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neil99
22nd August 2016, 13:45
Hi All

Are people planning to leave their current contracts by April 2017 ?

What's the chances of being billed for PAYE from the date they started.

I'm assuming the revenue will investigate anyone who goes from outside to inside IR35 working on the same contract or similar ?

northernladuk
22nd August 2016, 13:47
Hi All

I'm telling people at work they'd better leave their current contracts by April 2017 or face being billed for PAYE from the date they started. For some people this would be as far back as late 2013.

I'm assuming the revenue will investigate anyone who goes from outside to inside IR35 working on the same contract or similar. It might be a nasty surprise from people.

If I were you I'd just get your head down and look after your own business. If they act on your advice and something changes between now and then you could land in hot water, not least if your client gets wind of what you are doing and bins you.

Let them make their own decisions.

MrMarkyMark
22nd August 2016, 13:48
Hi All

I'm telling people at work they'd better leave their current contracts by April 2017 or face being billed for PAYE from the date they started. For some people this would be as far back as late 2013.

I'm assuming the revenue will investigate anyone who goes from outside to inside IR35 working on the same contract or similar. It might be a nasty surprise from people.

Where did you read this particular retrospective tax part?


If I were you I'd just get your head down and look after your own business. If they act on your advice and something changes between now and then you could land in hot water, not least if your client gets wind of what you are doing and bins you.

Let them make their own decisions.

This.

eek
22nd August 2016, 13:49
Hi All

I'm telling people at work they'd better leave their current contracts by April 2017 or face being billed for PAYE from the date they started. For some people this would be as far back as late 2013.

I'm assuming the revenue will investigate anyone who goes from outside to inside IR35 working on the same contract or similar. It might be a nasty surprise from people.

Why? How have you jumped to the conclusion that the changes will be retrospective. Do you have anything that backs that up outside your own imagination.

northernladuk
22nd August 2016, 13:50
Why? How have you jumped to the conclusion that the changes will be retrospective. Do you have anything that backs that up outside your own imagination.

A little knowledge is a dangerous thing.....

jamesbrown
22nd August 2016, 13:57
This isn't a clarification of existing legislation, it's new legislation, so there is literally no prospect of retrospective taxation. Indeed, for those desiring to remain in contract beyond April 2017, it will require a change in contract, because the terms will have changed to deemed employment. However, I agree with the underlying premise that it would be better to move sooner, simply for the practical reason that the private sector will be receiving a lot of latecomers from the PS once these contractors realise what has happened. Also, there may be some risk of additional scrutiny on older contracts (under existing IR35 rules), but that is speculation.

neil99
22nd August 2016, 13:57
Why? How have you jumped to the conclusion that the changes will be retrospective. Do you have anything that backs that up outside your own imagination.

Well it's an obvious question for a tax inspector to ask isn't it? There's nothing retrospective about it except that being 'out' then 'in' not because of a change in the IR35 rules per se seems an invitation for an investigation.

Perhaps one for the IR35 experts but I have a strong feeling that their advice would be.

northernladuk
22nd August 2016, 14:01
Well it's an obvious question for a tax inspector to ask isn't it? There's nothing retrospective about it except that being 'out' then 'in' not because of a change in the IR35 rules per se seems an invitation for an investigation.

Perhaps one for the IR35 experts but I have a strong feeling that their advice would be.

What on earth are you talking about?

As I said earlier, you really shouldn't be getting involved scaremongering colleagues with so little detail. Just get your head down and get out early to pick the juicy gig's and leave them to it.

jamesbrown
22nd August 2016, 14:04
Well it's an obvious question for a tax inspector to ask isn't it? There's nothing retrospective about it except that being 'out' then 'in' not because of a change in the IR35 rules per se seems an invitation for an investigation.

Perhaps one for the IR35 experts but I have a strong feeling that their advice would be.

Well, OK, but you're confusing scrutiny with retrospection, and we all know the success rate of HMRC w/ IR35 investigations, which is precisely why this legislation is coming forward. It's speculation that PS contractors will receive additional scrutiny on old contracts, but it's certainly possible. If they were outside, nothing in the new legislation will change this. Essentially, HMRC has accepted that they cannot address the problem (i.e. in their view) with existing legislation, so they are circumventing it to eliminate due process.

MrMarkyMark
22nd August 2016, 14:07
Well it's an obvious question for a tax inspector to ask isn't it? There's nothing retrospective about it except that being 'out' then 'in' not because of a change in the IR35 rules per se seems an invitation for an investigation.

Perhaps one for the IR35 experts but I have a strong feeling that their advice would be.

Well, I suggest you keep your strong "feelings" to yourself and don't post them in the professional forums, please :facepalm:

neil99
22nd August 2016, 14:08
What on earth are you talking about?

As I said earlier, you really shouldn't be getting involved scaremongering colleagues with so little detail. Just get your head down and get out early to pick the juicy gig's and leave them to it.

What you might call a fiscal risk assessment is not scaremongering. Complacency is not advisable in the current climate.

MrMarkyMark
22nd August 2016, 14:12
What you might call a fiscal risk assessment is not scaremongering. Complacency is not advisable in the current climate.


Still, at least the advice is worth what they paid you for it :rolleyes:

eek
22nd August 2016, 14:21
What you might call a fiscal risk assessment is not scaremongering. Complacency is not advisable in the current climate.

Exactly how much do you owe to HMRC thanks to your ill advised use of a tax avoidance scheme?

neil99
22nd August 2016, 14:33
Exactly how much do you owe to HMRC thanks to your ill advised use of a tax avoidance scheme?

I settled with HMRC and paid my whack. Happy?

eek
22nd August 2016, 14:38
I settled with HMRC and paid my whack. Happy?

Thanks for confirming my suspicion.

neil99
22nd August 2016, 14:43
Thanks for confirming my suspicion.

I'm surprised it took so long for you to work out.

There's no need to be smug and sneer at those who are now in dispute with HMRC.

It might happen to you one day.

DotasScandal
22nd August 2016, 14:47
Exactly how much do you owe to HMRC thanks to your ill advised use of a tax avoidance scheme?

Uncalled for.

eek
22nd August 2016, 14:59
Uncalled for.

No... I knew exactly what this busybody was up to and thought I would ask the question so that others understood the background....

If it is uncalled for I'm sure a mod will tell me... Somehow I doubt they will....

DotasScandal
22nd August 2016, 15:07
If it is uncalled for I'm sure a mod will tell me... Somehow I doubt they will....

