Navigating strong currents, needs an expert pilot and strong stomach

30th August, 2019

Navigating strong currents, needs an expert pilot and strong stomach

Sail on

Are you a lucky recipient of HMRC’s letter to contractors working at GSK?

Do you work at another “Big Pharma” – e.g. Astra Zeneca? Might they be next?

Want to know what comes next and how to prepare?

Join us on a voyage that may surprise you.

What we know is that HMRC has been preparing a campaign for some time (their template letter is from May 2019) to question the status of contractors in the pharmaceutical industry. What we don’t know is why this industry? Nobody is sure, although there are suggestions that HMRC’s model of the sector suggests it has a higher risk of contractor non-compliance.

(Nobody is quite sure what non-compliance means either, but it’s a label used by HMRC when they see an opportunity to “maximise revenue”).

Flag it up

If you have a letter you are at the source of a long and winding river in which it is easy to drown and very difficult to climb out of. Tempting as it is to listen to guides who say that the channels HMRC suggest are false and can and should be ignored – that is unwise.

To ignore the letter is to allow it to achieve just as much as paying up on HMRC’s claimed (but unseen and untested) evidence. No response will be seen by HMRC as “evidence” of something to hide. This will place you on a list of those to be followed up on. You therefore need to respond and preferably within the time given, i.e. 22^nd September 2019.

Life boat

It may be that you have already insured your IR35 position. If so, use it. We’re unsure if those who have offered such policies will regard the letter as a trigger for a claim, but we would be surprised if they were not prepared to assist. We very much consider the the main players here are reputable and can be regarded as having integrity. That said, there is going to be a tsunami of claims soon and getting onto their systems sooner rather than later is sensible.

If you are not insured, look to your existing agent. Do they have the resources to chart their way across what will be deep waters? Can they handle multiple claims or is their strength more basic bookkeeping and general accounting? Do not allow yourself to be stranded mid channel if they start with confidence but lose their way as their crew is not adequate.

If this is your situation, seek experts. IR35 is difficult – it’s a whirlpool of sometimes conflicting currents and flows and the smallest item can be important. Beneath it however lurks the Kraken and it will reach out to pull you under unless you can stay afloat.

Staying on top of the water requires the protection of a sturdy vessel, a crew and a captain who knows his/her way. A captain who can judge the wind, the waves, the tides, the mood of the harbour master. Being wrecked because of another’s error is still wrecked.

Captain and crew

Enough nautical nonsense. All this means: question your agent. If you have any doubt at all, find a specialist in IR35. That does not mean one who will offer you a lifeboat in the shape of a certificate or an assurance. Sadly HMRC has punctured all of those and only a Tribunal can now issue working versions.

HMRC claim that their evidence points towards an inside IR35 decision. That may have as much to do with post April 2020 positioning as anything else, but may have seen them use their infamous CEST weapon. We all know that is flawed but one way that HMRC can claim it is valid, is to subject people to its charms and say “there was no challenge”. CEST is flawed – deeply flawed. As a life jacket here it will be as useful as a brick.

You will see “fighting groups” or “action groups” or similar form. These may offer some help in that there are some common paths to that safe harbour. This is however very much an individual journey and whilst HMRC may claim that you are the same as your crew mate, that may not be case once a proper examination is conducted. There is no one size fits all here.

The key advantage of groups is usually cost. There will be some savings, but perhaps not significant ones.

Finally, don’t spoil the ship for that ha’peth of tar.

See the cost of a defence as an investment in your future, either by protecting your rewards from the past or preparing you for new voyages.

We are sure that almost all those genuinely outside IR35 will find their way home unscathed, but fighting off HMRC’s marauders and staying on course will be necessary.

Chose you crew and captain wisely.