HMRC Inside ir35 - tax evasion
Discussion
My current role is outside IR35 and contracted through a consultancy. I am currently working on a project, but I’ve recently been informed that my role has now been deemed to be inside IR35.
The consultancy claims they’ve found a solution to address the inside IR35 determination.
I’ve been told I’ll be issued two contracts: one inside IR35 and one outside. The inside IR35 contract will cover 39 hours per week and will pay a total of £108.20 for the month — supposedly to meet the minimum London living wage requirements.
The second, outside IR35 contract will cover the remaining payment, which will be the bulk of my contract. However, only 30 minutes to 1 hour per month will be allocated to delivering work for the consultancy.
To me, this arrangement feels ethically questionable and potentially constitutes tax evasion. While the consultancy has stated they’ve taken legal advice to support this approach, I have serious doubts about its legitimacy.
Any thoughts? If this were a valid solution, I suspect we’d see this kind of setup far more widely used.
The consultancy claims they’ve found a solution to address the inside IR35 determination.
I’ve been told I’ll be issued two contracts: one inside IR35 and one outside. The inside IR35 contract will cover 39 hours per week and will pay a total of £108.20 for the month — supposedly to meet the minimum London living wage requirements.
The second, outside IR35 contract will cover the remaining payment, which will be the bulk of my contract. However, only 30 minutes to 1 hour per month will be allocated to delivering work for the consultancy.
To me, this arrangement feels ethically questionable and potentially constitutes tax evasion. While the consultancy has stated they’ve taken legal advice to support this approach, I have serious doubts about its legitimacy.
Any thoughts? If this were a valid solution, I suspect we’d see this kind of setup far more widely used.
There are quite a few umbrella companies who offer this - while it's "legal" HMRC strongly discourage against this. They can retrospectively recover unpaid taxes when they change the law/rules in future, see the 'loan charge' structure.
https://www.gov.uk/guidance/working-through-an-umb...
https://www.gov.uk/guidance/working-through-an-umb...
Back in 2009 ish I was in a "scheme". Biggest professional regret ever.
The thing with these schemes is that they tell you they're declared to HMRC and it's all above board.
But when it all goes tits up, they disappear, usually to the caman islands.
I was also involved in our company when the IR35 rules changed and had a bunch of contractors working for me.
I'm a bit out of this arena now, but my no.1 piece of advice is that if it seems too good to be true, it almost certainly is. Keep your nose clean, it'll cost more than you save now to fix it later.
The thing with these schemes is that they tell you they're declared to HMRC and it's all above board.
But when it all goes tits up, they disappear, usually to the caman islands.
I was also involved in our company when the IR35 rules changed and had a bunch of contractors working for me.
I'm a bit out of this arena now, but my no.1 piece of advice is that if it seems too good to be true, it almost certainly is. Keep your nose clean, it'll cost more than you save now to fix it later.
Your instinct is correct - this is highly problematic as HMRC examines "the actual nature of the work relationship, not only the contract," which means they look beyond paperwork to determine your true working arrangement.
The fact that it isn't commonly seen is telling. While the consultancy claims they've taken legal advice, I would be very skeptical about this approach.
The fact that it isn't commonly seen is telling. While the consultancy claims they've taken legal advice, I would be very skeptical about this approach.
ks. And how can 39 hours per week at the living wage only amount to £108.20 for the month?Too Late said:
My current role is outside IR35 and contracted through a consultancy. I am currently working on a project, but I’ve recently been informed that my role has now been deemed to be inside IR35.
The consultancy claims they’ve found a solution to address the inside IR35 determination.
I’ve been told I’ll be issued two contracts: one inside IR35 and one outside. The inside IR35 contract will cover 39 hours per week and will pay a total of £108.20 for the month — supposedly to meet the minimum London living wage requirements.
The second, outside IR35 contract will cover the remaining payment, which will be the bulk of my contract. However, only 30 minutes to 1 hour per month will be allocated to delivering work for the consultancy.
To me, this arrangement feels ethically questionable and potentially constitutes tax evasion. While the consultancy has stated they’ve taken legal advice to support this approach, I have serious doubts about its legitimacy.
Any thoughts? If this were a valid solution, I suspect we’d see this kind of setup far more widely used.
The onus is on the Employer to ensure that the correct tax treatment is applied so i wouldn't worry about it too much. The consultancy claims they’ve found a solution to address the inside IR35 determination.
I’ve been told I’ll be issued two contracts: one inside IR35 and one outside. The inside IR35 contract will cover 39 hours per week and will pay a total of £108.20 for the month — supposedly to meet the minimum London living wage requirements.
The second, outside IR35 contract will cover the remaining payment, which will be the bulk of my contract. However, only 30 minutes to 1 hour per month will be allocated to delivering work for the consultancy.
To me, this arrangement feels ethically questionable and potentially constitutes tax evasion. While the consultancy has stated they’ve taken legal advice to support this approach, I have serious doubts about its legitimacy.
Any thoughts? If this were a valid solution, I suspect we’d see this kind of setup far more widely used.
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