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OwlHoot
10th November 2015, 18:09
From the Daily Mail

2015-11-07 Osborne to close tax loophole of staff being paid 'off the books' (http://www.dailymail.co.uk/news/article-3307960/Osborne-close-tax-loophole-staff-paid-books-follows-furore-BBC-stars.html)



Tens of thousands of middle-class professionals face a major tax hike as George Osborne clamps down on the use of controversial ‘personal service companies’.

The Chancellor is considering new measures that will force 90 per cent of those employed ‘off the books’ to go on the payroll of the organisation they work for.

The move, which could be announced in the Chancellor’s autumn statement later this month, is expected to raise up to £400million a year. ...

Probably a "KUATB" post, but not really bothered. Some of us don't avidly read every single post here, or indeed rarely anything outside General.

Come to think of it, I vaguely recall a recent thread title that mentioned £400 million a year.

Seems an utterly paltry amount to risk severely pissing off hundreds of thousands of prosperous voters, many if not most of whom are probably naturally inclined to vote Tory.

topgazza
10th November 2015, 18:15
My new shiny MP, first time as a MP, is horrified by these suggestions. He claims so are others . He is ex Lloyds Bank director level senior accountant and knows how valuable contractors are. Frankly it seems impractical to expect employers to take on staff on that basis unlees they intend to treat us as "zero hour employees" which in effect it is. Would it mean we would not longer be Ltd and not liable for corp tax or employers NI.... the whole things bizzare

OwlHoot
10th November 2015, 18:32
My new shiny MP, first time as a MP, is horrified by these suggestions. He claims so are others . He is ex Lloyds Bank director level senior accountant and knows how valuable contractors are. Frankly it seems impractical to expect employers to take on staff on that basis unlees they intend to treat us as "zero hour employees" which in effect it is. Would it mean we would not longer be Ltd and not liable for corp tax or employers NI.... the whole things bizzare

Any time the Government seems intent on pursuing a policy that will inevitably cause them far more electoral harm than good, you can be absolutely sure the EU is behind it.

In this case, no doubt, it is part of some secret EU tax harmonisation project, perhaps one they rashly signed up to years ago without much thought for the implications. We all know many EU countries loathe contractors even more than the present UK government if that is possible. :eyes

If not then it is hard to imagine how this government could be so unfathomably stupid to proceed with these changes, however desperate they are for tax revenue.

MicrosoftBob
10th November 2015, 18:37
Any time the Government seems intent on pursuing a policy that will inevitably cause them far more electoral harm than good, you can be absolutely sure the EU is behind it.

In this case, no doubt, it is part of some secret EU tax harmonisation project, perhaps one they rashly signed up to years ago without much thought for the implications. We all know many EU countries loathe contractors even more than the present UK government if that is possible. :eyes

If not then it is hard to imagine how this government could be so unfathomably stupid to proceed with these changes, however desperate they are for tax revenue.

Perhaps someone high up in Government has been offered cushy directorships with the big consultancies if he pushes it through, it wouldn't be the first time that thoughts of a post political career have changed policy decisions

diseasex
10th November 2015, 18:44
And how would that work exactly?
Company A has 10 developers. Delegates 1 of them to company B to help them and charges daily fee
Company B takes that developer on payroll? Laughable

Andy2
10th November 2015, 18:59
Current government's policy seem to be geared towards eliminating independent contractors and benefiting big consultancies who will fill the gap. The labour party was better for contractors. We voted tories for our own demise.

TestMangler
10th November 2015, 19:02
Current government's policy seem to be geared towards eliminating independent contractors and benefiting big consultancies who will fill the gap. The labour party was better for contractors. We voted tories for our own demise.

But arseholes, like DA, told us that the toriez iz da party of small bizniz and hard working families, innit.

Don't tell me the blind right wingers were lying, pleeeeassse.

northernladuk
10th November 2015, 19:03
Probably a "KUATB" post, but not really bothered. Some of us don't avidly read every single post here, or indeed rarely anything outside General.
.

Welcome back to the dark side. We've a section dedicated to just this so you don't need to read every post and spend too much time over here ;)

darmstadt
10th November 2015, 19:13
My new shiny MP, first time as a MP, is horrified by these suggestions. He claims so are others . He is ex Lloyds Bank director level senior accountant and knows how valuable contractors are. Frankly it seems impractical to expect employers to take on staff on that basis unlees they intend to treat us as "zero hour employees" which in effect it is. Would it mean we would not longer be Ltd and not liable for corp tax or employers NI.... the whole things bizzare

Would this be the same Lloyds Bank that gives take it or leave reductions in rates to contractors?

BolshieBastard
10th November 2015, 19:19
We voted tories for our own demise.

Speak for yourself, please.

Zero Liability
10th November 2015, 19:21
But arseholes, like DA, told us that the toriez iz da party of small bizniz and hard working families, innit.

Don't tell me the blind right wingers were lying, pleeeeassse.

I think the choice was pretty much rape with or without the lube, but I'm not entirely sure which of the two we actually got.

TestMangler
10th November 2015, 19:22
I think the choice was pretty much rape with or without the lube, but I'm not entirely sure which of the two we actually got.

Looks like, if lube was used, it was poor quality and drying rapidly.

Gumbo Robot
10th November 2015, 19:32
I will never, ever vote Tory again.

Zero Liability
10th November 2015, 20:03
Looks like, if lube was used, it was poor quality and drying rapidly.

It was only ever made for pigs' heads.


I will never, ever vote Tory again.

At least my conscience is clear in that respect. :D

d000hg
10th November 2015, 20:06
No.

teapot418
10th November 2015, 20:22
At least my conscience is clear in that respect. :D

Ditto. Although it affords me little cheer.

Unix
10th November 2015, 21:22
As per usual the article reveals the truth near the end after the sensational headlines.

"A contractor who uses an agency to find work with a range of IT firms for short periods will still be able to classify themselves as a personal service company. But a middle-manager brought in to do maternity leave cover at a firm will in future have to go on the firm’s payroll. The new rules will apply to both private firms and the public sector, where there have been numerous examples of senior staff paid ‘off the books’ in recent years."

So IT contractors doing technical/PM work on projects are fine. There is no way this will work, it will be just another box you have to tick on your contract from the agent.

Are you a real contractor? YES/NO

HTH

mudskipper
10th November 2015, 21:24
As per usual the article reveals the truth near the end after the sensational headlines.

"A contractor who uses an agency to find work with a range of IT firms for short periods will still be able to classify themselves as a personal service company. But a middle-manager brought in to do maternity leave cover at a firm will in future have to go on the firm’s payroll. The new rules will apply to both private firms and the public sector, where there have been numerous examples of senior staff paid ‘off the books’ in recent years."

So IT contractors doing technical/PM work on projects are fine.

HTH


Yes, if the short term work is < 1 month.

Dallas
10th November 2015, 21:26
Current client workarounds include bumping line managers and cost centres, it's in their interest to have projecty peeps off the books for their year end, they will find a way if required.

Unix
10th November 2015, 21:26
Yes, if the short term work is < 1 month.

So are you saying all companies using contractors will have to hire them as permies? This is never going the fly will cause chaos and will be U-Turn number 294 by Ozzy

EmbeddedBob
10th November 2015, 22:08
Less than 1 month...WTF? Have any of these people done technical work!

I see, they cant cut tax credits because that would upset people who arnt productive and who would moan because they could no longer afford a Sky subscription, so they come after people like me working silly hours a week who could be let go at any time.

