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View Full Version : Govt IR35 review...better to be direct to client now rather than through an Agency



TheMrs
21st July 2015, 20:49
Not too happy with my agency arrangement tonight so got me thinking....

Many people here have commented on a separate thread that the current Govt review of IR35 may well lead to clients just saying basically "you're all inside IR35 from now on" rather than deal with the bother of sussing out who is and who isn't.

However, it occurs to me that if you are contracted direct to the end client then that relationship is no different to a commercial contract to supply multiple bodies that a large consultancy may have with the client. For example KPMG can have a contract with Tesco to provide a ton of auditors or whatever and YourCo can have a contract with them to provide one person - you. However the main tenets of the contract would necessarily be similar. So all the KPMG bods are employees of KPMG and can't pay tax twice so IR35 hokey cokey couldn't be relevant.

It just seems that agency contractors will be the easiest and earliest pickings.

This is all assuming that IR35 rules are simplified and clear and that those of us not currently inside it somehow become inside by virtue of the fact that we use the same carpet as employees or drink from the same water fountain.....you know they are desperate to call us all disguised employees even if the reality is that I've had my rate cut overnight twice in 6 months due to recession in oil industry and not a single employee at ClientCo has had likewise without a lengthy consultation period with HR and a lot of compensation.....and don't get me started on staff benefits, holiday pay, sick pay....

TheFaQQer
21st July 2015, 20:59
So all the KPMG bods are employees of KPMG and can't pay tax twice so IR35 hokey cokey couldn't be relevant.

IR35 is irrelevant because they don't own a significant share of the company.


It just seems that agency contractors will be the easiest and earliest pickings.

Based on what, exactly?

jamesbrown
21st July 2015, 21:13
Given the choice, I'd guess that most contractors would work direct now if they could, so it's moot. That said, it makes no material difference to IR35 now (the agency contract with the client is a slight additional risk), and it's unlikely to make a difference in future. If everyone in the chain becomes jointly and severally liable for any "underpaid" tax, the client will be on the hook too, and that is where the risk lies. Once they've defined a PSC, they can be distinguished from other businesses and taxed and policed accordingly (by HMRC via agents/clients).

tractor
21st July 2015, 22:48
IR35 is irrelevant because they don't own a significant share of the company.



Based on what, exactly?

And the criteria for additional taxation known as PSC has not yet been tested in court.

SueEllen
22nd July 2015, 19:21
Given the choice, I'd guess that most contractors would work direct now if they could, so it's moot. That said, it makes no material difference to IR35 now (the agency contract with the client is a slight additional risk), and it's unlikely to make a difference in future. If everyone in the chain becomes jointly and severally liable for any "underpaid" tax, the client will be on the hook too, and that is where the risk lies. Once they've defined a PSC, they can be distinguished from other businesses and taxed and policed accordingly (by HMRC via agents/clients).

The problem with any definition will be that companies of all sizes do change the number of workers and company officers they have. So I had an agency incorrectly define my company once as only having one director when I had two and other workers.

StrengthInNumbers
22nd July 2015, 20:37
To me it looks like, government is saying we don't want single people to do well for themselves. Government wants all to be employees of big companies. Big companies will be able to supply resources at great rates and shift things around but individuals will have to become employees. Tax for corporations will go down but for individuals it will continue to go up.
It's a shame we have leaders who want this but this is easy way to win.