Mods are to enforce forum rules, not judge the decency of posts (or lacktherof).
But given that kicking fellow contractors (preferably when down) is CUK'ers favourite game, not sure why I bother...

northernladuk
22nd August 2016, 15:09
Mods are to enforce forum rules, not judge the decency of posts (or lacktherof).
But given that kicking fellow contractors (preferably when down) is CUK'ers favourite game, not sure why I bother...

I'd you can't beat 'em, join 'em.

eek
22nd August 2016, 15:12
Mods are to enforce forum rules, not judge the decency of posts (or lacktherof).
But given that kicking fellow contractors (preferably when down) is CUK'ers favourite game, not sure why I bother...

One of the phases that seem to occur with all people subject to HMRC's attacks has been to project their current problems into the future and claim that other contractors will be impacted by some random change...

So I'm not kicking people when they are down, I'm asking why they are suddenly (from nowhere) making statements about HMRC that don't have any foundation in anything HMRC has published.... As there was no basis for the statements made, the next question is why are such statements being made.

Hence my question, yes it was blunt but how else do you want me to ask it (softly step by step over 10-20 posts) or should I just ignore the blooming obvious elephant (to me) in the thread that others won't see....

neil99
22nd August 2016, 15:29
One of the phases that seem to occur with all people subject to HMRC's attacks has been to project their current problems into the future and claim that other contractors will be impacted by some random change...

So I'm not kicking people when they are down, I'm asking why they are suddenly (from nowhere) making statements about HMRC that don't have any foundation in anything HMRC has published.... As there was no basis for the statements made, the next question is why are such statements being made.

Hence my question, yes it was blunt but how else do you want me to ask it (softly step by step over 10-20 posts) or should I just ignore the blooming obvious elephant (to me) in the thread that others won't see....

Fair enough. My original was post stupidly put and I've rewritten it.

DotasScandal
22nd August 2016, 15:39
One of the phases that seem to occur with all people subject to HMRC's attacks has been to project their current problems into the future and claim that other contractors will be impacted by some random change...
So I'm not kicking people when they are down, I'm asking why they are suddenly (from nowhere) making statements about HMRC that don't have any foundation in anything HMRC has published....


One of the phases that seem to occur with all people subject to HMRC's attacks has been to project their current problems into the future and claim that other contractors will be impacted by some random change...
So I'm not kicking people when they are down, I'm asking why they are suddenly (from nowhere) making statements about HMRC that don't have any foundation in anything HMRC has published....

Because there is this thing called trends.
It's one thing to be aware that HMRC is inflicting pain on some contractors out there, experiencing said pain directly is quite another. Perhaps our friend was trying to be helpful and help fellow contractors avoid pain.

Let me give you an example to illustrate.

In 2014, the Government introduced the APN legislation, giving HMRC the power to inflict pain to contractors (retrospectively going back to 2004) having or having used DOTAS-registered schemes, and having open inquiries against their name.

Contractors with non-DOTAS schemes breathed a sigh of relief.
Some mocked the DOTAS contractors for being "stupid" enough going for not choosing a "non-DOTAS" scheme.

Contractors with no open enquiries breathed a sigh of relief - they got lucky.
A few actually mocked the DOTAS contractors with open enquiries for being unlucky bastards (they must have deserved it somehow - maybe retribution for some past sins or what have you).

At the time already, we warned against the "first they came for the DOTAS contractors, and I said nothing..." mentality rampant in the "community", and postulated that HMRC would get greedier still very quickly.

Lo and behold, in March 2016, Osborne announces plans to screw EVERY contractor who's ever had the misfortune of going anywhere near a "scheme" - this time regardless of DOTAS status or presence of valid enquiry and (cherry on the cake), applicable retrospectively going back to 1999.

If you draw a dot representing the 2014 event, then a dot representing the 2016 event, you'll get a trendline of sorts. Consider it.
That your present circumstances are favourable today does not mean they will be favourable tomorrow.

Look at the trend.

eek
22nd August 2016, 15:48
Because there is this thing called trends.
It's one thing to be aware that HMRC is inflicting pain on some contractors out there, experiencing said pain directly is quite another. Perhaps our friend was trying to be helpful and help fellow contractors avoid pain.

Let me give you an example to illustrate.

In 2014, the Government introduced the APN legislation, giving HMRC the power to inflict pain to contractors (retrospectively going back to 2004) having or having used DOTAS-registered schemes, and having open inquiries against their name.

Contractors with non-DOTAS schemes breathed a sigh of relief.
Some mocked the DOTAS contractors for being "stupid" enough going for not choosing a "non-DOTAS" scheme.

Contractors with no open enquiries breathed a sigh of relief - they got lucky.
A few actually mocked the DOTAS contractors with open enquiries for being unlucky bastards (they must have deserved it somehow - maybe retribution for some past sins or what have you).

At the time already, we warned against the "first they came for the DOTAS contractors, and I said nothing..." mentality rampant in the "community", and postulated that HMRC would get greedier still very quickly.

Lo and behold, in March 2016, Osborne announces plans to screw EVERY contractor who's ever had the misfortune of going anywhere near a "scheme" - this time regardless of DOTAS status or presence of valid enquiry and (cherry on the cake), applicable retrospectively going back to 1999.

If you draw a dot representing the 2014 event, then a dot representing the 2016 event, you'll get a trendline of sorts. Consider it.
That your present circumstances are favourable today does not mean they will be favourable tomorrow.

Look at the trend.

That has nothing to do with contractors but instead those who were scared by smooth talking salesmen into join a tax avoidance scheme that they didn't spend enough time researching before committing to..

I'm very happy to discuss those schemes outside of the protected HMRC Scheme Enquiries sub-forum - while it will be rather hard for me to bite my tongue and give my opinion of all those involved without getting banned I'll try my best...

mudskipper
22nd August 2016, 15:58
Back to the OP.

If someone has had their current contract and working practices reviewed as "outside" have provided that evidence to their client and had it accepted, I would think they are in a great position to challenge the client's (or tool's) decision if they are deemed to be "inside" after April 2016.

DotasScandal
22nd August 2016, 15:59
That has nothing to do with contractors but instead those who were scared by smooth talking salesmen into join a tax avoidance scheme that they didn't spend enough time researching before committing to...

It has everything to do with contractors. Yes, like it or not, even "scheme" contractors are your fellow professionals. And believe it or not - some did their due diligence.

But thanks for your comment nonetheless, because you are precisely showcasing the "us & them" mentality that I was talking about.