And why are Builders a special case?

Lube is mentioned in this thread but it doesn’t matter any more; Ive been raped so many times by government policy in the past (uni fees, housing policy!!!, multiple permi employment...etc) that they probably wownt even touch the sides.

AtW
10th November 2015, 22:08
Any time the Government seems intent on pursuing a policy that will inevitably cause them far more electoral harm than good, you can be absolutely sure the EU is behind it.

Wrong.

You can be sure that Govt will blame EU for the policy, but in reality in 90% of cases it would have little to do with EU.

LisaContractorUmbrella
11th November 2015, 08:22
I realise that we are dealing with HMG and HMRC and therefore this statement may not be wholly appropriate but DON'T PANIC

This has been reported in 2 newspapers but as they are the Guardian and the Daily Mail, I am not sure what's reported is wholly reliable. There has only been a discussion on IR35 to date and I would be surprised if anything this drastic were introduced without a consultation - that would be unusual. It may be that, after 1 month, a declaration would have to be made on IR35 status rather than a contractor having to become part of the workforce of the client - something like this could then be reported via the Agency Reporting Requirements which would make policing IR35 much easier for HMRC. This is just conjecture and I could be wrong but IMHO it would be more typical of HMRC and HMG than to force everyone into permiedom as that would not sit well with big business.

meanttobeworking
11th November 2015, 08:37
Your reply makes total sense Lisa, but the one thing that strikes me as odd is IPSE's response which is to email members with a template letter informing them to write to their MP. Either they know something we don't, or they're issuing the advice based on those same news articles. Neither explanation reassures me much.

LisaContractorUmbrella
11th November 2015, 08:44
Your reply makes total sense Lisa, but the one thing that strikes me as odd is IPSE's response which is to email members with a template letter informing them to write to their MP. Either they know something we don't, or they're issuing the advice based on those same news articles. Neither explanation reassures me much.

IPSE may know something we don't - perhaps someone could ask them :happy

Milkyway
11th November 2015, 08:56
I realise that we are dealing with HMG and HMRC and therefore this statement may not be wholly appropriate but DON'T PANIC

This has been reported in 2 newspapers but as they are the Guardian and the Daily Mail, I am not sure what's reported is wholly reliable. There has only been a discussion on IR35 to date and I would be surprised if anything this drastic were introduced without a consultation - that would be unusual. It may be that, after 1 month, a declaration would have to be made on IR35 status rather than a contractor having to become part of the workforce of the client - something like this could then be reported via the Agency Reporting Requirements which would make policing IR35 much easier for HMRC. This is just conjecture and I could be wrong but IMHO it would be more typical of HMRC and HMG than to force everyone into permiedom as that would not sit well with big business.

But we do seem to accept as truth whatever that paper says on migration and about immigrants though :)

Anyway, I have decided on two things so far:

1. Will never vote tories ever again (backstabbing bas***ds); but I don't know who else is an option now! (anybody that really backs entrepreneurism, small and medium businesses, wealth creators (for the UK in the grand scheme of things, and personally too of course), etc? - Answer is None! I thought so!!!!

2. Very importantly: To Vote to be IN EU.
Given all these mess that tories are doing right now (labour can only do worse with more taxes if they come into power), especially the kind one month limit to be a consultant (thanks fuc**ng Gideon), I would want to keep my mobility option open so I can venture into the rest of the EU for setting up business, work etc.
At this rate, if we vote to leave EU, we are stuck with Gideon and Labour for ever, and there wont be 4.6 million extra jobs (for ex-contractors) :( to go around, not to mention the inflow of offshore consultancies bringing in their lot too.

dynamicsaxcontractor
11th November 2015, 09:25
If this goes ahead the UK economy will suffer. The projects I am normally working on lasts for 12-24+ months, it could be quite funny to see how it would work with 24 handovers per role in a project.

Might be a good idea to move abroad before the UK leave the EU. Maybe its time to set up a guide for different countries around the globe to see which ones are contractor friendly.

MrMarkyMark
11th November 2015, 09:37
Less than 1 month...

Gonna really fly well at IBs, financial, or other security clearance type, required, roles.
The clearance will take longer than the actual allowed engagement.

:eyes

pjt
11th November 2015, 09:40
Maybe its time to set up a guide for different countries around the globe to see which ones are contractor friendly.

I'd be very interested to see something along those lines. Lets be honest we have a massive target on our backs and its not going away until contractors are wipes out. I don't see any signs of the government softening their stance the latest reports seem to suggest they are actually looking to get worse! I've pretty much got it in my head now that my company has until April 2017 at best before I wind it up. At that point who knows either do something completely different, move abroad or work abroad.

My current niche does not fit a permie role so I suspect I'll either have to go work for a consultancy. I'm not spending the rest of my career being told what I'm doing and in what god awful part of the country they think I can make them the most money in! Been doing this too long to go back to that.

jamesbrown
11th November 2015, 09:52
I realise that we are dealing with HMG and HMRC and therefore this statement may not be wholly appropriate but DON'T PANIC

This has been reported in 2 newspapers but as they are the Guardian and the Daily Mail, I am not sure what's reported is wholly reliable. There has only been a discussion on IR35 to date and I would be surprised if anything this drastic were introduced without a consultation - that would be unusual. It may be that, after 1 month, a declaration would have to be made on IR35 status rather than a contractor having to become part of the workforce of the client - something like this could then be reported via the Agency Reporting Requirements which would make policing IR35 much easier for HMRC. This is just conjecture and I could be wrong but IMHO it would be more typical of HMRC and HMG than to force everyone into permiedom as that would not sit well with big business.

Yes, there are various possible interpretations of that one-month figure, so we'll need to await the details, and your suggestion is one of the stronger possibilities (aligns with reports elsewhere about an online test). What concerns me more than the specifics, given the terrible reporting, is the timing and tone of the article as a statement of intent, especially as the IR35 discussion was in its infancy. The impression (particularly given those same reports elsewhere that the IR35 forum is being completely ignored) is that HMT have overridden due process in a panicked attempt to make the numbers appear to add up in the AS.

OwlHoot
11th November 2015, 11:00
Wrong.

You can be sure that Govt will blame EU for the policy, but in reality in 90% of cases it would have little to do with EU.

OK, then maybe someone should whump up and submit a Freedom of Information request, to enquire in so many words what if any EU tax harmonisation measures are currently being implemented or planned.

I can't, because I'm too busy. But I'm sure we'll all be interested in the outcome in the unlikely event any information is provided.

Zero Liability
11th November 2015, 12:01
If this goes ahead the UK economy will suffer. The projects I am normally working on lasts for 12-24+ months, it could be quite funny to see how it would work with 24 handovers per role in a project.

Might be a good idea to move abroad before the UK leave the EU. Maybe its time to set up a guide for different countries around the globe to see which ones are contractor friendly.

It's not a foregone conclusion that it will leave, that the EU won't seek to enact similar EU wide measures against contractors in light of its bid for more 'tax harmonisation' or that mobility within the EEA will be curtailed for high skill workers if it did leave, so I think this is all a bit premature. Even outside the EU it's much easier to migrate if you bring a good, in demand skill set. There may be good reasons to migrate anyway, however.

TheFaQQer
11th November 2015, 12:05
Gonna really fly well at IBs, financial, or other security clearance type, required, roles.
The clearance will take longer than the actual allowed engagement.

