UKTECH seminar told IR35 penalties will be mild for the diligent

From feedback gathered on the day and subsequently, those who attended last week’s UKTECH seminar ‘Opportunities from change in the contracting market’ felt the event was very worthwhile – many left with plans for positive future actions.

The seminar consisted of brief presentations examining the legal, accounting and business implications of changes in the contract market, including the latest views after the JR hearing. Working on two levels, these issues were covered in detail, but also from a helicopter view, looking at the bigger picture. Regular UKTECH contributor Kevin Miller explained the necessary financial “detail” and passed on tips to the audience of independent contractors, accountants, agents and clients. The emphasis throughout the day was how to deal with the uncertainty while managing the business: year-end strategies, deemed payment calculations, status issues and P35s.

Tony Askham, of solicitors Bond Pearce spoke about his work on the PCG legal team and referred to specific employment status case law. UKTECH Editor Andy White, talked about the larger business of contracting, and the methods and aptitudes he believes are necessary to grow a business into a successful enterprise. As a business grows, IR35 becomes just one area of uncertainty in business – everyone agreed that entrepreneurs should not make critical business decisions just based on tax issues.

For many, the seminar offered an opportunity to pose questions to the “expert panel”. Perhaps most surprising was the message from two of the expert panellists, Dave Smith of Accountax and Steve Greenwell of Qdos. Having been encouraged to view their businesses as being outside of IR35, many contractors were naturally cautious of the implications of the Revenue deciding the opposite – particularly with the Revenue threatening “penalties”. Both experts are ex-Revenue inspectors and agreed that in truth as long as businesses can show they have genuine reasons for believing they are “not caught”, then penalties will be very much less severe than implied by the IR. Only those who chose to ignore IR35 will feel anywhere near the full force of the Revenue’s penalties.

By taking a “necessary and reasonable care,” such as using an independent advisor to provide a contract review, businesses can show they have made a decision to be outside of IR35 based on professional advice. Even businesses that receive a “marginal fail” review are entitled to act as not caught if they believe there is something happening in their business which the professional advisor may have missed – or something they have put in place since the review – or simply because the advisor may have taken a pessimistic view. Whatever the circumstances, Revenue penalties may only be interest (around 7%) on late payments and are likely to range from 10% to 40% penalties – depending on negotiations.

The panellists also gave advice to a range of questions regarding completing P35s and other forms – all agreed that it was best *not* to approach the Revenue for an opinion on a contract, as this merely flags up that you may now or in the future risk being a deemed employee.

Based on feedback from attendees and requests into the site, UKTECH is considering extending these seminars to a road show, with sessions proposed for the following locations:

Aberdeen

Edinburgh

Leeds / Manchester / M62

Birmingham

Thames Valley

North London / Cambridge

M3 / South

In each case, seminars will only take place if we gain sufficient support for each particular venue (we will email UKTECH registered readers for this).

Seminars will take place after Easter and in plenty of time for the May 19th deadline for P35 completion.

We have invited those who attended to provide additional feedback to the seminar. Many felt that the delegates pack provided useful guidance.

"The tips regarding penalty details were particularly useful to me," said one delegate,

"IR35 has turned things upside-down for me. I think I might also get a second opinion on a couple of contracts from Qdos".

Another commented: "I plan to have a long talk with my new accountant about some of the things I have heard here today."

Mark Roderick