IR35 letters going out to GlaxoSmithKline contractors

[PhiltheGreek]

You might well be advised to hang onto it for a few more years whilst Hector sifts through all your bins.

[JohntheBike]

The latter. If everyone is an agency employee, nobody needs IR35 insurance. And those small minority who their client agrees are outside IR35 won't need it either because the client will be responsible for the outside IR35 status. End of QDOS, end of IPSE.

For the avoidance of doubt, since I left the UK including in my current job, I've worked alongside many contractors, they're all on the agency pay roll. At least until their contract comes to an end, then they're gone. No reason it should any different in the UK. Occasionally, I do come across a genuinely self employed consultant contractor. They tend to run concurrent jobs with multiple clients, sometimes with employees of their own. I think we'll see more like this in the UK, just like the rest of the world.

I would tend to agree, unless that is the clients still insist on contractors engaging in the chain through an Ltd. I guess we will have to wait and see what happens in detail. There are going to be many scenarios, and I guess some that we haven't identified as yet.

[Lance]

I'm hearing rumours that GSK is going to start sorting out SoW for contractors and not all contractors there have received these letters, so the plot thickens around how these individuals have been targeted.

perhaps GSK have run the CEST tool in advance of April 2020 and determined that 1500 will be inside at that time (asssuming the changes happen).
And all others found to be genuinely outside.

It's speculation but it seems quite likely as they're going to have to do an impact assessment prior to April.

[ShandyDrinker]

The latter. If everyone is an agency employee, nobody needs IR35 insurance. And those small minority who their client agrees are outside IR35 won't need it either because the client will be responsible for the outside IR35 status. End of QDOS, end of IPSE.

For the avoidance of doubt, since I left the UK including in my current job, I've worked alongside many contractors, they're all on the agency pay roll. At least until their contract comes to an end, then they're gone. No reason it should any different in the UK. Occasionally, I do come across a genuinely self employed consultant contractor. They tend to run concurrent jobs with multiple clients, sometimes with employees of their own. I think we'll see more like this in the UK, just like the rest of the world.

I would tend to agree, unless that is the clients still insist on contractors engaging in the chain through an Ltd. I guess we will have to wait and see what happens in detail. There are going to be many scenarios, and I guess some that we haven't identified as yet.

I don't think you should write off QDOS and IPSE just yet. Unless people go down the MVL route, AFAIK there is still a likelihood of requiring some kind of insurance for a few years yet, even if your LTD does stop trading?

I saw a post on LinkedIn this morning that tends to suggest if an MVL has taken place, the risks of any IR35 inspection reduce significantly. Can anyone with a tax/accounting background explain why that would be the case?

[Fred Bloggs]

I would tend to agree, unless that is the clients still insist on contractors engaging in the chain through an Ltd. I guess we will have to wait and see what happens in detail. There are going to be many scenarios, and I guess some that we haven't identified as yet.

That outcome is possible in the short term, though once the normal way to employ agency workers is via agency pay roll, the thinking will change. The minority of truly independent contractors will obviously continue through a Ltd Co vehicle if for no other reason than limited liability. I expect HMRC's opinion of a 90 - 10 split between agency workers and proper Ltd Co workers to be likely near the mark. Though my own experience in other jurisdictions, I'd say it's nearer 97/98 agency workers to 2/3 truly independent businesses.

[mudskipper]

Can anyone with a tax/accounting background explain why that would be the case?

Not from that background, but my understanding is that yourCo is liable for the unpaid tax. For that debt to be passed to you personally, there would have needed to be extreme negligence. If yourCo no longer exists, then it has no money with which to pay the taxman. (Some people avoid having a company warchest for the same reason).

[JohntheBike]

I don't think you should write off QDOS and IPSE just yet. Unless people go down the MVL route, AFAIK there is still a likelihood of requiring some kind of insurance for a few years yet, even if your LTD does stop trading?

I saw a post on LinkedIn this morning that tends to suggest if an MVL has taken place, the risks of any IR35 inspection reduce significantly. Can anyone with a tax/accounting background explain why that would be the case?

granted, IR35 insurance will still be needed for a while even if the LTD is closed, in order to handle historic IR35 claims. However, I guess that situation won't exist forever.

[Maslins]

Not from that background, but my understanding is that yourCo is liable for the unpaid tax. For that debt to be passed to you personally, there would have needed to be extreme negligence. If yourCo no longer exists, then it has no money with which to pay the taxman. (Some people avoid having a company warchest for the same reason).

Yup, basically this. It's a whole extra step for HMRC to argue not only that the company had the PAYE liability, but that the director should be forced to pay it personally.

There has been a school of thought that contractors should close their companies and restart every few years. Not from an MVL/capital gains manipulation perspective, but more to periodically bury old contracting work to get a clean slate for IR35.

[jamesbrown]

Yup, basically this. It's a whole extra step for HMRC to argue not only that the company had the PAYE liability, but that the director should be forced to pay it personally.

There has been a school of thought that contractors should close their companies and restart every few years. Not from an MVL/capital gains manipulation perspective, but more to periodically bury old contracting work to get a clean slate for IR35.

Agree with this first point. On the second point, agree with that too as a statement of fact, but this would fall within the scope of the TiS and prevent a capital distribution (regardless of ER), so there wouldn't be much tax incentive to do it, which you also allude to, I think.

OTOH, if there were to be a successful transfer of debt, it would be more likely to happen when it appears that the contractor were precisely motivated by that chicanery. Personally, I think regularly opening/closing companies is not a good look, creates some additional risks (by creating an event/hook for inspection, as a minimum) and mitigates none (for anyone reading that might be considering it).

[Bernadette2you]

The couple we've seen have been addressed to the PSC, no mention of the personal name of the director/shareholder.

I do worry that this could lead to the unfair situation where two contractors did the same role, one has QDOS/IPSE/whoever on their side and scare HMRC off with a swift rebuttal, whilst the other doesn't and caves.

Hi, I'm one of the contractors that have received this letter and it is addressed to the PSC. There are two of us working for the same PSC, both with GSK contracts (coincidently - we are usually at different places) - different departments. The HMRC then gave my name as the contractor they were writing to, not my business partner.

Getting through to HMRC isn't easy mind!!