egos® –
the IR35 services page
Note: the IR35 legislation is now to be found in
the Income Tax (Earnings & Pensions) Act 2003 sections 48-61 – copies can
be found
here.
Comment on the Dragonfly case (Sep 2008)
The Egos detailed IR35 pages – a thorough examination of the legal
issues
Services offered to Contractors
Agency contracts, and clients' own
contracts –
pre-signing review and amendments
Direct contracts -
drafting
Opinion on IR35
status of existing contract / working arrangements, taking into account the latest legal developments,
and the background of your
business (and including suggestions focused on your particular situation)
for improvement
Preserving evidence of the reality –
the
Confirmation of Arrangements
The IR35 position of the income from a contract
depends on the overall picture created by the reality, viewed against the
background of the obligations and responsibilities laid down by the contract,
and with that in turn viewed against the overall background of the business
carried on by the Contractor.
PAYE Audit support Increasingly,
Contractors are finding themselves subject to PAYE audits. Backtaxes if you are found to have accounted
wrongly for IR35 can be crippling to any Contractor – let alone the potential
penalties. Conversely, paying tax under
IR35 if you are not in fact liable to do so is throwing a large amount of money
down the drain. It’s crucially important
to (a) take the right decision on whether or not to position yourself inside or
outside IR35, and (b) if you choose that position to be outside, to do
everything you reasonably can to secure that position.
IR35 cases –
case index
Services offered:
For
Contractors:
Agency
contracts, and clients' own contracts
If you are about to take a new
contract, we can
review its terms, and deal
with IR35-related changes in the course of the review
We will consider the overall picture (ie the contract
– document, and reality - viewed against the background of your business as a
whole), and we will give our clients the best and most accurate opinion and
risk assessment that we can. We will do
our best not to err at all – whether on the side of caution, or otherwise –
since we believe that our clients will be in the best position to take their
own decisions once they have proper advice on their whole situation; and that advice is what we aim to provide.
Direct
contracts
If you have the opportunity to work
directly, we can
draft a suitable contract
for you.
Opinion
on IR35 status of existing contract
Reasoned written
opinion, based on the currently understood principles as laid out in the most
recent case law. Cost £200.00. This is the one you are likely to need for
your year-end accounts, and will also be sufficient for audit purposes.
To proceed we'll need
a full copy of the contract (email, or fax to 01534-729988), and your replies
to a
questionnaire which you can
download, or which we’ll email on request.
The IR35 position of the income
from a contract depends on the overall picture created by the reality, viewed
against the background of the obligations and responsibilities laid down by the
contract, and with that in turn viewed against the overall background of the
business carried on by the Contractor.
It is therefore important both to establish what the
reality in fact is, and (so far as practicable) to preserve the evidence of
that.
Certainly if they investigate, determining what the
reality actually is will be one of the first things the Revenue seek to
investigate. This can give rise to
problems – particularly where the Contractor is unable to provide anything,
they may well seek direct contact with the Client, often by telephone. This in turn means that they are making up
their minds, on the basis of a conversation to which you yourself were not a
party, and on the basis of information you have not yourself been told (and are
therefore in difficulties in arguing with) – and that information may have been
given to them by someone who had no actual knowledge of what happened in
relation to your contract, and is simply replying based on ignorance and/or
assumption, rather than hard fact. The
trouble is that if the Revenue are told what they want to hear, you then have a
much harder task in persuading them that they have been misinformed.
What is emerging as a useful way to preserve evidence of
the reality is the form of Confirmation of Arrangements agreed between the
Revenue and the PCG. That form itself is
however less than perfect, and contains some ‘trick’ questions, where a reply
made without full understanding of all the issues may be unduly
prejudicial; the range of multiple
choice answers the form provides is also limited, as all of these are often
less then accurate. Not taking all steps
to complete this form in the best way risks losing a valuable opportunity to
secure an ‘outside IR35’ position, and in some cases may literally be something
that makes all the difference.
Drafting a Confirmation of Arrangements in order to give
the best support to an ‘outside IR35’ position can therefore be somewhat of an
art in many situations, and it may be better to have the form expertly
drafted.
We can offer this service, and if you would like to
pursue it we would need from you (at a time when the reality is clear) (a) a
copy of the contract as actually signed, (b) your replies to our own
questionnaire
which you can download, or which we’ll email on request, and (c) your
own first draft of the Confirmation of Arrangements (a blank of the form is in
the questionnaire).
Cost: at present
this is a new service offered by us; at
present it is offered for a fixed price of
₤200, or
₤175 if requested at the same
time as an IR35 Opinion (because some duplication of work is avoided if done at
that time).
PAYE
audit support
Increasingly,
Contractors are finding themselves subject to PAYE audits. Back taxes if you are found to have accounted
wrongly for IR35 can be crippling to any Contractor – let alone the potential
penalties. Conversely, paying tax under
IR35 if you are not in fact liable to do so is throwing a large amount of money
down the drain.
1
do all that is necessary to get and
keep your house in order on an ongoing basis – don’t play the ostrich and
kid yourself that it can’t happen to you – it can, and quite possibly it
will; and
2
if you do get notice that the Revenue
intend to carry out a PAYE audit, if you possibly can, get proper advice straightaway –
don’t wait until after the Revenue’s visit before doing so
We can draft new
IR35-friendly standard terms of business for you, taking into account the way
in which you choose to do business, and the things that help to
make your own business unique - and by doing so, we can help you to gain
additional business and market share from those who are not prepared to make
these changes.
If
you think we can help,
mail us
and we'll discuss it.
No liability is
accepted for any inaccuracy in the information in these pages -
see
full disclaimer
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