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Is your business at risk? The test: Part 3

Part 3

The following tests ask a Yes/No question. If you answer yes, you score points. At the end the total number of your points decides which category you are in.

  • 0 – 10 Points – High Risk
  • 10 – 20 Points – Medium Risk
  • 20+ Points – Low Risk

Your answers must be supported by evidence about your company.

 

9. The Customer Risk Test (Score – 10 points)

Have you been in a position where your company has been unable to recover payment:

a)      For work done in the last two years

b)      More than a tenth of your yearly turnover?

Evidence

–          Accounting records demonstrating write-offs

–          Copies of letters and emails from intermediary & end client

–          Copies of letters and emails describing legal action for recovery

 

10. The Invoice Test (Score – 2 points)

Do you invoice clients for work carried out before you are paid, and negotiate terms of payment?

Evidence

–          Records of invoices

–          Copies of letters & emails about billing

 

11. The Right to Substitution Test (Score – 2 points)

Does your business have the right to send a substitute?

Evidence

–          Clause in contract

–          Information about who would supply the substitute

–          Information about who would be responsible for the substitute’s performance

–          Details of who would pay the substitute

–          Description of what level of veto the end client has

 

12. The Replacement Worker Test (Score – 20 points)

Have you employed someone in the last two years to do work you have taken on?

E.g. sending someone to work instead of you, or sub-contracting.

Your business maintains responsibility for the work and payment to the replacement.

Evidence

–          Details of end client

–          Information about who was hired

–          Description of why the substitute was hired

–          Details of who was responsible for finding/paying the substitute

–          Payment terms

–          Audit trail of payment from end client to intermediary to substitute.

 

Source: http://www.hmrc.gov.uk/ir35/guidance.pdf

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