:eyes

Last government project I did, I didn't have a desk, PC or login after a month.

eazy
11th November 2015, 12:39
Ministers discuss £400m IR35 crackdown
Ministers discuss £400m IR35 crackdown | AccountingWEB (http://www.accountingweb.co.uk/article/ministers-discuss-400m-ir35-crackdown/592661)

OwlHoot
11th November 2015, 12:45
If this goes ahead the UK economy will suffer. The projects I am normally working on lasts for 12-24+ months, it could be quite funny to see how it would work with 24 handovers per role in a project. ...

Good point, and to reiterate another couple of good points I have read, possibly also in this thread but maybe in the related one in General :

* Some clients take a month or more just to set up desks and logins etc to get IT contractors started, not to mention security clearance.

* Most IT contractors charge VAT. So the derisory (for all this hoo hah) £400M tax gain will be more than offset by the huge loss in VAT payments.

topgazza
11th November 2015, 12:45
Would this be the same Lloyds Bank that gives take it or leave reductions in rates to contractors?

Indeed.... but they are not alone in doing that. He wasn't involved that area although i don't doubt "cost reduction" is something that he was at least aware of. I don't hold out much hope as the drive is to reduce the tax gap and any means will do. Plenty or orgs "abuse" the 2 year rule including all the Gove departments. I know of 5 contractors ay MoJ that have been there 5 years

Zero Liability
11th November 2015, 13:00
Abuse it in what respect? It's to do with T&S expenses.

MrMarkyMark
11th November 2015, 13:05
Plenty or orgs "abuse" the 2 year rule


Abuse it in what respect? It's to do with T&S expenses.

Agreed, only to do with expenses.
Some of the banks have a 2 year rule, however, this is only due to the fact they don't really understand what the actual 2 year rule is either.

That all having been said, I will be finishing at this IB, in January, after a 3.5 year program.
The sign off for this has to go to quite a high level though, after the 2 year mark.

topgazza
11th November 2015, 13:42
Agreed, only to do with expenses.
Some of the banks have a 2 year rule, however, this is only due to the fact they don't really understand what the actual 2 year rule is either.

That all having been said, I will be finishing at this IB, in January, after a 3.5 year program.
The sign off for this has to go to quite a high level though, after the 2 year mark.

I thought there was a 2 year rule in place for outside IR35 then being in after 24 months.... maybe I've misunderstood.

MrMarkyMark
11th November 2015, 13:50
I thought there was a 2 year rule in place for outside IR35 then being in after 24 months.... maybe I've misunderstood.

You have misundertood :)

topgazza
11th November 2015, 13:55
DOH!

Indeed... of course its about expenses and claiming them after a period of time.... double DOH!.... thanks for your patience :emb

Maslins
11th November 2015, 14:26
Good point, and to reiterate another couple of good points I have read, possibly also in this thread but maybe in the related one in General :

* Some clients take a month or more just to set up desks and logins etc to get IT contractors started, not to mention security clearance.

* Most IT contractors charge VAT. So the derisory (for all this hoo hah) £400M tax gain will be more than offset by the huge loss in VAT payments.

Presumably purpose is to get people onto PAYE, rather than stop the work being done...and re your final VAT point, the corporates will typically be reclaiming that VAT (which wouldn't happen with employees), B2B VAT typically = no net gain to HMRC.

MrMarkyMark
11th November 2015, 14:29
re your final VAT point, the corporates will typically be reclaiming that VAT (which wouldn't happen with employees), B2B VAT typically = no net gain to HMRC.

Not in finance, bud.

VAT goes to HMRC, cannot be claimed back.
Could cost the treasury around a billion a year.

eek
11th November 2015, 14:43
Not in finance, bud.

VAT goes to HMRC, cannot be claimed back.
Could cost the treasury around a billion a year.

only if the contractor is moved onto payroll. If you used an agency or umbrella to pay the person its tax neutral on the VAT front with more tax received than via limited companies..

MrMarkyMark
11th November 2015, 14:48
only if the contractor is moved onto payroll. If you used an agency or umbrella to pay the person its tax neutral on the VAT front with more tax received than via limited companies..

Good point :glasses.
However, as someone pointed out in another thread, it could be difficult for agencies to have us all on pay roll.

Zero Liability
11th November 2015, 17:59
Ministers discuss £400m IR35 crackdown
Ministers discuss £400m IR35 crackdown | AccountingWEB (http://www.accountingweb.co.uk/article/ministers-discuss-400m-ir35-crackdown/592661)

Pretty good comments on there, too.

jpdw
11th November 2015, 20:09
This one month business is so dumb it really can't be more than a daft brainstorming idea. One to allow to 'leak' out and see what the reaction is....

A couple of points:

1/
If there's a 1 month limit, you just have a 1 month contract then renew for another month!!! Of course, even HMT/HMRC would have thought of that and would impose a 'no return before' period. How long would that be? 6 months or 12 months or 24 months? How many undoubtedly-real-businesses would now fall foul of this by not being about to do repeat business within an artificial period of time.

2/
So this would apply to people working for PSCs. Let me check my certificate of incorporation. No, it's for Ltd company. Something as significant to business both small (contractors) and large (client co's) would surely require a 'PSC' to be actually defined somewhere proper for it to be the lynchpin of significant legislation.

3/
What would the average medium/large business' reaction be to being TOLD by HMG that they MUST move their 100, 200 or 500 (whatever) contractors doing projects lasting anything more than 31 days onto a PERMIE payroll....

4/
Builders singled out to be an exception? How & Why would that be? Justify that.... erm, because it takes more than 1 month to build 'a house'. Yeah but it also takes more than 1 month to build (!!!) a software project, a government-enforced-website-tracking-and-storing-system. Yeah but (they might say) there are plenty of large IT companies that could fill the gap left by IT contractors.... Maybe, but there are also lots of large building companies that could fill the gap of the 1 man building firms. (As an aside .. I bet IT Contractors dodge less tax/vat by doing 'cash in hand' jobs too)

The timings daft too... Announce it all this autumn and people can decide they are going to go back to permie-don so (having decided that) they'll cash out their divis in this tax year before the 7.5% sorry 15% or 20% comes in.....

darrylmg
12th November 2015, 00:03
This one month business is so dumb it really can't be more than a daft brainstorming idea. One to allow to 'leak' out and see what the reaction is....

A couple of points:

1/
If there's a 1 month limit, you just have a 1 month contract then renew for another month!!! Of course, even HMT/HMRC would have thought of that and would impose a 'no return before' period. How long would that be? 6 months or 12 months or 24 months? How many undoubtedly-real-businesses would now fall foul of this by not being about to do repeat business within an artificial period of time.

2/
So this would apply to people working for PSCs. Let me check my certificate of incorporation. No, it's for Ltd company. Something as significant to business both small (contractors) and large (client co's) would surely require a 'PSC' to be actually defined somewhere proper for it to be the lynchpin of significant legislation.

3/
What would the average medium/large business' reaction be to being TOLD by HMG that they MUST move their 100, 200 or 500 (whatever) contractors doing projects lasting anything more than 31 days onto a PERMIE payroll....

4/
Builders singled out to be an exception? How & Why would that be? Justify that.... erm, because it takes more than 1 month to build 'a house'. Yeah but it also takes more than 1 month to build (!!!) a software project, a government-enforced-website-tracking-and-storing-system. Yeah but (they might say) there are plenty of large IT companies that could fill the gap left by IT contractors.... Maybe, but there are also lots of large building companies that could fill the gap of the 1 man building firms. (As an aside .. I bet IT Contractors dodge less tax/vat by doing 'cash in hand' jobs too)

The timings daft too... Announce it all this autumn and people can decide they are going to go back to permie-don so (having decided that) they'll cash out their divis in this tax year before the 7.5% sorry 15% or 20% comes in.....

