1..2...Hector's coming for YOU

[Malvolio]

It's worth pointing out the £600,000 HoL case for Arctic Systems was aimed at recovering a little over £7000 of tax... Proportionality doesn't appear to be a parameter.

[Bel]

Originally Posted by The SMG

Bel, do you think there's a cut off point (time / money) where HMRC decide NOT to investigate? For example, if an enquiry is only likely to recoup, say £3,500 for a 7 week assignment, do you think they'd actually bother?

To tell you the truth, I don't know the answer to that, so I don't want to mislead you. Perhaps one of the experts do? What I do know is that the government plan to put £1 billion of taxpayers money into investigating - taxpayers - for tax avoidance. And there's Q6 to consider too. That doesn't bode well for owner managers.

But I doubt that you'd find out what HMRC's internal policy decisions are for carrying out any tax reviews and investigations - they would probably be secret anyway. Otherwise, tax payers would just find strategies to mitigate the effects of being investigated over and above what they'd sanction (isnt' that why you're asking? . I'm inclined to assume that HMRC deliberately take a blietzkreig approach so that they can keep us guessing and take us by surprise and, of course, scare people into coughing up under IR35 rules, whether they're inside or not.

I do know that the length of an engagement is given considerable weight, according to my source. But that has nothing specifically to do with HMRC's decision to investigate in the first place, because they don't know how long the engagement is when they first inform you/accountant of their intentions to investigate. Just because you made a lot of money that shows up on your tax return - payment of high divis/low salary etc, that could mean that you took on many engagements, not just one.

But I wouldn't take that as meaning anything more than it is: there is more chance of you slipping up, getting sloppy about your working practices, coupled with hirers exerting pressure on you to work under their control because time has taken it's toll and you've cozied up to the staff too much.

It certainly has nothing to do with a long engagement automatically = caught. If you work to deliverables and keep a stranglehold on your working practices, an engagement could last years and you still wouldn't be caught.