Reply to post: Re: how to scare people

20% of UK businesses would rather axe their contractors than deal with IR35 – survey

d3vy Silver badge

Re: how to scare people

"There is no change in legislation apart from doing the IR35 assessment is a mandatory thing. Obviously all the bullshit you can read on the internet is just to scare people and it's why media are used by HRMC to do that."

No, there is a change. The change is who makes the determination.

At the moment it is up to the contractor to decide whether they are inside or not, normally by having a company like QDos review their contract and working practices, if we make the wrong decision and get investigated we have to pay back taxes and probably a fine.

However from April the client will need to make the decision, they are faced with two options:

1. Say the contractor is inside IR35

In this instance the contractor is required to pay themselves their full day rate as a salary with all of the tax liabilities that entails.

2. Say the contractor is outside IR35

In this instance the contractor can continue to operate their business as normal and remunerate themselves in whatever way they see fit (Within the law obviously).

However (And this is the bigger bit of the change that people seem to miss) IF the client chooses option 2 and the contractor is outside IR35 and then gets investigated and HMRC decide that they really should be inside IR35 then the CLIENT is liable for the back taxes not the contractor.

So the client has really two options :

1. Declare the contractor inside IR35 and have no liability for their tax.

2. Declare the contractor outside IR35 and potentially get a bill for many (*MANY*) thousands of pounds a few years down the line.

Which do you think they are going to take? Ill give you a hint... its the subject of the article.

Then to compound the issue the HMRC tools have been shown to be unreliable and they guidance isn't due to be made available until March next year, a few weeks before the legislation comes into effect.

Its an utter shit show.

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