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IR35 Accounted for incorrectly ??

I have recently taken over a couple of clients who work solely for one client, they are HGV drivers who currently work for a sole agency.

They work set hours and are told where to go and what to do, so they are clearly caught within IR35. But heres my problem their previous accountant had not told them about IR35 and was putting through the minimum salary and claiming dividends rather than putting them through on full salary. Now my client is saying that they should be treated as outside of the scope of IR35. How do i go about this now?

My other question is this... am i right in thinking that anyone that is working solely for one client, that is told where to go, what to do, cannot produce a substitute if needed is caught within IR35? It doesn't matter about what industry they are in, or if they have a contract or not?

Sorry if i am sounding thick but IR35 is really confusing me at the moment as i keep hearing different stories. 


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04th Feb 2013 17:30

The short answer is that ...

it is complicated. Yes in principle I agree that your client is probably caught by IR35 but neither you or I can possible answer definitively without a very detailed understanding of the circumstances of the work. That last sentence is approximately what I would put in to my engagement letter (along with a strong reommendation that they approach one of the experts such as Accountax to review their contract). At that point I would suggest you let your client make a decision. If that doesn't sit comfortably with you then don't take them on.

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04th Feb 2013 19:00

It comes down to the vagaries of IR35

Although IR35 should be fairly simple, it is so badly written that it can encompass almost everyone not working directly under PAYE or almost no-one. This has been demonstrated by the Professional Contractors Group having won about 1,200 IR35 cases against HMRC for about 4 losses.

Given these sorts of statistics from legally challenged outcomes it is therefore reasonable to assume the opposite and accept that your client is probably not subject to IR35, but as you are not an expert (and indeed very few are), you should cover yourself all possibilities.

In my standard introduction, after providing them with an overview of IR35, I have new clients sign a one-page disclaimer acknowledging that ensuring they are outside the scope of IR35 is a matter for them and only they can determine whether they are compliant or not.

I also offer new clients cover under our Abbey Tax policy (at reasonable rates) or request a signed disclaimer that they were offered cover, but declined and will be seeking their own cover.

Ultimately, there is no way that I can prove that a client is IR35 compliant as this can change at any moment and I can't be always looking over their shoulder. The only thing I can do is acknowledge the reality that HMRC have proven very few IR35 cases in law and protect myself as best as possible.

This is not ideal, but given the circumstances is the least-worst position that I can take.

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