Some good points.
I'd like to know who in their right mind would want to run a ltd company with all the yearly expenditure and accountabilities, for just 1 month of work. Absolutely no way this is a genuine course of action. No way. Just fluff invented by the media to fill a page.

IR35 Avoider
12th November 2015, 12:56
This will be trivial for government to implement, and will have no impact on clients or agencies, and will have no effect on the existence or extent of contracting, other than knock-on effects stemming from net-of-tax pay being considerably lower.

I am a bit mystified that only I can see this, and that every other contractor here seems to be pontificating about how impossible this is, or that it is the end of contracting as we know it.

All they have to do is add a criterion to the current IR35 legislation, that any time with a client after the first month counts as caught.

The bit about clients having to take people on payroll is I presume just journalists (or whoever is briefing them) being a bit clueless.

IR35 Avoider
12th November 2015, 12:58
Contractors will still run companies even if 100% of income is IR35-caught, as in that scenario it's still a better option than using a brolly.

MrMarkyMark
12th November 2015, 13:06
I am a bit mystified that only I can see this, and that every other contractor here seems to be pontificating about how impossible this is, or that it is the end of contracting as we know it.


All they have to do is add a criterion to the current IR35 legislation, that any time with a client after the first month counts as caught.

Blimey, what a, completely, terribly, stupid, idea, maybe no one else wishes to "see it" as you do :suicide:.

Why, in your opinion, should people be caught after a month has elapsed?

Hardly living up to your user name, either :laugh

pjt
12th November 2015, 13:09
Contractors will still run companies even if 100% of income is IR35-caught, as in that scenario it's still a better option than using a brolly.

Even in that scenario with the changes to T&S & IR35 some contractors will not be able to go on. I'm talking here about the Monday - Friday away from home guys who shell out a lot weekly on getting and staying somewhere for a gig.

Your right though the rest will probably just carry on with a much smaller take home though still higher than going permie!

I hate to admit it but I'v done the sums and working close to home should be fine, working away I wont touch. Problem I have is most of my gigs are away! So lots of bench time ahead with me then having to work out if the increased bench time pushes me into permie.

LondonManc
12th November 2015, 13:13
This will be trivial for government to implement, and will have no impact on clients or agencies, and will have no effect on the existence or extent of contracting, other than knock-on effects stemming from net-of-tax pay being considerably lower.

I am a bit mystified that only I can see this, and that every other contractor here seems to be pontificating about how impossible this is, or that it is the end of contracting as we know it.

All they have to do is add a criterion to the current IR35 legislation, that any time with a client after the first month counts as caught.

The bit about clients having to take people on payroll is I presume just journalists (or whoever is briefing them) being a bit clueless.
If you know exactly how it's going to be implemented, please enlighten us. Then we can pick holes in your unique vision.

MrMarkyMark
12th November 2015, 13:14
Listening to some here, they are prepared to roll over, get their bellies tickled, prior to lubing up, whilst bending over, before handing over everything to HMRC.

Pathetic :suicide:

pjt
12th November 2015, 13:20
Listening to some here, they are prepared to roll over, get their bellies tickled, prior to lubing up, whilst bending over, before handing over everything to HMRC.

Pathetic :suicide:

Not at all. The problem is the options are very limited. Other than a token letter to our MP, and raising the risk with clients what can we do. If they really want to push this through they will.

topgazza
12th November 2015, 13:24
You make a good point but how ludicrous and unfair is it to pay employers NI and corp tax when by any interpretation your are Ltd in name only. We know that already of course but I for one would go permanent. As the difference over a permanent employee with holiday pay, sick pay, bonuses, pension contributions, implied security of a job and all the other nice to haves not forgetting the stress and hassle of running a Ltd company would disappear IMO. Or day rates will have to go up by 50%.... yeah right :smile

MrMarkyMark
12th November 2015, 13:30
If they really want to push this through they will.

Having been doing this for longer than 5 minutes, I would suggest they won't.
Completely unworkable.

pjt
12th November 2015, 13:41
Having been doing this for longer than 5 minutes, I would suggest they won't.
Completely unworkable.

Is it though. As IR35 avoider and some others have suggested the probably method of carrying this out will be for us all to be forced inside IR35 after 1 month. In effect nothing will change for anyone other than agents will be determining our IR35 status and we will be stuck inside. Client's etc will carry on paying the same rates and getting pretty much the same service in return.

Sure some may go permie which may have a long term effect of rates going up but I'd be surprised when it comes to it how many will actually go permie. The amount most will clear even within IR35 is likely to be much more than a permie salary.

MrMarkyMark
12th November 2015, 13:48
You, sir, are on the wrong drugs :D.


Is it though. As IR35 avoider and some others have suggested the probably method of carrying this out will be for us all to be forced inside IR35 after 1 month.

Firstly, it takes at least a month to get people up and running.
Secondly, in banking, or security roles, it takes 5 weeks, or so, just to get clearance.
Thirdly, look at the stupidity of the tax credits situation, i.e. Georgie can suggest what he likes, but, it won't come to pass.

This month suggestion is unworkable and will be kicked into touch by big business.

Ill ask, my question, again.
Please remember contract length has never had any bearing on IR35, before you answer.

Why, in your opinion, should people be IR35 caught after a month has elapsed?

As you are from Scotland, maybe, lobby the SNP about it :eyes

topgazza
12th November 2015, 13:55
Answer: So they can raise millions doing next to nothing, more in tax with no appeals. Simples.... lazy legislation but deceptively simple to apply on the face of it. It really only affects the contractor so they probably think its would get little resistance in reality. Real affect would take longer to come in but agencies would need to do nothing with rates... its not their problem.

There is a need to change the law so being a sole trader is easier with no implications for agencies or clients. But they're not going to do that as its moving the goal posts and self defeating for HMRC. Worrying but interesting times. They aren't"destroying" the contract market in their little world just raising more revenue but leaving the risk in the risk & reward scenario and also putting a huge dent in the reward....


They could remove corp tax and employers NI from any Ltd company in IR35, which always seemed illogical to me anyway, to reflect that they are ltd in name only because its demanded by the agency

pjt
12th November 2015, 14:10
You, sir, are on the wrong drugs :D.



Firstly, it takes at least a month to get people up and running.
Secondly, in banking, or security roles, it takes 5 weeks, or so, just to get clearance.
Thirdly, look at the stupidity of the tax credits situation, i.e. Georgie can suggest what he likes, but, it won't come to pass.

This month suggestion is unworkable and will be kicked into touch by big business.

Ill ask, my question, again.
Please remember contract length has never had any bearing on IR35, before you answer.

Why, in your opinion, should people be IR35 caught after a month has elapsed?

As you are from Scotland, maybe, lobby the SNP about it :eyes

Your missing the point the fact projects take longer than a month has no bearing on the possible outcome. In effect HMRC have targeted us for more tax. Big business don't care if we are IR35 caught or not they only care about getting the resource that wont change for them nothing will change at all.

I certainly don't think we should be caught by IR35 automatically that doesn't mean its not going to happen. What in your eyes can we do about it other than moan among fellow contractors and maybe send a letter to our MP's? Apart from that its out of our hands.