I'm very happy to discuss those schemes outside of the protected HMRC Scheme Enquiries sub-forum - while it will be rather hard for me to bite my tongue and give my opinion of all those involved without getting banned I'll try my best...

This was not meant as an invitation but, as I wrote, as an illustration. Think I've made my point, so we don't particularly need to discuss further, and you won't have to bite your tongue.

nucastle
22nd August 2016, 16:09
I've already had two newbie contractors who have no knowledge of forums like these, tell me about a way they can retain 90% of their invoices.

And these are public sector contractors, working at or next door to HMRC! So the assumption that it's fairly obvious that these schemes are easily spotted and avoided is not the case.

neil99
22nd August 2016, 16:14
Back to the OP.

If someone has had their current contract and working practices reviewed as "outside" have provided that evidence to their client and had it accepted, I would think they are in a great position to challenge the client's (or tool's) decision if they are deemed to be "inside" after April 2016.

Yep. I had my contract reviewed but not my working practices. I don't think many of my friends here even had a contract review.

DotasScandal
22nd August 2016, 16:14
I've already had two newbie contractors who have no knowledge of forums like these, tell me about a way you can retain 90% of their invoices.
And these are public sector contractors. So the assumption that it's fairly obvious that these schemes are easily spotted and avoided is not the case.

And that's in 2016, when there are HMRC "spotlights" all over the place.
2005 was much different.

eek
22nd August 2016, 16:16
I've already had two newbie contractors who have no knowledge of forums like these, tell me about a way you can retain 90% of their invoices.

And these are public sector contractors. So the assumption that it's fairly obvious that these schemes are easily spotted and avoided is not the case.

Scheme salesman have 2 things on their side

1) the fear story of ir35
2) the greed of the contractor

I would also add that until very recently HMRC didn't help by not having a don't be so fluffing stupid page on their website. Thankfully and only 15 years too late that admission has been fixed

eek
22nd August 2016, 16:17
Back to the OP.

If someone has had their current contract and working practices reviewed as "outside" have provided that evidence to their client and had it accepted, I would think they are in a great position to challenge the client's (or tool's) decision if they are deemed to be "inside" after April 2016.

That wasn't the original question. If it was we wouldn't have been sidetracked into schemes.

eek
22nd August 2016, 16:23
It has everything to do with contractors. Yes, like it or not, even "scheme" contractors are your fellow professionals. And believe it or not - some did their due diligence.

But thanks for your comment nonetheless, because you are precisely showcasing the "us & them" mentality that I was talking about.



This was not meant as an invitation but, as I wrote, as an illustration. Think I've made my point, so we don't particularly need to discuss further, and you won't have to bite your tongue.

To be blunt I don't think they did. My due diligence back in 2001 said run a mile, those things require £100,000 minimum to fight and nothing's changed there.

And it's not a them and us mentality. It's the use of contractor in a post about tax schemes that I object to. Member would be a far more accurate word to use than contractor as only some contractors were members of such schemes and IPSE argue that it's neither a large or significant proportion of all their target members

DotasScandal
22nd August 2016, 16:30
Scheme salesman have 2 things on their side
1) the fear story of ir35
2) the greed of the contractor
I would also add that until very recently HMRC didn't help by not having a don't be so fluffing stupid page on their website. Thankfully and only 15 years too late that admission has been fixed

Ah, you forgot the utmost important point:

3/ the complicity of HMRC themselves

Please understand that their part goes much, much further than "not having a page on their website".
IR35 sparkled the whole "Contractor Scheme" boom of the early 00's, there is no doubt about that. But HMRC could have killed it in the egg if they had wanted.

Instead, they FUELED the industry, causing it to prosper probably beyond the promoters' wildest expectations.
How? simply by supporting, through their silence and inaction, the promoters' narrative. That makes them complicit whether they'll admit it or not.
Someone more conspiracy minded might say that they set up tens of thousands of poor slobs in order to reap them later (with interest!).
We'll just say that thay have been a bunch of incompetent, lazy bastards that sat on their hands for 10+ years, and are now panicking at the idea that someone might take notice. Hence the need for all the retro and unorthodox measures to make sure individuals do not or cannot pursue their day in court, and that facts are never ever examined by tax tribunals.

DotasScandal
22nd August 2016, 16:34
IPSE argue that it's neither a large or significant proportion of all their target members

How would IPSE know? I don't remember being asked when I joined.Most IPSE members are silent / passive to start with, they're not going to volunteer the info.

Personally I think it's an excuse by IPSE to avoid addressing the subject.

neil99
22nd August 2016, 16:41
That wasn't the original question. If it was we wouldn't have been sidetracked into schemes.

Actually it was the original question. Just put a different way.

MrMarkyMark
22nd August 2016, 16:45
To be blunt I don't think they did. My due diligence back in 2001 said run a mile, those things require £100,000 minimum to fight and nothing's changed there.

And it's not a them and us mentality. It's the use of contractor in a post about tax schemes that I object to. Member would be a far more accurate word to use than contractor as only some contractors were members of such schemes and IPSE argue that it's neither a large or significant proportion of all their target members

Agreed, so did mine.
If we are talking about an them and us mentality,lots of people I knew at the time, said I was a mug for not participating.

Anyway the post seems to have gone well South, in any case.

cojak
22nd August 2016, 18:51
Mods are to enforce forum rules, not judge the decency of posts (or lacktherof).
But given that kicking fellow contractors (preferably when down) is CUK'ers favourite game, not sure why I bother...

We do both actually. And since this thread is in 'The Future of Contracting' and not 'HMRC Scheme Enquiries' the usual Professional house rules apply.

eek
22nd August 2016, 18:58
Actually it was the original question. Just put a different way.

No it wasn't there is a large difference between this rant


Hi All

I'm telling people at work they'd better leave their current contracts by April 2017 or face being billed for PAYE from the date they started. For some people this would be as far back as late 2013.

I'm assuming the revenue will investigate anyone who goes from outside to inside IR35 working on the same contract or similar. It might be a nasty surprise from people.

and this far more sane question without the hyperbola


Hi All

Are people planning to leave their current contracts by April 2017 ?

What's the chances of being billed for PAYE from the date they started.

I'm assuming the revenue will investigate anyone who goes from outside to inside IR35 working on the same contract or similar ?

and I do call out posts like the original version because it only comes from a posters with (shall we say) a certain history...

neil99
22nd August 2016, 19:26
No comment

cojak
22nd August 2016, 19:41
Just delete the thread please. And then remove my account. Thanks.

