Agent wants me to sign ESM2051 (IR35 Q) Agent wants me to sign ESM2051 (IR35 Q)
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  1. #1

    Nervous Newbie


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    Default Agent wants me to sign ESM2051 (IR35 Q)

    Could someone explain what does ESM2051 mean and if it's related to IR35?
    As most of contractors here I pay myself £8,632 salary and take the rest as dividends. Will I be able to use low salray / high dividends schema after signing the document below? I tried to re-read it multiple times but still can't get it.

    You are responsible for payments to <MY REAL NAME> and any other individuals providing services through your organisation (“Representative”), and for accounting to HMRC for the Taxes on all payments made to the Representative.

    For the purposes of this statement, remuneration in consequence of the services provided by the Representative includes but is not limited to all salary, wages, commission, bonuses and any amounts paid to the Representative for or in connection with work that the Representative has carried out for us or a client of ours.

    By signing this statement, you are confirming that all remuneration paid to the Representative in consequence of the services provided to us and our clients is treated as employment income ESM2051 - Employment Status Manual - HMRC internal manual - GOV.UK, subject to deduction of the Taxes and that you are accounting to HMRC for the Taxes.
    Last edited by rapsberry; 27th September 2019 at 15:07.

  2. #2

    Some things in Moderation

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    The clue is in the reading...
    any wage or salary paid to the worker by the PSC during a tax year is employment income. The PSC must operate PAYE on these payments and remit the appropriate income tax and NICs to HMRC at the appropriate time via RTI. Therefore this income will not come within the provisions of the agency legislation.
    They are trying to offload their (and the clients) responsibilities to your PSC by saying the you are responsible for paying the 'correct' amount of tax.

    Basically it's the cowards way of telling you that the role is inside IR35 and you must pay da HMRC man...
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
    - Voltaire/Benjamin Franklin/Anne Frank...

  3. #3

    Fingers like lightning

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    Referring to my ir35 and the public sector thread, it looks like contract reviews are not dead even if the agent says the role is outside and you are paid in an outside capacity.
    Last edited by BlueSharp; 27th September 2019 at 09:05.

  4. #4

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    Quote Originally Posted by cojak View Post
    The clue is in the reading...


    They are trying to offload their (and the clients) responsibilities to your PSC by saying the you are responsible for paying the 'correct' amount of tax.

    Basically it's the cowards way of telling you that the role is inside IR35 and you must pay da HMRC man...

    I understand this as an indicator that the end client will put everyone inside IR35 from April 2020 and by signing this form I give my agreement.

    Does it mean I’m safe to continue to pay taxes as if Outside IR35 before April? Or I have to pay “inside” taxes from the moment I sign the form?

    My contract is expected to run beyond April next year.

  5. #5

    Fingers like lightning

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    Quote Originally Posted by rapsberry View Post
    I understand this as an indicator that the end client will put everyone inside IR35 from April 2020 and by signing this form I give my agreement.

    Does it mean I’m safe to continue to pay taxes as if Outside IR35 before April? Or I have to pay “inside” taxes from the moment I sign the form?

    My contract is expected to run beyond April next year.
    Get it professionally reviewed. If I saw that clause I would treat all income as inside ir35.

  6. #6

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    Quote Originally Posted by BlueSharp View Post
    Get it professionally reviewed. If I saw that clause I would treat all income as inside ir35.
    I wouldn't.

    If unable to get the contract changed after a review, I would then ensure, once in, the role was Conducted in an Outside manner and if anyone came knocking, provide proof to that effect. This being relevant to the Contract and the Manner of Working being identical when finalising a conclusion. If the contract says one thing but the manner of working suggest another, then you're home and dry.

    Of course, a review and a change of wording is paramount but if this is the only role open to you, the above is the way I'd operate it.

  7. #7

    I live on CUK

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    Quote Originally Posted by cojak View Post
    The clue is in the reading...


    They are trying to offload their (and the clients) responsibilities to your PSC by saying the you are responsible for paying the 'correct' amount of tax.

    Basically it's the cowards way of telling you that the role is inside IR35 and you must pay da HMRC man...
    Best send them a revised daily rate.
    Quote Originally Posted by Bean
    I admit that I'm a lazy lying cretin, but so what?
    25 June 2018

  8. #8

    Some things in Moderation

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    Quote Originally Posted by simes View Post
    I wouldn't.

    If unable to get the contract changed after a review, I would then ensure, once in, the role was Conducted in an Outside manner and if anyone came knocking, provide proof to that effect. This being relevant to the Contract and the Manner of Working being identical when finalising a conclusion. If the contract says one thing but the manner of working suggest another, then you're home and dry.

    Of course, a review and a change of wording is paramount but if this is the only role open to you, the above is the way I'd operate it.
    I would get everything documented. If HMRC challenge the client then they in turn will challenge you to cough up all taxes owed for the duration of the contract (this is being seen 'in the wild' apparently.)
    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
    - Voltaire/Benjamin Franklin/Anne Frank...

  9. #9

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    What does the contract say about who pays PAYE if the determination changes during the contract period, i.e. via a HMRC challenge. Do they start deducting the money at source, will you be liable for PAYE repayment for that financial year?

    I have heard a a very strong rumour that Agents\Public Sector Clients are going after the PSC for PAYE taxes that financial year when a determination changes mid contract. Now if this rumour is true what happens if the determination was wrong x years ago and you have this clause in your contract?
    Last edited by BlueSharp; 27th September 2019 at 11:51.

  10. #10

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    All it says is that you agree to deduct the appropriate income taxes from any remuneration paid in connection with your supplies to the agent.

    Fortunately you are not paid anything in connection to the services provided, YourCo is.

    YourCo remunerates you in the form of a small modest salary in connection with your duties as company director and as a shareholder it pays you dividends as an when profit allows. Neither of these things have anything to do with the agent or the end client or the contract. You would be paying these even if you were on the bench.

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