IR 35

andy_pandy_2

Hi,  does anyone have any help towards the new IR 35 regs due out this April,
At present i have my own limited company and provide metal work services to the motor industry requiring me to work away from home .The new regs have now stopped companies from wanting to use people like me through fear of being in the wrong with HMRC. Companies now want to use Umbrella companies to protect themselves which are of detrimental benefit to Freelancers like myself & will not allow claims for accommodation and food. This will result in a skills shortage for companies not able to source locally & make it impossible for contractors like myself to work away from home or in Mrs Thatcher's word,s "get on my bike and find work".Also i work in Sweden & germany on occasion How do i cover the cost of the flights ? 
Really think HMRC have not thought this through correctly And the result is if i have no work i will pay no percentage of tax 0% of 0 earnings is 0 .
I understand this system has been abused by some. Does anyone have any thoughts as even accountants are scratching their heads with a way forward .

Andy_L

andy_pandy_2 said:

.Also i work in Sweden & germany on occasion How do i cover the cost of the flights ? 

You add the cost of the flights to the amount you charge the client

Speedbird676

Each client you work for would need to determine your IR35 status.

Some clients "may" determine your status as outside IR35 and you could continue to invoice them from your Ltd company. For these you would process expenses in the same way as now. Others may require you to work via an Umbrella company, if they determine you to be inside IR35 or are risk averse and no longer with to engage PSCs (Personal Service Companies).

For the overseas work, are you engaged directly by a foreign company or are you engaged by a UK company who request you to work overseas?

Mr87

Have a look at www.ipse.co.uk who have good resources on this. Most of this free but some resources require you to be a member. 

Unfortunately the fear of businesses to use contractors is real. You can use HMRCs CEST tool (Google! ) to provide yourself (and your clients) reassurance, although Hmrc have been taken to employment tribunal many times successfully disputing the results of that tool. 

uknick

Mr87 said:

Have a look at www.ipse.co.uk who have good resources on this. Most of this free but some resources require you to be a member. 

Unfortunately the fear of businesses to use contractors is real. You can use HMRCs CEST tool (Google! ) to provide yourself (and your clients) reassurance, although Hmrc have been taken to employment tribunal many times successfully disputing the results of that tool. 

Do you mean tax tribunal, not employment? 

Mr87

uknick said:

Mr87 said:

Have a look at www.ipse.co.uk who have good resources on this. Most of this free but some resources require you to be a member. 

Unfortunately the fear of businesses to use contractors is real. You can use HMRCs CEST tool (Google! ) to provide yourself (and your clients) reassurance, although Hmrc have been taken to employment tribunal many times successfully disputing the results of that tool. 

Do you mean tax tribunal, not employment? 

I don't know the specifics of the type of tribunal, but there are examples (forum isn't allowing me to post links). The general point is, HMRC determinations on employment have successfully been ruled against many times, so you can't on the face of it accept HMRC's judgement.

However, if you use CEST tool online, HMRC say 'HMRC will stand by the result you get from this tool'. That indicates to me that you should give it a go. If you answer honestly, and it says you aren't captured by IR35, you should print it out and use it as documentary evidence for the prospective client. If it says you are captured within IR35, that doesn't necessarily mean you are by law, given previous rulings at tribunal.

Prism

You put up your price to include your expenses estimate. I have been doing this for years

uknick

Mr87 said:

uknick said:

Mr87 said:

Have a look at www.ipse.co.uk who have good resources on this. Most of this free but some resources require you to be a member. 

Unfortunately the fear of businesses to use contractors is real. You can use HMRCs CEST tool (Google! ) to provide yourself (and your clients) reassurance, although Hmrc have been taken to employment tribunal many times successfully disputing the results of that tool. 

Do you mean tax tribunal, not employment? 

I don't know the specifics of the type of tribunal, but there are examples (forum isn't allowing me to post links). The general point is, HMRC determinations on employment have successfully been ruled against many times, so you can't on the face of it accept HMRC's judgement.

However, if you use CEST tool online, HMRC say 'HMRC will stand by the result you get from this tool'. That indicates to me that you should give it a go. If you answer honestly, and it says you aren't captured by IR35, you should print it out and use it as documentary evidence for the prospective client. If it says you are captured within IR35, that doesn't necessarily mean you are by law, given previous rulings at tribunal.

Yes, HMRC have lost at tax tribunals many times with regard to IR35 but, they've also won many times, as shown by some high profile cases for various TV personalities.  I think the press tend to cover the losses far more than the wins.

With regard to the CEST tool I've used the old one in the past to justify my outside IR35 status.  Can't comment on the latest one.  But, the problem seems to be private sector customers are now taking the default view; you're inside IR35 without bothering to look at the CEST result.  If they do this, then the only option does seem to be increase the rates to take into account the high tax charges.  Of course this strategy will only work if all peer contractors do the same. 

Mr87

@uknick I think TV personalities are the exception. If we're honest, on the face of it, many of those personalities go through PSC for tax purposes alone, because it is so lucrative for them to do so. They are the ones being targeted by IR35. 

For most PSCs that are of modest turnover, the attraction of being limited is more than about tax efficiency: limited liability, separate entity, professional identity. One client I had would simply not engage on the basis of sole trader. So on balance, I think most PSCs will not be captured by IR35, because the way they operate reflects those needs. Might be wrong.

The best business is repeat business, and referrals. If you have a platform already, hopefully your client won't even worry about IR35. And if they do, you only need to lob over the CEST assessment and have a conversation about it. Genuine Ltd co. have nothing to worry about. It's mainly new business that suffers. 

csgohan4

As long as you pay your taxes owed and your money in your accounts are accounted, in or out of ir35 you have nothing to hide. As above the CEST tool is a good start.

https://www.etctax.co.uk/hmrc-and-data-mining/
HMRC can and will come after you if your paying less tax than they think you should be

isplumm

Mr87 said:

@uknick I think TV personalities are the exception. If we're honest, on the face of it, many of those personalities go through PSC for tax purposes alone, because it is so lucrative for them to do so. They are the ones being targeted by IR35. 

For most PSCs that are of modest turnover, the attraction of being limited is more than about tax efficiency: limited liability, separate entity, professional identity. One client I had would simply not engage on the basis of sole trader. So on balance, I think most PSCs will not be captured by IR35, because the way they operate reflects those needs. Might be wrong.

The best business is repeat business, and referrals. If you have a platform already, hopefully your client won't even worry about IR35. And if they do, you only need to lob over the CEST assessment and have a conversation about it. Genuine Ltd co. have nothing to worry about. It's mainly new business that suffers. 

Don't agree - I worked as a IT contractor via my LTD company for years - packed it up 3 years ago - if you look now, nearly all IT contractors are being classed as inside IR35, whether CEST agrees or not. Companies are panicking that they will be liable for the tax contractors should be paying, so blanket putting all inside IR35 - which means these contractors are leaving in droves.
It does create opportunity for people like me, who are prepared to take up the permie roles that are replacing them.
Thanks Mark