putting you inside IR35. Either that or you're going to be looking over your shoulder for HMRC for years to come.
lucyclarityumbrella

Hi LondonManc ,

Yes I have reasonable evidence that I am/was Outside IR35 up to 31 March 2021.

Can you please explain the bit:

Establish your evidence, agree your working practices "as is" with the client (i.e. "as is" being outside).
Then, get your client to issue a statement that they intend to take advantage of the situation by applying things to your new contract that will benefit them as part of putting you inside IR35. Either that or you're going to be looking over your shoulder for HMRC for years to come.
lucyclarityumbrella

In practical terms what do I need to do?