And just because I'm from Scotland doesn't mean I have any desire to lobby the SNP. Never a party I've had any interest in voting for and I've always been happy to be a part of the UK. Though with the current outlook I'm starting to wonder if Independence may have actually worked out better for us!

MrMarkyMark
12th November 2015, 14:11
Answer: So they can raise millions doing next to nothing, more in tax with no appeals. Simples.... lazy legislation but deceptively simple to apply on the face of it. It really only affects the contractor so they probably think its would get little resistance in reality. Real affect would take longer to come in but agencies would need to do nothing with rates... its not their problem.

That's the why HMRC would do it, not why a contract should be IR35 caught after 1 month.

In any case, the actual HMRC proposal was move everyone on to ClientCos payroll after a month, not make people universally IR35 caught, after that time.


Though with the current outlook I'm starting to wonder if Independence may have actually worked out better for us!

Part of the reason, for my, slightly, tongue in cheek comment.


Big business don't care if we are IR35 caught or not they only care about getting the resource that wont change for them nothing will change at all.

They will do, when the resources just are not there.

jamesbrown
12th November 2015, 14:15
This will be trivial for government to implement, and will have no impact on clients or agencies, and will have no effect on the existence or extent of contracting, other than knock-on effects stemming from net-of-tax pay being considerably lower.

I am a bit mystified that only I can see this, and that every other contractor here seems to be pontificating about how impossible this is, or that it is the end of contracting as we know it.

All they have to do is add a criterion to the current IR35 legislation, that any time with a client after the first month counts as caught.

The bit about clients having to take people on payroll is I presume just journalists (or whoever is briefing them) being a bit clueless.

Putting aside the legislative issue (I'm afraid it isn't quite that simple a modification), I think you're entirely missing the point of the proposals. It's about increasing compliance, which is why they want engagers involved in enforcement. They don't want a bunch of PSCs, many of whom have never even heard of IR35, continuing to self-assess. They don't have the enforcement capability today, and that's only going to get worse (see the press today about further mass consolidation at HMRC).

pjt
12th November 2015, 14:33
Putting aside the legislative issue (I'm afraid it isn't quite that simple a modification), I think you're entirely missing the point of the proposals. It's about increasing compliance, which is why they want engagers involved in enforcement. They don't want a bunch of PSCs, many of whom have never even heard of IR35, continuing to self-assess. They don't have the enforcement capability today, and that's only going to get worse (see the press today about further mass consolidation at HMRC).

James it seems clear though that the details of the press release are unworkable for big business. But reading between the lines with the IR35 review etc and the press release it makes sense that the end result may be IR35 caught after 1 month.

Let me make it clear this would be a killer for me and lots of others I just don't see theirs much we can do. Its pretty clear IPSE are not going to be able to make much of a dent!

MrMarkyMark
12th November 2015, 14:37
But reading between the lines with the IR35 review etc and the press release it makes sense that the end result may be IR35 caught after 1 month.

It doesn't make any sense at all, IMO.

They won't be able amend the legislation in your suggested way easily, it is nothing close to the original IR35 law.

LisaContractorUmbrella
12th November 2015, 14:38
That's the why HMRC would do it, not why a contract should be IR35 caught after 1 month.

In any case, the actual HMRC proposal was move everyone on to ClientCos payroll after a month, not make people universally IR35 caught, after that time.



Part of the reason, for my, slightly, tongue in cheek comment.



They will do, when the resources just are not there.

HMRC's proposal????? No-one has seen any proposal from HMRC that even mentions any of this - it was a report in the media from an unconfirmed and unnamed 'source' at the Treasury

pjt
12th November 2015, 14:47
They won't be able amend the legislation in your suggested way easily, it is nothing close to the original IR35 law.

They can raise a consultation. We already know ones on the way. And it doesn't look as if we've been able to do much about the T&S consultation. If anything HMRC seem to be getting worse if this release has any merit.

MrMarkyMark
12th November 2015, 14:54
HMRC's proposal????? No-one has seen any proposal from HMRC that even mentions any of this - it was a report in the media from an unconfirmed and unnamed 'source' at the Treasury

Oops, indeed, poor choice of words. :igmc:

jamesbrown
12th November 2015, 14:56
James it seems clear though that the details of the press release are unworkable for big business. But reading between the lines with the IR35 review etc and the press release it makes sense that the end result may be IR35 caught after 1 month.

Let me make it clear this would be a killer for me and lots of others I just don't see theirs much we can do. Its pretty clear IPSE are not going to be able to make much of a dent!

It depends what you mean by "IR35 caught". Whatever they do, I'd bet your house (:D) that clients will need to enforce it, either by having contractors legally employed (i.e. no longer a contractor in fact) or of questionable status (i.e. no longer a contractor in practice; for example, SDC intended for tax status only would lead to employment claims).

As things stand, my best guess, reading between the lines of various sources, concurs with what Lisa pointed out elsewhere, i.e. the one month as a lower bound for a status check by the engager (eliminating some admin for them), rather than an upper bound beyond which everyone is definitively caught, but the engager will be at the heart of this. Anyway, at this point, we're largely in the dark and will need to wait.

pjt
12th November 2015, 15:14
It depends what you mean by "IR35 caught". Whatever they do, I'd bet your house (:D) that clients will need to enforce it, either by having contractors legally employed (i.e. no longer a contractor in fact) or of questionable status (i.e. no longer a contractor in practice; for example, SDC intended for tax status only would lead to employment claims).

As things stand, my best guess, reading between the lines of various sources, concurs with what Lisa pointed out elsewhere, i.e. the one month as a lower bound for a status check by the engager (eliminating some admin for them), rather than an upper bound beyond which everyone is definitively caught, but the engager will be at the heart of this. Anyway, at this point, we're largely in the dark and will need to wait.

We will need to wait. Its going to be a long 2 weeks. But it does appear IR35 will be a lot move widespread come 2017 especially if the engager has to determine status.

Pondlife
12th November 2015, 16:40
It depends what you mean by "IR35 caught". Whatever they do, I'd bet your house (:D) that clients will need to enforce it, either by having contractors legally employed (i.e. no longer a contractor in fact) or of questionable status (i.e. no longer a contractor in practice; for example, SDC intended for tax status only would lead to employment claims).

As things stand, my best guess, reading between the lines of various sources, concurs with what Lisa pointed out elsewhere, i.e. the one month as a lower bound for a status check by the engager (eliminating some admin for them), rather than an upper bound beyond which everyone is definitively caught, but the engager will be at the heart of this. Anyway, at this point, we're largely in the dark and will need to wait.

Exactly this. SDC will still be the determining factor rumoured to be decided via an online assessment.

Waldorf
12th November 2015, 16:48
If this does come to pass then it seems the aim of HMRC would be to have PAYE & NIC applied to contractors income.

If so, the easiest way would be to revert to contractors being employed as 'temps' by the agency, this avoids the end client having to bother with employing short term contractors, it also ensures that full tax & NIC are deducted from the contractor.

The role of the agency remains, the client will see no change, just the contractor paying more tax. The rates would probably remain the same apart from the fact that they will be paying more tax.

If T&S goes, then this could be made up in cases of major commuting by a higher rate.

Hopefully this won't happen but if HMRC wish to raise extra cash without upsetting business then this could be the way they do it.

yakitoo
12th November 2015, 16:53
Hopefully this won't happen but if HMRC wish to raise extra cash without upsetting business then this could be the way they do it.
Pretty well sums it up.

