One of the unforeseen consequences of forcing contractors out of their limited companies and onto the payroll is their fear of retrospective action from HMRC. While end-clients apparently assumed that contractors would have little choice but to comply with an inside IR35 status and non-negotiable terms, contractors’ mistrust of HMRC has thrown an additional spanner in the works of the off-payroll debacle.…
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HMRC has launched preliminary IR35 investigations into Transport for London (TfL). The public sector organisation was approached by HMRC, who asked for information about its limited company contractors.
There are fears that this is another fishing exercise that could result in an outcome similar to that of NHS Digital.…
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In the event of an IR35 enquiry, HMRC will ask to see copies of the written contract. Although it’s common practice for them to dispute paper contracts as ‘contrivances’, it’s crucial that contractors take steps to ensure that the information presented in their contracts is consistent.…
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There has been considerable debate over the introduction of off-payroll working rules in the public sector, which are also set to apply to the private sector by 2020. The changes place the responsibility for determining whether IR35 applies to a contract with the government organisation that is paying the contractor.…
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The Chancellor’s budget announced that off-payroll rules will hit the private sector in 2020. Amidst uncertainty over Brexit, there are widespread concerns that the reforms will damage business and weaken the economy at a critical time. ContractingWise takes an overview of the off-payroll developments to date.…
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Mutuality of Obligation or MoO is a feature of employment law that relates to contractual agreements. In the simplest sense, it refers to the obligation of an employer to provide work and pay for it, together with the obligation of the employee to personally do the work.…
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Following the invitation by HM Treasury to submit a Budget representation, the Institute of Chartered Accountants in England and Wales (ICAEW) have released their suggestions. In their submission, they state that there should be “no new tax policy initiatives” in the Autumn Budget.…
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In the event of an IR35 inquiry, HMRC will attempt to establish the true relationship between the contractor and the end client in order to determine employment status. As many contracts are generic, the investigating officer will often place more emphasis on what’s known as the ‘hypothetical contract,’ formed by the impressions they gather about the day-to-day working practices of the contractor while on a given assignment.…
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A right of substitution clause states the contractor’s right to send a replacement in their place if they are unable to work on the contract. While having a right of substitution clause in your contract won’t guarantee that you’re outside IR35, it’s part of an important set of factors that can help to prove your self-employed status.…
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The prospect of an IR35 investigation is sure to unnerve any contractor whose fees are paid through their own limited company. Even if your tax affairs are entirely in order, dealing with HMRC investigators can be a serious distraction and eat into time you could be spending on clients and although you may be confident that you can prove you are truly self-employed, there may still be a risk that HMRC disagrees and demand ‘unpaid’ taxes and a possible penalty.…
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