I'm afraid not. I would suggest not using your account or stay within HMRC Scheme Enquiries.

westtester
25th August 2016, 07:50
Looking at Jobserve, I can see that UKHO are looking for contractors and the advert specifies

"They are also on the forefront of tax assurance set out by HMRC, the contractor must be willing to comply with the rules operating inside IR35."

At a maximum of £240 a day for testers or £300 a day for C# devs, who's going to bother?

eek
25th August 2016, 07:56
Looking at Jobserve, I can see that UKHO are looking for contractors and the advert specifies

"They are also on the forefront of tax assurance set out by HMRC, the contractor must be willing to comply with the rules operating inside IR35."

At a maximum of £240 a day for testers or £300 a day for C# devs, who's going to bother?

£575 for a Java dev makes sense £300 and I would go perm

difficulttimes
25th August 2016, 08:43
That is surprising that they are advertising contracts like this pre-April but I guess we better get used to it..
I still don't understand if they want those terms just employ someone on a FTC - probably too lazy to get the approvals as it is always easier recruiting a day rate contractor. Guess they will find out the hard way when they see who applies for this and other roles.

westtester
25th August 2016, 09:56
Well they are losing practically all their contractors this month as there was an end of August deadline for coming inside IR35 in order to continue working there.

I'm surprised at the rates as they are considerably lower than they were paying earlier this year. I don't know why they think forcing folk inside IR35 and offering a lower rate is going to tempt anyone. It should be a good indicator of what might happen to the rest of the PS after April 2017.

nucastle
25th August 2016, 12:29
Just turned down an agent who knew I was leaving the PS because of IR35 approaching me for a gig at the BBC in Manchester.

He pre-empted my answer about IR35 and this being no different by saying this would not be caught by IR35 as this would be operated via Reed (he was not a Reed agent) as a 'work package' which would still use my Ltd company.

Could this be how the industry is attempting to circumvent the new rules?

I still said no. Regardless of any fancy new engagement setup, it doesn't stop you getting contacted by internal compliance to see proof that correct tax is being paid and that your contract is 'acceptable'.

northernladuk
25th August 2016, 12:47
Just turned down an agent who knew I was leaving the PS because of IR35 approaching me for a gig at the BBC in Manchester.

He pre-empted my answer about IR35 and this being no different by saying this would not be caught by IR35 as this would be operated via Reed (he was not a Reed agent) as a 'work package' which would still use my Ltd company.

Could this be how the industry is attempting to circumvent the new rules?

I still said no. Regardless of any fancy new engagement setup, it doesn't stop you getting contacted by internal compliance to see proof that correct tax is being paid and that your contract is 'acceptable'.

Wouldn't that be something similar to the IPSE FLC offering that was floated awhile ago?
Goodbye to IR35 from FLC - Contractor Weekly (http://www.contractorweekly.com/contractor-news/tax-a-ir35-news/1034-goodbye-to-ir35-from-flc)

It would be interesting to ask Reed how they believe they fit in with Example 3 of the consultation?


Example 3: Contract that involves workers providing services to the public sector.
A consultancy PLC contracts to provide on-site consultancy services at the Ministry. This
consists of ten information management consultants to work in the Ministry’s policy unit for up
to six months, as well as some software and online support. The supply of ten staff in this
contract would be within the scope of the proposed measure. The consultancy would need to
use the online tool and consider the new rules. They need to operate tax and National
Insurance on the payments to the PSCs. The PSCs would need to give information to the
consultancy such as the worker’s name, address and National Insurance Number so that the
consultancy could add them to their payroll.

I think the devil is in the details with the Reed option so do a lot of digging first.

northernladuk
25th August 2016, 12:49
And just to add, I'm surprised but looks like the word is getting around at my client. We've got one guy leaving tomorrow and another lady who's notice has just gone in. Both started looking because of the new rules.

youngguy
25th August 2016, 13:43
When I get calls about PS roles now I ask their views on the April changes. Unsurprisingly all have said they don't think it will apply. This ranges from "it can't work" to " there will be a way around it" to "ah but this role is exempt". I make a point of saying I'm going nowhere near the sector until there is clarity and the rates they are currently offering will yield them no decent contractors

jamesbrown
25th August 2016, 14:24
Wouldn't that be something similar to the IPSE FLC offering that was floated awhile ago?

Sounds like agency BS to me. Source the meat, and worry about the details later (April, 2017).

Come April 2017, no agency is going to risk the failure to operate PAYE/NIC correctly, especially when they're clueless about the working practices. The consequences will be pretty much the same as the ITEPA on agencies engaging with sole traders. Either you're on PAYE umbrella or agency PAYE. There may be a few PS clients that stick their necks out and factor a highly specialist project as being outside IR35 (a good thing, in principle), but there won't be any agents going maverick, because they're liable, and yet clueless about the working practices. The PS is going to be a graveyard pretty soon...

neil99
26th August 2016, 08:54
Sounds like agency BS to me. Source the meat, and worry about the details later (April, 2017).

Come April 2017, no agency is going to risk the failure to operate PAYE/NIC correctly, especially when they're clueless about the working practices. The consequences will be pretty much the same as the ITEPA on agencies engaging with sole traders. Either you're on PAYE umbrella or agency PAYE. There may be a few PS clients that stick their necks out and factor a highly specialist project as being outside IR35 (a good thing, in principle), but there won't be any agents going maverick, because they're liable, and yet clueless about the working practices. The PS is going to be a graveyard pretty soon...

I just had a recruiter put the phone down on me when I challenged his assertion that the contracts with PS they were selling would definitely be outside of IR35.

neil99
26th August 2016, 08:56
When I get calls about PS roles now I ask their views on the April changes. Unsurprisingly all have said they don't think it will apply. This ranges from "it can't work" to " there will be a way around it" to "ah but this role is exempt". I make a point of saying I'm going nowhere near the sector until there is clarity and the rates they are currently offering will yield them no decent contractors

For what it's worth, contractor doctor very kindly wrote my a lengthy reply about my concerns:

Public Sector: IR35 Concerns - Contractor Weekly (http://www.contractorweekly.com/contractor-news/contractor-doctor/1397-public-sector-ir35-concerns)

northernladuk
26th August 2016, 08:58
I just had a recruiter put the phone down on me when I challenged his assertion that the contracts with PS they were selling would definitely be outside of IR35.