LondonManc
12th November 2015, 16:59
If this does come to pass then it seems the aim of HMRC would be to have PAYE & NIC applied to contractors income.

If so, the easiest way would be to revert to contractors being employed as 'temps' by the agency, this avoids the end client having to bother with employing short term contractors, it also ensures that full tax & NIC are deducted from the contractor.

The role of the agency remains, the client will see no change, just the contractor paying more tax. The rates would probably remain the same apart from the fact that they will be paying more tax.

If T&S goes, then this could be made up in cases of major commuting by a higher rate.

Hopefully this won't happen but if HMRC wish to raise extra cash without upsetting business then this could be the way they do it.

If they do that, they'll kill contracting. While you'll still earn more take home, I may as well move into consultancy and get training, holidays, sick pay, car allowance, etc

unixman
12th November 2015, 17:19
Whatever they do, they won't simply hit contracting over the head with a huge mallet, which is what the 1 month idea would be. Industry and the govt needs contractors. Even more so these days, with the laws governing permanent employment becoming ever more strict and onerous for employers.

Zero Liability
12th November 2015, 17:32
Exactly this. SDC will still be the determining factor rumoured to be decided via an online assessment.

If so, those news articles on it got it completely wrong. Whether due to the source (for a bit of FUD-related amusement) or just bad writing. Which just means we're still stuck with the bad ideas put forward for the consultation/discussion docs, respectively, which isn't a huge relief. I do wonder if they will stick to a FB2016 deadline for the T&S stuff and FB2017 for IR35 stuff. I guess we'll know in a couple of weeks.


If this does come to pass then it seems the aim of HMRC would be to have PAYE & NIC applied to contractors income.

If so, the easiest way would be to revert to contractors being employed as 'temps' by the agency, this avoids the end client having to bother with employing short term contractors, it also ensures that full tax & NIC are deducted from the contractor.

The role of the agency remains, the client will see no change, just the contractor paying more tax. The rates would probably remain the same apart from the fact that they will be paying more tax.

If T&S goes, then this could be made up in cases of major commuting by a higher rate.

Hopefully this won't happen but if HMRC wish to raise extra cash without upsetting business then this could be the way they do it.

Or they could just tweak their newest toy, the dividend tax. :rolleyes:

Waldorf
12th November 2015, 19:02
Or they could just tweak their newest toy, the dividend tax. :rolleyes:

The problem with that is that it hits pensioners and non-contractors with higher taxes.

However I do believe that this tax will rise in the future, chancellors will not be able to resist it.

BolshieBastard
12th November 2015, 19:16
The problem with that is that it hits pensioners and non-contractors with higher taxes.

However I do believe that this tax will rise in the future, chancellors will not be able to resist it.

Or it could be abolished in the future when the blue rinse brigade find they're paying extra tax on their investment.

I think this 1 month thing is being floated to test the idea of a workable 'limit' say 6 to 12 months and so when the anouncement is made in the November statement, everyone will go 'could have been worse, could have been 1 month as originally suggested.'

jamesbrown
12th November 2015, 19:18
The problem with that is that it hits pensioners and non-contractors with higher taxes.

However I do believe that this tax will rise in the future, chancellors will not be able to resist it.

It would be quite straightforward to allow a higher tax-free allowance for pensioners or to remove it for directors of close companies (or any companies for that matter). They can accentuate and mitigate as they see fit.

Gordon Ice
12th November 2015, 21:23
It depends what you mean by "IR35 caught". Whatever they do, I'd bet your house (:D) that clients will need to enforce it, either by having contractors legally employed (i.e. no longer a contractor in fact) or of questionable status (i.e. no longer a contractor in practice; for example, SDC intended for tax status only would lead to employment claims).

As things stand, my best guess, reading between the lines of various sources, concurs with what Lisa pointed out elsewhere, i.e. the one month as a lower bound for a status check by the engager (eliminating some admin for them), rather than an upper bound beyond which everyone is definitively caught, but the engager will be at the heart of this. Anyway, at this point, we're largely in the dark and will need to wait.

Exactly right, it depends on what you mean by "IR35 caught" and once again we're into the realms of "who" this applies to and whether the "who" can be defined and enforced. Last I looked PSC was still not enshrined in anything remotely close to law, and attempts to separate Ltd's from Ltd's engaged via an "intermediary" (a.k.a. Agencies) will serve only to drive contractors to reinvent themselves so they are not caught by IR35. And so the cycle repeats..

Personally I think we have a case of lazy headline grabbing news tapping into an already concerned contractor community worrying/struggling to understand where HMRC is going with SDC potentially for both T&S and IR35. It's already evident from SDC proposals that it will be possible for a contractor to be considered "employed" for T&S purposes and at the same time be able to demonstrate being outside IR35 (using the typical IR35 tests and of course calling on the now substantial IR35 case law) and thus be considered "self employed".. yeah right, that's logical.

There are limitless ways this can go because collectively HMRC and HMT are a collection of hatstands without the intellectual capacity to grasp the problem they are trying to solve.. let alone find a workable solution for UK plc.

Whatever happens Darwinian law will still apply - some will evolve and flourish, some will fail to evolve and die.. good luck to all.

eazy
13th November 2015, 11:22
Autumn Statement Predictions : Tweaking IR35

Autumn statement predictions | AccountingWEB (http://www.accountingweb.co.uk/article/autumn-statement-predictions/592776)

The government appears determined to deter tax-incentivised incorporation. The dividend tax is one line of attack, another is the restriction of travel and subsistence expenses for contractors working through intermediaries. Both changes are due to take effect from 6 April 2016. On top of those there is a rumour of further tweaking of the IR35 rules to force contractors on to their engager’s payroll where the engagement lasts for a set period – possibly as little as 12 months.

The Autumn Statement promises to be exciting – but possibly not in a good way for small businesses.

LondonManc
13th November 2015, 11:42
Autumn Statement Predictions : Tweaking IR35

Autumn statement predictions | AccountingWEB (http://www.accountingweb.co.uk/article/autumn-statement-predictions/592776)

The government appears determined to deter tax-incentivised incorporation. The dividend tax is one line of attack, another is the restriction of travel and subsistence expenses for contractors working through intermediaries. Both changes are due to take effect from 6 April 2016. On top of those there is a rumour of further tweaking of the IR35 rules to force contractors on to their engager’s payroll where the engagement lasts for a set period – possibly as little as 12 months.

The Autumn Statement promises to be exciting – but possibly not in a good way for small businesses.

That'll make an absolute mockery of the whole situation. Have they considered the accounting implications of it?

From hereon in, he'll be know as George The Plum

GB9
13th November 2015, 15:37
That'll make an absolute mockery of the whole situation. Have they considered the accounting implications of it?

From hereon in, he'll be know as George The Plum

Someone remind me where it is stated that the decision to ban T&S on contracts through intermediaries has been taken.

MrMarkyMark
13th November 2015, 15:56
Someone remind me where it is stated that the decision to ban T&S on contracts through intermediaries has been taken.

It hasn't.

In addition, they have tried the same thing, at some stage before, they couldn't get it through that time round.

IR35 Avoider
13th November 2015, 17:06
Here are some comments on various responses to my earlier posts.

If I make a specific prediction about how the world will end, that doesn't mean I'm in favour of it ending that way, or in any other way. You have to be a bit cognitively challenged to draw that conclusion.

