HMRC Contractors IR35 Decision – Almost 100% of Contractors Inside IR35

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HMRC Contractors IR35 Decision
HMRC Contractors IR35 Decision

HMRC Contractors IR35 Decision

It looks like HMRC Contractors IR35 Decision is that almost 100% of contractors are now inside IR35.

They waited till the very last minute to declare this meaning that contractors have little time to try to get themselves an umbrella company.

Many may simply pay the IR35 tax.

We have, from one source, that HMRC declare that 100% of their contractors are inside IR35.

They did this by declaring that the contract jobs are inside IR35.

From another source we hear that it is at least 95% of HMRC contractors who are now inside IR35.

So, either all, or nearly all, of HMRC’s contractors are now inside IR35.

Pay IR35 Tax or Join an Umbrella Company

They will either simply pay the tax or join an umbrella company – if that option is available to them.

It seems that in the unit that one contractor is working in, 80% of the people working on he project are contractors.

This is because it is a new area of technology for which their permanent staff do not have the skills.

According to The Register, many of the contractors who helped set this all up for HMRC have either left or plan to leave.

Contractors in Government Departments

One agency said that, overall, 40% of contractors in Government departments, companies or trusts are now inside IR35.

They can no longer use their personal service companies.

It looks as if, rather than test contractors individually, using their new online IR35 Employment Status Test, HMRC have just declared their contract jobs inside IR35.

Of course, those positions haven’t changed. They are still the same as they were and the contractors are doing exactly the same things on the projects.

Contractors May Now Owe Back Tax, Penalties and Interest

How would you feel if you are operating in a Government department who now say that they tested you inside IR35.

Also, HMRC Contractors IR35 Decision may have far reaching consequences.

Does that mean that you owe a lot of back tax, penalties and interest?

After all, they are now declaring that you operated in a wrong fashion by using a personal service company.

Perhaps throughout your contracting career you were wrong in declaring yourself outside IR35.

And HMRC know your name as the Government departments have to pass it on after you sat the test to HMRC.

There’s certainly a tax bonanza awaiting them if all those 40% of Government contractors who are now inside IR35 according to the test.

Working as Contractors at HMRC

How would you feel now, if you are working as a contractor at HMRC and your contract is now stated to be inside IR35.

HMRC certainly know your name.

It would be a very easy thing to pursue all of those contractors who work for HMRC in jobs that HMRC say are inside IR35 and who previously used personal service companies.

It would be like shooting fish in a barrel for HMRC.

Will they do it?

Comments in the section below please.

Read also Contractors Group IPSE Finished says Contractor.

End

Contractor Services

If you do need an umbrella company you could try one of the following:-

Simply Umbrella

Public Sector Umbrella Company

If you want to cut your Accountancy costs by using apps try Aardvark Accounting.

For Mortgages specially designed for contractors try Specialist Contractor Mortgages.

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4 COMMENTS

  1. Will they do it? Quite simply, no. This post is confusing and alarmist​.

    HMRC have not ruled out retrospective action (of course they haven’t) but they have stated that this is about compliance going forward and they don’t intend to undertake any mass investigations.

    The law has not changed. If you were outside IR35 before the new legislation, you’re outside now *regardless* of what a PSB determines using the tool (which by the way is no legally binding) and you would be just as likely to win a court case now as before if you are investigated.

  2. Noted a lot of people are just doing their job and making a living but if I had to make a single statement it is “karma”.

    Given the government is essentially insolvent and only operate on generosity of foreign investors who see sovereign government ability to tax (means taking money from their citizens) I saw we are screwed.

    With Brexit I’d seriously look at migration options and potentially at some point moving to a low tax jurisdiction.

  3. The news this evening that hard-pressed NHS trusts have been told that all locum doctors are defined as ‘in scope’ of IR35 is just the icing on the cake. Some doctors are just demanding a 20% increase to cover the ‘deemed’ employers Ni contributions. I guess the trusts will have to take a view on how many of their key staff they can piss off. This is especially hard for those doctors who locum across different trusts and will get double clobbered by having zero rated tax allowances applied. It is true that they will get their ‘over payments’ back when they submit Self Assessment forms in the following year but they may well regard this as extremely unfair. Just at the time when the UK Government needs them to willing to shoulder an even heavier work load.

  4. Well I’m sure the government will also be wanting to pay back all the VAT, Corporation tax and employer NI contributions paid in error to them too so I doubt very much this will happen.

    The best advice is 2 fingers to your IR35 positions and good luck in filling it with an equally qualified person (who you couldn’t manage to fill it with before you needed a contractor).
    Alternatively take a full time job after all thats exactly what you are under the new rules “an employee” and many people who choose contracting did so to get out of being exactly that.

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