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GB9
27th October 2015, 13:57
If clients become responsible for putting day rate contractors through their payroll are the contractors still going to be vattable (or cattle as my spell checker put it)?

Will clients have to do VAT returns too? Or will IR35 contractors stop being vattable and thus resulting in HMRC losing all that lovely cash we process on their behalf?

DaveB
27th October 2015, 14:57
If clients become responsible for putting day rate contractors through their payroll are the contractors still going to be vattable (or cattle as my spell checker put it)?

Will clients have to do VAT returns too? Or will IR35 contractors stop being vattable and thus resulting in HMRC losing all that lovely cash we process on their behalf?

There is (currently) no plan to make clients take contractors on under their own payroll. This would end up being no different to Fixed Term Contracts. You would be an employee for a fixed term. No day rate, just permie salary.

The discussion is, partially, around whether clients should be the ones determining IR35 status by declaring the existance or otherwise of S,D or C and being liable for Employers NI on the day rate if they put you inside. You would still be charibng VAT on the day rate but be treated as inside IR35 and subject to deemed payments and the resulting tax bill.

GB9
27th October 2015, 15:41
There is (currently) no plan to make clients take contractors on under their own payroll. This would end up being no different to Fixed Term Contracts. You would be an employee for a fixed term. No day rate, just permie salary.



No you wouldn't. FT contracts have benefits that we wouldn't. There is a suggestion of asking clients to deduct PAYE from day rate contractors they believe to be under either S, D or C.

Where does that leave VAT?

jamesbrown
27th October 2015, 17:55
No you wouldn't. FT contracts have benefits that we wouldn't. There is a suggestion of asking clients to deduct PAYE from day rate contractors they believe to be under either S, D or C.

Where does that leave VAT?

It is left as a possibility, but I think (assume, hope) that it will ultimately be disregarded as unworkable for this and many other reasons. There are all sorts of profound problems raised by clients interfering in B2B supplies and processes, whether or not they are classified as "disguised", and I think the obvious approach would be to have a deemed payment operated by the contractor as normal, but with a proof/reporting requirement.

SueEllen
27th October 2015, 18:33
No you wouldn't. FT contracts have benefits that we wouldn't. There is a suggestion of asking clients to deduct PAYE from day rate contractors they believe to be under either S, D or C.

Where does that leave VAT?

Oh dear....

I see trouble ahead as even on zero hours contracts you can end up with employment rights. Some client who has a variety of workers is going to be taken to court over this.....

LisaContractorUmbrella
28th October 2015, 08:13
Oh dear....

I see trouble ahead as even on zero hours contracts you can end up with employment rights. Some client who has a variety of workers is going to be taken to court over this.....

Think you are absolutely right SueEllen - all this blurring of the lines between tax law and employment law is going to end up with someone suffering in Court - HMG can't have it both ways - either a worker is an employee (disguised or otherwise) and entitled to employment rights or they are in business and should be taxed accordingly. Can't help thinking that someone, somewhere in HMRC is trying to stuff worms back in the can :ohwell

Danglekt
28th October 2015, 10:08
Think you are absolutely right SueEllen - all this blurring of the lines between tax law and employment law is going to end up with someone suffering in Court - HMG can't have it both ways - either a worker is an employee (disguised or otherwise) and entitled to employment rights or they are in business and should be taxed accordingly. Can't help thinking that someone, somewhere in HMRC is trying to stuff worms back in the can :ohwell

I was thinking this - if the client deems you as satisfying the employment criteria and therefore inside IR35 (albeit to avoid any costs getting passed to them rather than any real employment relationship) how long till a narked off contractor slaps them with a claim for any/all their perks as an employee...and I dont see how the client could argue it, after all they have determined them as satisfying the employment criteria already by their own volition.