If I'm right that this would be implemented as a tweak to IR35, assuming anything like a one-month rule happens, then I agree people who depend on substantial expenses will be more affected than I originally suggested.

I don't see why this isn't easy to legislate, it's hugely simpler than what was legislated in IR35 Mk1, and can build on that foundation. Without actually trying to compose anything, I'd guess you might be able to add as little as one sentence/paragraph to the existing legislation, and catch 95% of those not currently caught. (By catch I mean get to actually comply, the other 5% would be caught but not complying.)

It's possible that there will be a duty on clients to notify HMRC, but I doubt that's really necessary or practical, and in any case it won't be the thing that make a difference. The rule that more than one month means caught is what would matter, whether clients and agents help enforce it or PSC owners are expected to self-assess is secondary. IR35 mk1 failed because people could get away with wrong (in HMRC's eyes) self-assessments, that doesn't happen if the criteria for caught becomes very simple and obvious.

jamesbrown
13th November 2015, 18:24
Here are some comments on various responses to my earlier posts.

If I make a specific prediction about how the world will end, that doesn't mean I'm in favour of it ending that way, or in any other way. You have to be a bit cognitively challenged to draw that conclusion.

If I'm right that this would be implemented as a tweak to IR35, assuming anything like a one-month rule happens, then I agree people who depend on substantial expenses will be more affected than I originally suggested.

I don't see why this isn't easy to legislate, it's hugely simpler than what was legislated in IR35 Mk1, and can build on that foundation. Without actually trying to compose anything, I'd guess you might be able to add as little as one sentence/paragraph to the existing legislation, and catch 95% of those not currently caught. (By catch I mean get to actually comply, the other 5% would be caught but not complying.)

It's possible that there will be a duty on clients to notify HMRC, but I doubt that's really necessary or practical, and in any case it won't be the thing that make a difference. The rule that more than one month means caught is what would matter, whether clients and agents help enforce it or PSC owners are expected to self-assess is secondary. IR35 mk1 failed because people could get away with wrong (in HMRC's eyes) self-assessments, that doesn't happen if the criteria for caught becomes very simple and obvious.

You cannot simply change legislation by adding a one liner. If the intention were to achieve a "caught" scenario after one month, the legislation would need to be re-written, defining the appropriate conditions, in such a way that those conditions could not be easily circumvented (and this is more difficult than you might think), while also removing the extraneous stuff that no longer applies. Obviously, that could be done. That isn't the issue, really. The problem is more with your premise that self-assessment works, and the point of failure is, therefore, with the specific set of rules that apply. According to HMRC, it fundamentally does not work, which is why they want to involve the engager. It's much easier to chase a few engagers for compliance and, ultimately, a liability than several hundred thousand contractors. A large fraction of contractors don't even consider IR35 (i.e. they aren't aware of it). In that sense, CUK is not representative.

IR35 Avoider
14th November 2015, 10:35
We can agree that writing the legislation is not an obstacle. I'm surprised that you think that defining "more than one month at a client" is not vastly simpler than "has a relationship with a client that looks like employment", but it seems you agree it can be done.

I've been thinking about this some more, and if the bit about killing off the PSC is correct, here's how I think it could be done: there could be an extra "follow the money" rule that says if IR35 is not complied with, whoever paid money to the non-complying company becomes liable for payroll taxes. This is analogous to what happened with self-employment: as soon as companies, and later agencies, became liable for sole traders payroll taxes when they were deemed employees, they each stopped dealing with sole traders. So in the world of "IR35 Mk2 with client-enforced compliance" no-one will deal with a PSC, as they do not trust them to operate IR35 correctly. Clients and agencies will be willing to pay other large companies, such as agencies, umbrellas and large consultancies, but contractors will have to be PAYE with a large company they do not control.

In this world the ideal vehicle for a contractor would be a large-consultancy owned by its employees. I hope IPSE would create the ideal one. Contracting would work mostly as now, but with the large-co taking the place of the PSC/umbrella. There would be some complexities involved in Large-co ensuring income was not IR35-caught, which would probably require contractors not having a benefits package directly linked to fees generated. They would have to trust large-co to remunerate them fairly on average over the long-term. Discretionary bonuses would be an essential tool in large-cos employee-benefits armoury. Large-co might be able to do some clever things that even PSCs can't, such as paying 30K tax-free redundancy when work dried up for unusually long periods. Some (relatively small) level of dividends from employee owned shares would also be possible.

IR35 Avoider
14th November 2015, 10:59
The problem is more with your premise that self-assessment works, and the point of failure is, therefore, with the specific set of rules that apply. According to HMRC, it fundamentally does not work, which is why they want to involve the engager.

The reason it doesn't work is because there is plausible deniability when contractors get self-assessment wrong. Plausible deniability means there are no penalties. If status is so simple that there is no plausible deniability, then there are penalties for not complying, so then there is no compliance problem.

malvolio
14th November 2015, 11:12
Apart from the commercial issues (which are significant), there are two key problems with the large consultancy for contractors model - it would have to sidestep the MSC legislation, and it is very easy for HMRC to define it as a sham organisation under Ramsay on the basis that it has no other commercial purpose; the Big 4, after all, have a solid commercial presence in their own right. Even without stretching Ramsay, any such organisation could be easily identified and marked a "special case" so you end up as a PAYE employee anyway.

IR35 Avoider
15th November 2015, 10:55
Clearly there are large consultancies that don't even have to think about status issues, so it must be possible to sufficiently resemble one so that an employee-owned one is in the same boat. The only question to be settled is what exactly "sufficiently" means. (And yes, I do recall that you and I have had this exact conversation before. :smile)

Having said that, the issue of having to give up "your" income to the consultancy might well make it a commercial non-starter, due to contractors simply not being willing to do that.

I remember working at a client where the majority of other outside workers, more than 50, were supplied by a large consultancy. I recall my eyebrows shooting up when one of their people mentioned that they were a "charity". He could see the funny side of that description, when new graduates were being charged at multiples of what they themselves were being paid, and rapidly explained that their status was just a tax-related thing. Anyway, my insignificant point is that a legitimate large consultancy doesn't have to have external owners raking off a large proportion of the profits.

jamesbrown
15th November 2015, 11:22
The reason it doesn't work is because there is plausible deniability when contractors get self-assessment wrong. Plausible deniability means there are no penalties. If status is so simple that there is no plausible deniability, then there are penalties for not complying, so then there is no compliance problem.

Again, you're missing the point. First, in my experience, a significant number of contractors don't self-assess (inaccurately or otherwise) because they're unaware of IR35 or have misunderstood its scope (e.g. confused it with the 24mo rule for T&S). Second, and more importantly, HMRC don't have the resources to police this, and that isn't going to improve. In my view, there's no outcome that doesn't involve engagers policing the situation, and HMG will have a strong preference for either eliminating the liability altogether (on payroll) or having engagers shoulder the liability from non-compliance, because they're much easier to pursue. It's absolutely this shift of responsibility towards engagers that will fundamentally change the situation. Regardless of the criteria used, engagers will take a conservative approach when faced with a liability and they will assume "on payroll" by default.

Finally, you're over-stating the simplicity of legislating strict deeming criteria. Quite obviously, it can be done, but they'll need to consider more than simply the timeframe (clear rules present clear targets for those trying to circumvent them; for example, by stringing together one-month contracts). However, with engagers policing the situation, this question of compliance largely disappears.

