If you are a contractor right now and you are concerned about the new IR35 rules. Then truly you need to be, because it has a couple of problems within it that you should be aware of.
The biggest one which I want to talk about today very briefly is the continuation of your current contract.
In your current contract if you believe you are outside of IR35 and under the current legislation, the personal service company, the contracting company, your limited company, where you are the only person in it doing the work makes a decision whether you are in or out.
And quite often, we’ve had clients who make the decision that they are outside of IR35. And hence don’t have to payroll all their income.
Now, if you are under that position and just say you’ve been with a contract for three months, nine months, 12 months, it doesn’t matter if it’s longer than a month or two months. And you’ve been outside IR35 and your new company.
Your new contract from April the 1st or April the 6th, suggest that you should be inside IR35 because now if you’re working for a medium or large company, you are no longer the judge of whether you are in or out.
Then, what happens is, you have a problem because now the same contract, the same working environment, the same job, if you like, the same work that you’re doing is considered in when you had considered it out.
Now, if you follow my thinking on this. The inland revenue has the great opportunity and easy opportunity being as aggressive as they are to collect more tax, to go back and say, well, if it is in now than it was in then.
And so we want to come to you for the extra tax and national insurance, and that can be a lot of money.
So my tale for this short video is to be aware that you have an opportunity to get yourself in trouble just by continuing the contract. If the people above you, the agency, the higher end client, if you like, they’re a medium or large company, has to make that judgment.
They’re the ones who are going to get you into trouble if you keep the same contract. And, you know, just in the next video, we’re going to talk a little bit about whether they adjust the rate, what happens then.
But the first problem is they’re giving you evidence that your contract is now in, when you thought it was out.
And the revenue can go back and say, well, if you’re in now, you’re in then, let’s collect the tax please, and the penalties and the interest.
So there is, and then while they’re at it, why don’t they look at all the other contracts. Anyway, that’s it for now.
This is Gordon, on IR35 again. Oh my God, will it ever end. Speak to you in the next video.
Take care. Goodbye.
