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Could furloughing invalidate outside of IR35 claim

If IR35 means having an employment 'but for' the company, working contractors are not inside IR35

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In a previous post, I reiterated the government's guidance that company directors could also furlough.  However, where many are receiving only a salary up to the national insurance threshold, the grant entitlement will be about £575 a month.  For service sector contractors, median monthly income will be many multuples of that grant amount.  Foregoing income is not worth attempting to preserve entitlement to the grant.

Furthermore, contining work during the crisis demonstrates self-sufficiency and by extension self-employment.  If a company owner can work from home, with minimal use of client equipment and resources, managing bumpy workflows and profiting from decision making in that conetxt, on what basis is that same owner now being required to account for income under the regulation of IR35?

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By Duggimon
06th Apr 2020 08:56

I don't really understand what you're asking, but contractors working inside IR35, or outside IR35 but being re-assessed by their engagers as inside IR35, are not employees and will not be treated as employees or receive the same rights as employees, they're just taxed as employees.

That's why we have IR35, if they were the same thing as employees there'd be no need for separate legislation.

The fact that they haven't been made redundant when the employees of their engager have been furloughed doesn't translate to an argument against their IR35 status. Especially when it's no longer the government the argument is with, it's the engager, who will just turn round and say "you're in IR35 because we say so, here's why, you need to go and work for this company now".

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By Matrix
06th Apr 2020 09:01

I think the OP means if the outside IR35 status was challenged by HMRC then the fact they were still running the company may act in their favour. This has nothing to do with the off payroll rules where the engager makes the determination.

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By ComanCo
06th Apr 2020 09:32

Since the covid announcement on 21st March, the onus is temporarily lifted on the engager to determine working status. https://comanandco.co.uk/covid19#IR35-postponement

The announcement came too late for many contractors who had been moved onto payroll in anticipation of the new rules that were due to take effect on 6 April 2020.

However, for those contractors still using their company, working and thus not furloughing, this crisis adds weight to their position that they are outside of IR35.

Not furloughing is persuasive rather than conclusive evidence that a contractor is outside of IR35

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By Duggimon
06th Apr 2020 15:37

I suppose my confusion was about who it is you see requiring this additional weight for their arguments? People operating outside of IR35 will continue to do so, presumably comfortable in their determination. People put inside IR35 by their engagers don't have anyone to argue with.

I am well aware the rules were pushed back, and also well aware that by the time they were, many of the people affected had already gone to umbrella companies.

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