LisaContractorUmbrella
16th November 2015, 08:16
Clearly there are large consultancies that don't even have to think about status issues, so it must be possible to sufficiently resemble one so that an employee-owned one is in the same boat. The only question to be settled is what exactly "sufficiently" means. (And yes, I do recall that you and I have had this exact conversation before. :smile)

Having said that, the issue of having to give up "your" income to the consultancy might well make it a commercial non-starter, due to contractors simply not being willing to do that.

I remember working at a client where the majority of other outside workers, more than 50, were supplied by a large consultancy. I recall my eyebrows shooting up when one of their people mentioned that they were a "charity". He could see the funny side of that description, when new graduates were being charged at multiples of what they themselves were being paid, and rapidly explained that their status was just a tax-related thing. Anyway, my insignificant point is that a legitimate large consultancy doesn't have to have external owners raking off a large proportion of the profits.

To be considered a consultancy under the terms of proposed legislation (T&S) you would have to prove that your main source of income was not supply of staff

Fred Bloggs
16th November 2015, 10:16
So, what exactly is the difference between supplying staff and supplying professional services?

jamesbrown
16th November 2015, 10:37
So, what exactly is the difference between supplying staff and supplying professional services?

The probability of securing a lucrative consultancy contract to supplement your constituency work.

LondonManc
16th November 2015, 11:16
Someone remind me where it is stated that the decision to ban T&S on contracts through intermediaries has been taken.

Why was that aimed at me? I was talking about something totally different.

LisaContractorUmbrella
16th November 2015, 13:12
So, what exactly is the difference between supplying staff and supplying professional services?

How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

MrMarkyMark
16th November 2015, 13:15
I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

I have been looking at the possibility of providing fixed price managed services.

Still through an agency, but, just utilising their PSL capability, as well as factoring invoices.

GB9
16th November 2015, 16:46
Why was that aimed at me? I was talking about something totally different.

Sorry. Wasn't aimed AT you. Iirc it was because of the Accounting Web (or whatever they call themselves) piece that you may have linked to. They stated that T&S would not be available as if it were a fact.

Fred Bloggs
16th November 2015, 17:11
How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC
I see where you are coming from but I don't think it is quite so easy to characterise. I mainly contract to companies who run engineering projects. Think of KBR, CB&I, Jacobs, Costain etc... I don't really see any difference in what they do and what I do as a subcontractor. I don't really see why MyCo Ltd isn't supplying professional services?

MicrosoftBob
16th November 2015, 17:39
So, what exactly is the difference between supplying staff and supplying professional services?

Well with one your main source of income is supplying staff and the other your main source of income is supplying staff

jpdw
16th November 2015, 20:08
Well with one your main source of income is supplying staff and the other your main source of income is supplying staff

Isnt that exactly Fred Bloggs' point ... the difference is far from clear. Yes, the "big 4" do 'accountancy' as well as providing staff to do specific work for clients (the word 'lend' was used, but I doubt the client gets it for gratis - political consulting aside). But there are other 'professional services' consultancies that don't also sell the same client accountancy or whatever.

Is the difference is about having the names of individuals specified in the contract? But that happens with consultancies too (presumably to avoid the consultancy replacing all the smart bods seen during pre-sales with just-out-of-school newbies).

Fred Bloggs
16th November 2015, 20:31
Isn't it just as valid to say that my main source of income is in supplying professional services? That's what my clients do and I'm just a subby to them.

Zero Liability
16th November 2015, 20:39
How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

Aren't accountancy services professional services in the end?

LisaContractorUmbrella
17th November 2015, 08:18
I see where you are coming from but I don't think it is quite so easy to characterise. I mainly contract to companies who run engineering projects. Think of KBR, CB&I, Jacobs, Costain etc... I don't really see any difference in what they do and what I do as a subcontractor. I don't really see why MyCo Ltd isn't supplying professional services?

I think that if you supply your services directly to the client, negotiate terms etc etc then you could successfully argue the case - I think where it would fall down is if you have a bunch of contractors, who all secure their contracts through an agency who negotiates with the end client, who refer to themselves as a consultancy because it improves their tax position and for no reason other than that. I see exactly where you're coming from but I think this would be the argument that HMRC would present against the idea

Fred Bloggs
17th November 2015, 10:02
Thanks Lisa.

Danglekt
17th November 2015, 10:19
i'd imagine there would have to be some legal wrapper over the ind consultants which provides the vehicle for group bidding and winning, payment and dividend sharing.

Messy game all round.

jpdw
17th November 2015, 14:19
Why would you need a legal wrapper to aggregate an arbitrary number of independents who are offering a professional service?
Couldn't it be just as valid to be a 2-person consultancy offering professional services? Or just ... 1 person....?

Maybe the key differentiator is the lack of "...secure their contracts through an agency who negotiates with the end client..."?

TheFaQQer
17th November 2015, 14:45
Why would you need a legal wrapper to aggregate an arbitrary number of independents who are offering a professional service?
Couldn't it be just as valid to be a 2-person consultancy offering professional services? Or just ... 1 person....?

Maybe the key differentiator is the lack of "...secure their contracts through an agency who negotiates with the end client..."?

IIRC, once you get to the point where no one person has 5%, then you are outside IR35 under the current rules. So it's already in place.

jamesbrown
17th November 2015, 14:58
I think that if you supply your services directly to the client, negotiate terms etc etc then you could successfully argue the case - I think where it would fall down is if you have a bunch of contractors, who all secure their contracts through an agency who negotiates with the end client, who refer to themselves as a consultancy because it improves their tax position and for no reason other than that. I see exactly where you're coming from but I think this would be the argument that HMRC would present against the idea

Yes, I think that's about right. The only thing that's clear is the target (i.e. large consultancies outside, micro-businesses inside). The boundary between the two is probably a multi-person consultancy that negotiates and packages services as a collective and coherent whole (i.e. you don't have individual people negotiating the terms of their own consultancy contracts) and these companies are perhaps less likely to second their consultants to other organisations.

Very subjective though, as you have micro-businesses that negotiate directly and deliver services without a consultant onsite (perhaps subcontracting) and large consultancies that second a bunch of staff (essentially labour) while being considered as supplying a coherent service. But the situation that Lisa describes where you have contract negotiations at the level of individual consultants, rather than a B2B negotiation, would clearly be considered a supply of labour.

MPwannadecentincome
18th November 2015, 21:28
Last I looked PSC was still not enshrined in anything remotely close to law.

Isn't a PSC anyone who ticks the box on the Tax Return? If nobody ticked the box then PSCs would not exist ;-)

Apart from that even if a PSC was not defined in law, what would a judge assume it meant based on what the man on the street would understand it to be, that is the direction the judge would give surely?

Zero Liability
18th November 2015, 21:41
So basically their standard for what it is, is what the opinion of someone entirely clueless about these matters would be? :confused:

MPwannadecentincome
18th November 2015, 22:27
So basically their standard for what it is, is what the opinion of someone entirely clueless about these matters would be? :confused:

Isn't that how the law works in the courts where things are not clear? I might be wrong....

Zero Liability
18th November 2015, 23:55
Isn't that how the law works in the courts where things are not clear? I might be wrong....

It'd be a bloody awful way of trying to define a corporate structure with no current standing in law, with all the attendant legal ramifications that would have. I think they do invoke such a standard in cases where the experience of the "man on the street" is relevant, e.g. expectations when purchasing a car or entering a broadband contract. However, I can't see why it'd have the least bit of relevance in such a case. I'm not a legal expert, but I'd hope they aren't that foolish.