Sadly he knows there are enough chumps that don't know or don't care about IR35 out there that will take it. What he doesn't realise is he's g9nna have to start again when that contractor leaves next April.

northernladuk
26th August 2016, 09:07
For what it's worth, contractor doctor very kindly wrote my a lengthy reply about my concerns:

Public Sector: IR35 Concerns - Contractor Weekly (http://www.contractorweekly.com/contractor-news/contractor-doctor/1397-public-sector-ir35-concerns)

That article isn't to be taken lightly though. The two questions for example...


1.Is the worker required to do the work themselves?
2.Does the engager decide or have the right to decide how the work should be done?


I've spent a lot of time badgering my client about these. I'd hazard a bet that a large number of roles in the PS will struggle to get anything but YES to both of those. It's taken a lot of work to prove to my client the answer to these is NO for me and have to constantly remind them which doesn't go down that well. I can't see how your standard permatractor PM or coder is going to do it.

You've still got to be very careful and can't rest on your laurels.

neil99
26th August 2016, 09:22
Sadly he knows there are enough chumps that don't know or don't care about IR35 out there that will take it. What he doesn't realise is he's g9nna have to start again when that contractor leaves next April.

I'm sure HMRC would be interested in the miss-selling and giving out adhoc tax advice that is wrong.

SueEllen
26th August 2016, 09:24
I'm sure HMRC would be interested in the miss-selling and giving out adhoc tax advice that is wrong.

I doubt few contractors are clever enough to catch them misselling as agents do it verbally.

northernladuk
26th August 2016, 09:30
I'm sure HMRC would be interested in the miss-selling and giving out adhoc tax advice that is wrong.

I very much doubt that.

Hobosapien
26th August 2016, 09:49
I doubt few contractors are clever enough to catch them misselling as agents do it verbally.

Maybe we should start those conversations with "one moment, just starting the audio recording". Whether we have that capability or not, to at least try to keep them honest. I know, that thought alone is :rollin:

If there was proper regulation of agencies they'd have to record all their calls like many other sales people do.

I presume mobile phone plan sellers have to record their calls as a verbal contract when selling upgrades over the phone that aren't always what the buyer really wants or needs. For those I usually ask them to put the offer in writing/email and so far not one has been followed up that way so no sale. Maybe that's the best way to handle agent's BS to weed out some of the shysters. If it can't stand up to being put into email form then that speaks for itself.

neil99
26th August 2016, 10:47
I very much doubt that.

Let's call the IR35 help line and ask them?

LondonManc
26th August 2016, 10:56
So, when your PS contract is found to be outside IR35, how do you go about reclaiming money taken from you unfairly? Not least when you've already run your ltdco year end?

jonnyboy
26th August 2016, 10:57
I presume mobile phone plan sellers have to record their calls as a verbal contract when selling upgrades over the phone that aren't always what the buyer really wants or needs. For those I usually ask them to put the offer in writing/email and so far not one has been followed up that way so no sale. Maybe that's the best way to handle agent's BS to weed out some of the shysters. If it can't stand up to being put into email form then that speaks for itself.

ACR on Android (free app) records all incoming and outgoing calls. Now technically you have to tell the other person you are recording the call, but I view those dam annoying messages as permission (please note, calls may be recorded...") as in "you may" - so permission is normally granted from the get go... unless an agent calls you - still, better to have it recorded than not. I am sure there is something similar on iPhones.

DotasScandal
26th August 2016, 11:09
how do you go about reclaiming money taken from you unfairly?

:laugh:laugh:laugh:laugh:laugh:laugh:laugh
You're not really familiar with HMRC's new "business plan", it seems...
As the APN crowd, they'll bring you up to speed.

LondonManc
26th August 2016, 11:12
:laugh:laugh:laugh:laugh:laugh:laugh:laugh
You're not really familiar with HMRC's new "business plan", it seems...
As the APN crowd, they'll bring you up to speed.

If you're going to laugh, I'm happy to play the "well, I wasn't stupid enough to fall for a scheme" card. I considered it a legitimate question.

youngguy
26th August 2016, 11:18
That article isn't to be taken lightly though. The two questions for example...



I've spent a lot of time badgering my client about these. I'd hazard a bet that a large number of roles in the PS will struggle to get anything but YES to both of those. It's taken a lot of work to prove to my client the answer to these is NO for me and have to constantly remind them which doesn't go down that well. I can't see how your standard permatractor PM or coder is going to do it.

You've still got to be very careful and can't rest on your laurels.

Also we need to remember that, although those Qs are not new, the examples in the consultation doc are. I cannot see how the definition they use would not catch all.

youngguy
26th August 2016, 11:21
I'm sure HMRC would be interested in the miss-selling and giving out adhoc tax advice that is wrong.

I don't think it makes a difference.

Gov enforces rules in Apr. The contractor either accepts or walks . What an agent told them months before won't matter. Agent can plead ignorance or just deny. To be fair I have heard just as many contractors say they will be fine come Apr "ah but I'm a managed service" for example.

youngguy
26th August 2016, 11:24
Maybe we should start those conversations with "one moment, just starting the audio recording". Whether we have that capability or not, to at least try to keep them honest. I know, that thought alone is :rollin:

If there was proper regulation of agencies they'd have to record all their calls like many other sales people do.

I presume mobile phone plan sellers have to record their calls as a verbal contract when selling upgrades over the phone that aren't always what the buyer really wants or needs. For those I usually ask them to put the offer in writing/email and so far not one has been followed up that way so no sale. Maybe that's the best way to handle agent's BS to weed out some of the shysters. If it can't stand up to being put into email form then that speaks for itself.

Ok, but as a business I would never take someone with a vested interest in me signing a contract at their word - that is why I always get an impartial professional view on contracts before I sign.

Besides, they won't be laughing when they have to do all the admin for collecting our tax come April. I'm sure agency mngrs are as nervous as us about the rules ,but the first line fodder has only one thing on their mind....get the signature so the commission can be banked .

youngguy
26th August 2016, 11:26
So, when your PS contract is found to be outside IR35, how do you go about reclaiming money taken from you unfairly? Not least when you've already run your ltdco year end?

I'm yet to think of an example or delivery model where it would be found outside.....anyone else had more success?

DotasScandal
26th August 2016, 11:28
If you're going to laugh, I'm happy to play the "well, I wasn't stupid enough to fall for a scheme" card. I considered it a legitimate question.

