P35 Question 6 - Service Company
In previous years, HMRC advised that they would not target companies by saying "Yes" to question 6 on the P35.
Kate Cottrell of Bauer & Cottrell states that "This is no longer the case. If the box on the P35 is ticked to say that IR35 does not apply and it later transpires that it actually did then this is considered to be negligence and penalties apply. Worst still if wilful action is taken when ticking the boxes, penalties start at 100% of the tax lost".
How to determine a "Yes" or "No" answer
Where Contractors and Freelancers have turnover of 50% or more earned by providing their services, then the answer needs to be "Yes" to the service company part of the question.
On the second part of the question, if any engagements have been inside IR35 and a deemed payment calculated; regardless of whether other engagements outside IR35 have been undertaken, then the answer is "Yes". Only where all engagements are outside IR35 should the question be answered "No".
If you are in any doubt whatsoever, it is advisable to have a professional contract review, without one you could be leaving yourself wide open to the HMRC penalty regime.