HMRC off payroll decision service

[difficulttimes]

The likelihood is very high. An investigation into 1000 contractors at an agency will yield more, and be significantly more efficient than a thousand individual investigations. I'd imagine the revenue will start will the highest RTI reports and work backwards.

The uncomfortable truth is that the vast majority of contractors are inside IR35 but the sheer volume of contractors has made it impossible to police. IR35 has largely been ignored because of the fundamental lack of enforcement.

Think of it as one of those nice Attenborough films. Currently of the wildebeest make it past the lions with only the odd straggler being picked off. The vast majority of the herd just pile on oblivious to the danger.

By making agencies and the clients police it, they've corralled the herd.

Beg to disagree as IR35 is individual and as such you can't do a wholesale investigation - each person has different working practices so HMRC will still have to investigate each single person. That is how it is today and that will be the same. Ask QDOS or IPSE who sell the insurance as they are best placed to manage risk etc.. And remember they will have to take each person to a tribunal if it isn't settled out of court etc. It's not like they can write a letter saying all of you guys at X Group owe us £10k in IT and £5 in NI each can you pay up within 90 days or else.

Ltd. companies aren't a tax avoidance scheme..

[northernladuk]

It might be individual but if you are working in a same organisation with the same culture/working practices/contract /framework you cease to be an individual. You become a number.

[difficulttimes]

It might be individual but if you are working in a same organisation with the same culture/working practices/contract /framework you cease to be an individual. You become a number.

I asked the exact same question and was told it is still individual because how you work could be different to the guy next to you. If it was by group then you would have seen far more IR35 cases going forward.

Also, I should add that they can only make an enquiry into your tax return that you filed for that year.

Sorry, but I do get frustrated that people think the legislation has changed and suddenly there is an army of HMRC investigators working on this. Speaking of which someone told me today that HMRC win 50% of their IR35 cases - I was like 50% of what exactly? I've heard of the BBC which isn't really a win. Feels like more scare-mongering.

[Andy Hallett]

Beg to disagree as IR35 is individual and as such you can't do a wholesale investigation - each person has different working practices so HMRC will still have to investigate each single person. That is how it is today and that will be the same. Ask QDOS or IPSE who sell the insurance as they are best placed to manage risk etc.. And remember they will have to take each person to a tribunal if it isn't settled out of court etc. It's not like they can write a letter saying all of you guys at X Group owe us £10k in IT and £5 in NI each can you pay up within 90 days or else.

Ltd. companies aren't a tax avoidance scheme..

But this is the point, they don't have to take each person to a tribunal, the liability is not the contractors anymore, it has moved to the payer. If someone pays you as outside, you are home and hosed......

Ok, lets say I work for Dodgy Recruitment Ltd (no jokes please).

- We run 100 contractors in the Public Sector, one of whom is contractor A
- Either the PSEC body has determined it's outside IR35 or we've failed to do deductions.
- There is an individual investigation into contractor A.

If you were HMRC, would you:

1) Investigate the other 99 contractors and send a big bill to agency?
2) Go hunting randomly for contractor B?

The same will apply to public sector bodies who have a lot of outside determinations. The herd will have a big target on them. As stated at the top, it's not your problem now if you've been paid as outside.

[difficulttimes]

But this is the point, they don't have to take each person to a tribunal, the liability is not the contractors anymore, it has moved to the payer. If someone pays you as outside, you are home and hosed......

Ok, lets say I work for Dodgy Recruitment Ltd (no jokes please).

- We run 100 contractors in the Public Sector, one of whom is contractor A
- Either the PSEC body has determined it's outside IR35 or we've failed to do deductions.
- There is an individual investigation into contractor A.

If you were HMRC, would you:

1) Investigate the other 99 contractors and send a big bill to agency?
2) Go hunting randomly for contractor B?

The same will apply to public sector bodies who have a lot of outside determinations. The herd will have a big target on them. As stated at the top, it's not your problem now if you've been paid as outside.

But last time I checked HMRC aren't judge, jury and executioner - there will have to abide by the existing policies and procedures for opening an enquiry.

[Andy Hallett]

But last time I checked HMRC aren't judge, jury and executioner - there will have to abide by the existing policies and procedures for opening an enquiry.

Yep, and guess which hunting ground they'll start.

The point is, they don't need to catch everyone. They just need agencies and PSEC bodies to fear being caught to force the majority inside. Previously they had no skin in the game, they do now.

Don't get me wrong, we'll push for anyone genuinely outside to that determination and support them accordingly. But there is a financial risk I have to mitigate come April that we don't currently have.

[eek]

But last time I checked HMRC aren't judge, jury and executioner - there will have to abide by the existing policies and procedures for opening an enquiry.

No to open an enquiry all they have to do is have evidence that they suspect the contract isinside IR35 not outside and send a kick off letter. Currently its difficult to identify IR35 cases full stop, but come April there is a readily available dataset of cases worth investigating...

[LondonManc]

Andy,

Potentially another service you could sell in to PS - IR35 determination based on experience. While you've possibly in the past made contracts more IR35-friendly and let the contractor worry about the working practices, you're in a better position than the PS to say which contracts should and shouldn't be inside IR35.

I'd imagine (and it's purely a finger in the wind) that 60-80% of all contractors who are declared outside at the moment should actually be inside. I'd also suspect that you could provide sample contracts and a list of roles combined with experience levels to give better guidelines to PS bodies as to which, say, 65% of those contracts would be inside. Hector gets his pound of flesh and we all have to accept that some have had it too good for too long. There are people in the office that I am in that are outside IR35 that I'd suspect should be inside IR35.

[eek]

No to open an enquiry all they have to do is have evidence that they suspect the contract isinside IR35 not outside and send a kick off letter. Currently its difficult to identify IR35 cases full stop, but come April there is a readily available dataset of cases worth investigating...

I think its worth being clear here.

HMRC only need to send out letters. Even if 50% of people object and pass the letter to IPSE or others to deal with that still gives them a 50% success rate as those without advice pay up.

And if HMRC swamp IPSE and others with more work than they can handle that to HMRC would be a win as well...

The thing to remember here is that HMRC can take what was once a lot of work individually identifying cases and instead adopt the blanket approach they nowadays prefer...

[BoredBloke]

Only hmrc could come up with a system where the tax status of A is determined by C and the liability is held by B.