Not laughing at your question. Just implying that HMRC has probably not thought about any actual provisions for such repayments (see APN's vague "if we were wrong, we'll pay you back"... followed by a myriad of exclusions and special cases where they reserve the right to NOT pay you back).

neil99
26th August 2016, 11:31
So, when your PS contract is found to be outside IR35, how do you go about reclaiming money taken from you unfairly? Not least when you've already run your ltdco year end?

You'd need a lot of cash to engage a tax specialist who would then take up the matter with the revenue, presumably leading to a tribunal if an agreement can't be reached by arbitration.

I'm probably wrong here but I think the going rate is 250k for a 1st tier tribunal ?

neil99
26th August 2016, 11:33
I'm yet to think of an example or delivery model where it would be found outside.....anyone else had more success?

Evidently the fairly well know Bristol based agency that specialises in security cleared contracts has come up with one! PM me for the details. (I need an emoticon for 'tongue in cheek')

DotasScandal
26th August 2016, 11:35
It's something like that.
I.e. for an individual contractor, it's practically impossible to fund.
HMRC knows it, and it's perfectly factored into the calculation (as are all the various "stalling tactics" that will be deployed against you).

teapot418
26th August 2016, 16:26
For what it's worth, contractor doctor very kindly wrote my a lengthy reply about my concerns:

Public Sector: IR35 Concerns - Contractor Weekly (http://www.contractorweekly.com/contractor-news/contractor-doctor/1397-public-sector-ir35-concerns)

"Answering ‘yes’ to both questions places the contract firmly inside IR35."

No, it doesn't.

It means that HMRC deem you to be a disguised employee, but that does not reflect IR35 case law. FCSA and IPSE both made this point strongly in their responses. If/when this comes in, I would expect that an organisation such as IPSE would cherry pick a couple of good cases and take them all the way - of course this would require the contractor being prepared for a long and stressful fight.

eek
26th August 2016, 16:51
"Answering ‘yes’ to both questions places the contract firmly inside IR35."

No, it doesn't.

It means that HMRC deem you to be a disguised employee, but that does not reflect IR35 case law. FCSA and IPSE both made this point strongly in their responses. If/when this comes in, I would expect that an organisation such as IPSE would cherry pick a couple of good cases and take them all the way - of course this would require the contractor being prepared for a long and stressful fight.

I think that misses the entire point of HMRC's plan which is that PAYE and NI will be deducted well before the contractor receives his money.

Hence its a moot point taking a case to a tribunal as there is no money to fight over.... Granted I can imagine IPSE and co may be able to cherry pick and find a case to fight - I'm just not sure who they would be fighting against...

eek
31st August 2016, 11:43
Just sent a second email rejecting a project out of hand due to the ir35 changes.

Let's see what the response is

LondonManc
31st August 2016, 12:02
Just sent a second email rejecting a project out of hand due to the ir35 changes.

Let's see what the response is


Say you're on a £500 dayrate at the moment. Expenses aside (let's assume it's a basic commute and the fiver a day isn't worth the hassle collecting receipts for), what would the mark-up need to be to get the same "take home"? Are you looking at, say, £700?

DaveB
31st August 2016, 12:13
Say you're on a £500 dayrate at the moment. Expenses aside (let's assume it's a basic commute and the fiver a day isn't worth the hassle collecting receipts for), what would the mark-up need to be to get the same "take home"? Are you looking at, say, £700?

That's in the right ball park for a bog standard one man band contractor who takes 100% of available divi's.

eek
31st August 2016, 12:31
That's in the right ball park for a bog standard one man band contractor who takes 100% of available divi's.

You also have the joy of travel expenses which I would no longer be able to take from untaxed income. That's probably £30 extra if commutable, £100 if not and £200 for London - the train fare is £300 a week now

DaveB
31st August 2016, 12:35
You also have the joy of travel expenses which I would no longer be able to take from untaxed income. That's probably £30 extra if commutable, £100 if not and £200 for London - the train fare is £300 a week now

He did say expenses aside, but yes, that's another cost to add to the rate.

And then there are those that are income splitting, have a spouse or another employee on the payroll, aren't taking 100% divis, are making large pension contributions etc etc etc...

:suicide:

eek
31st August 2016, 12:50
He did say expenses aside, but yes, that's another cost to add to the rate.

And then there are those that are income splitting, have a spouse or another employee on the payroll, aren't taking 100% divis, are making large pension contributions etc etc etc...

:suicide:

I know they are an aside but its worth mentioning them - as it shows the long term planning that has been implemented in this scheme.

Either way onwards and upwards towards a proper consultancy....

jamesbrown
31st August 2016, 12:53
Add all that in, and you'll still be 50% cheaper than the big 4 :laugh

LondonManc
31st August 2016, 12:59
Add all that in, and you'll still be 50% cheaper than the big 4 :laugh

Twice as good for half the price. Fancy that.

eek
31st August 2016, 13:13
Add all that in, and you'll still be 50% cheaper than the big 4 :laugh

Yep I would still be about 30-50% cheaper than the big 4.

Unfortunately I would be in the same ballpark as other Microsoft Partners before agency costs and that might be a problem....

youngguy
31st August 2016, 13:40
Say you're on a £500 dayrate at the moment. Expenses aside (let's assume it's a basic commute and the fiver a day isn't worth the hassle collecting receipts for), what would the mark-up need to be to get the same "take home"? Are you looking at, say, £700?

I did a rough estimate a few weeks ago based on what little info there is and worked out I'd have had to raise my rate by about 20-25per cent if pension was still an allowable expense and at least 40per cent if pension is not allowable . (I generally commute daily and have pretty low expenses )

jamesbrown
31st August 2016, 13:48
Yep I would still be about 30-50% cheaper than the big 4.

Unfortunately I would be in the same ballpark as other Microsoft Partners before agency costs and that might be a problem....

...30-50% better too :D

westtester
31st August 2016, 14:14
I did a rough estimate a few weeks ago based on what little info there is and worked out I'd have had to raise my rate by about 20-25per cent if pension was still an allowable expense and at least 40per cent if pension is not allowable . (I generally commute daily and have pretty low expenses )

I've seen a couple of ads for testers on govt projects and they're offering not much over £200 a day, if anything it looks like rates are going downwards. Maybe the pay ceiling that's been operating in the NHS is being applied to other departments? I think the chances of getting big rates rises are pretty slim.

eek
31st August 2016, 14:20
I've seen a couple of ads for testers on govt projects and they're offering not much over £200 a day, if anything it looks like rates are going downwards. Maybe the pay ceiling that's been operating in the NHS is being applied to other departments? I think the chances of getting big rates rises are pretty slim.

Up north I'm seeing the opposite. Rates that at HP were no more than £450 max are now in DWP at £550-650 and they will be paying the upper end of that....

Granted its not testing but I don't think the public sector care much about things working...

LondonManc
31st August 2016, 14:21
Up north I'm seeing the opposite. Rates that at HP were no more than £450 max are now in DWP at £550-650 and they will be paying the upper end of that....

Granted its not testing but I don't think the public sector care much about things working...

So previously it was a gig via HP's consultancy arm?

youngguy
31st August 2016, 14:22
I've seen a couple of ads for testers on govt projects and they're offering not much over £200 a day, if anything it looks like rates are going downwards. Maybe the pay ceiling that's been operating in the NHS is being applied to other departments? I think the chances of getting big rates rises are pretty slim.

I'm going back over a yr but I did start seeing rates much lower, PMs at 350-400 etc.

I think once the CLone stuff started getting traction , with margins being low and fixed (i heard in the 4-8pc range), Capita went for numbers rather than margins. They would often say "the role is at 400 but we recommend you go in lower to be competitive". Over time this seems to have driven rates down a bit, as well as dept expectations.

Although I recall on several occasions depts being miffed at PMs with little experience who then could not cut the mustard. Buy cheap, buy twice .....

I agree re rate rises being unlikely. However as a business if I get a call about a role I will not immediately dismiss it until I know it is definitely not viable and I would go back to the PS if the terms were right (namely the rate)

eek
31st August 2016, 14:24
So previously it was a gig via HP's consultancy arm?

Nope previously this was hosted and managed by HP. The system is now going in house within DWP and that is the rate in the adverts that have appeared today for the system migration jobs....

LondonManc
31st August 2016, 14:26
Nope previously this was hosted and managed by HP. The project is now going in house within DWP and that is the rate in the adverts that have appeared today for the service migration jobs....

Ah right. It wouldn't surprise me if DWP are simply chopping the consultancy rate up and going direct to market rather than have HP chunk a fair whack on top because they're HP. As good as they are, you can get non-HP staff to do similar stuff for a fraction of the price. Let's not go there with chopping Capita out of the consulting part :D

neil99
31st August 2016, 15:45
Ah right. It wouldn't surprise me if DWP are simply chopping the consultancy rate up and going direct to market rather than have HP chunk a fair whack on top because they're HP. As good as they are, you can get non-HP staff to do similar stuff for a fraction of the price. Let's not go there with chopping Capita out of the consulting part :D

The big consultancies are charging out independent contractors at over double the rate they pay them at the place I am engaged. You'd think that margin would have to give.

I've been approached about work in Telford and Newcastle but told the agencies that it's not viable any more given we can't charge expenses and will likely taxed at source from April 2017.

northernladuk
31st August 2016, 15:52
The big consultancies are charging out independent contractors at over double the rate they pay them at the place I am engaged. You'd think that margin would have to give.

I've been approached about work in Telford and Newcastle but told the agencies that it's not viable any more given we can't charge expenses and will likely taxed at source from April 2017.

Indeed but they are a different model to us being engaged via an agent so not really a like for like comparison. Still outrageous though.

youngguy
31st August 2016, 16:18
Indeed but they are a different model to us being engaged via an agent so not really a like for like comparison. Still outrageous though.

How does that model work? Does the contractor get a day rate as an associate and get paid in a similar way, then they are badged as consultancy y who charge them at the standard consultancy rates?

I've never done it myself so have no knowledge .

northernladuk
31st August 2016, 16:25
In theory they offer a managed service rather bum on seats. They own a whole piece of work and delivery of it so the client doesn't have to. A managed service. They add more value than just a bum on seat. The reality is they take on a loss making service just to get in and then start farming people in getting so entrenched that the client has no choice but to keep using them.

youngguy
31st August 2016, 16:38
I guess we will see a lot more contractors subbing via a consultancy as April rules kick in, at least until the consultancies can swap them out for permies grads

northernladuk
31st August 2016, 16:42
I guess we will see a lot more contractors subbing via a consultancy as April rules kick in, at least until the consultancies can swap them out for permies grads

Doesn't one example in the consultation document cover the scenario where a consultancy has a number of people in. I'm sure they are still in scope.

LondonManc
31st August 2016, 16:46
The big consultancies are charging out independent contractors at over double the rate they pay them at the place I am engaged. You'd think that margin would have to give.

I've been approached about work in Telford and Newcastle but told the agencies that it's not viable any more given we can't charge expenses and will likely taxed at source from April 2017.

Yes to the first part; but I've seen other consultancies try and "compete" for business with local contractors by using bobs.

As for it not being viable, put in a quote to reflect the new tax levels. While they don't care about your tax situation, you do. It's not like it's changed mid-contract and you're about to down tools because they aren't going to reissue a new contract.

youngguy
31st August 2016, 17:03
Doesn't one example in the consultation document cover the scenario where a consultancy has a number of people in. I'm sure they are still in scope.

Oh Yes, scenario 3 if I recall.

This option would not circumvent the rules , but potentially a consultancy could hoover up the contractors , bung them a couple of hundred more and then once they get their own staff prepped, swap then out for permies.

Cost to client : the same (eg 1200 or whatever)
£ to contractor: few hundred more
Advantage to big 4: secure the work and make a few hundred profit on the contractor for 6 months then swap out for permies and make many 00s a day.

Managed service means they now have the business for an eternity

northernladuk
31st August 2016, 19:03
I'd spend more time actually understanding how agents work and what they are to you than flailing about and guessing what constancies are going to do.

eek
1st September 2016, 12:14
Nope previously this was hosted and managed by HP. The system is now going in house within DWP and that is the rate in the adverts that have appeared today for the system migration jobs....

And the architect job has appeared. Rates a bit low for the person who knows how it works and can fix the immediate performance issues I'm aware of - but I'm sure that can be negotiated slightly....

youngguy
1st September 2016, 12:18
I'd spend more time actually understanding how agents work and what they are to you than flailing about and guessing what constancies are going to do.

Oh come on NLUK, don't be grumpy about that! You must have better things to do than hold grudges and drag that up from yesterday.

Seeing as you did, it's interesting that all those (you included) who were quick to judge didn't actually come back with any information on the added value you had personally experienced.

I'm no one's enemy here. I come to learn and debate with an open mind. Others may like to d*ck measure,put people down or spend time trawling through posts to loiter around points from the past and have the last word.

The good thing is we all get what we need from this forum :)

LondonManc
1st September 2016, 12:18
Oh Yes, scenario 3 if I recall.

This option would not circumvent the rules , but potentially a consultancy could hoover up the contractors , bung them a couple of hundred more and then once they get their own staff prepped, swap then out for permies.

Cost to client : the same (eg 1200 or whatever)
£ to contractor: few hundred more
Advantage to big 4: secure the work and make a few hundred profit on the contractor for 6 months then swap out for permies and make many 00s a day.

Managed service means they now have the business for an eternity

Or simply leave the happy contractors in place with very little management required, while allowing a couple of senior consultants to go in and sell more bums on seats on the back of the seasoned contractors doing a good job.

You've a lot to learn about consulting.

youngguy
1st September 2016, 12:35
Or simply leave the happy contractors in place with very little management required, while allowing a couple of senior consultants to go in and sell more bums on seats on the back of the seasoned contractors doing a good job.

Ah yes, good point.

I've steered clear of consulting (purposefully) but am wondering whether that is a viable option in a post April future, hence my Qs.




You've a lot to learn about consulting.
Yes I know....that's why i asked the Q!

northernladuk
1st September 2016, 12:43
Yes I know....that's why i asked the Q!

Maybe that's where you are coming over wrong. You made a statement, not asked a question.

youngguy
1st September 2016, 12:50
Maybe that's where you are coming over wrong. You made a statement, not asked a question.

Then it is my error if that was the case.

I was thinking aloud. I personally believe that there changes will eventually roll out to all sectors, so have started to explore what that may mean a few yrs down the road. I'm wondering whether working with/via a consultancy is viable in the future.....by which I mean a model similar to what London Manc cited, ie billing an amount which is broadly comparable to pre April rules and being able to work and be left alone rather than a consultancy lapdog.

neil99
1st September 2016, 12:50
Indeed but they are a different model to us being engaged via an agent so not really a like for like comparison. Still outrageous though.

Oh the agent takes a cut too and another intermediary. For a hypothetical 500 / day contract it costs the public sector 1500.

In the case here there's BIG CONSULTANCY -> boutique agency -> recruitment agency

neil99
1st September 2016, 12:52
Yes to the first part; but I've seen other consultancies try and "compete" for business with local contractors by using bobs.

As for it not being viable, put in a quote to reflect the new tax levels. While they don't care about your tax situation, you do. It's not like it's changed mid-contract and you're about to down tools because they aren't going to reissue a new contract.

Bobs? IS this a reference to a certain episode of Blackadder II ?

neil99
1st September 2016, 12:55
Doesn't one example in the consultation document cover the scenario where a consultancy has a number of people in. I'm sure they are still in scope.

You mean (from April 2017) where a BIG CONSULTANCY brings in contractors to work at client site? Surely when HR uses the employment status test tool it will appear inside IR35 and the BIG CONSULTANCY will deduct PAYE/NIC.

At least that's how it will have to work. I suspect they are cooking up other plans to dump contractors on day rates and go for fixed term employment contracts the type of which are found in other public sector bodies.

My enquiry as to why agencies are flogging contracts (via BIG CONSULTANCIES) as outside of IR35 has so far gone unanswered. I will call their helpline. It would look a bit bad if they were hiring contractors to work at HRMC and encouraging them to pay incorrect tax.

eek
1st September 2016, 13:02
You mean where an BIG CONSULTANCY brings in contractors to work at client site? That's totally inside IR35 and the BIG CONSULTANCY will deduct PAYE/NIC.

At least that's how it will have to work. I suspect they are cooking up other plans.

My enquiry as to why agencies are flogging contracts (via BIG CONSULTANCIES) as outside of IR35 has so far gone unanswered. I will call their helpline. It would look a bit bad if they were hiring contractors to work at HRMC and encouraging them to pay incorrect tax.

A consultancy bringing a contractor in to work at DWP or HMRC would not necessarily at the moment be caught by IR35...

Come April next year and the new rules that could well change....

neil99
1st September 2016, 13:28
A consultancy bringing a contractor in to work at DWP or HMRC would not necessarily at the moment be caught by IR35...

Come April next year and the new rules that could well change....

Sure. I made that statement with April 2017 in mind. BIG CONSULTANCY HR would have to do the IR35 test and presumably this would result in being inside IR35. B C won't want to take any risks on this!

DaveB
1st September 2016, 13:45
Bobs? IS this a reference to a certain episode of Blackadder II ?

Derogatory and generic reference to overseas workers shipped in under outsourcing agreements. Much quickness, plenty cheapness.

northernladuk
1st September 2016, 13:47
Derogatory and generic reference to overseas workers shipped in under outsourcing agreements. Much quickness, plenty cheapness.

All started from this legend.

https://www.linkedin.com/in/bobshawadiwadi

Bob Shawadiwadi (http://shawadiwadi.blogspot.co.uk/)

eek
1st September 2016, 17:00
And the architect job has appeared. Rates a bit low for the person who knows how it works and can fix the immediate performance issues I'm aware of - but I'm sure that can be negotiated slightly....

And it's a CLone contract which the latest documents (http://ccs-agreements.cabinetoffice.gov.uk/sites/default/files/contracts/4427-15%20Contingent%20Labour%20Generic.pdf) state is subject to supervision, direction and control.

Good luck trying to fill that role with someone who knows the systems. I don't trust the agency to handle putting everything from April 1 in my pension pot

youngguy
30th September 2016, 08:56
I received a call about a PS role for HMRC. The rate was 50% of the market rate (in the 200s) and stated it was via PAYE. I replied saying no chance and good luck finding anyone on that rate.

May be a one off but this seemed to show a rate decrease AND the tax hit via PAYE, so this possibly suggests they aren't even waiting for their own tax tool.

westtester
30th September 2016, 09:29
I've come across these low rates as well, I don't know if the rate restrictions used for NHS jobs are being applied to other areas?

LondonManc
30th September 2016, 09:55
I've come across these low rates as well, I don't know if the rate restrictions used for NHS jobs are being applied to other areas?

PS rates have been rubbish for years but you get 3 hours of work to do in 7 hours (allegedly).

youngguy
30th September 2016, 10:03
PS rates have been rubbish for years but you get 3 hours of work to do in 7 hours (allegedly).

Rates seemed to drop a bit when Capita got the majority of Gov a few years ago, so I started to see some in the high 300s.. this is the first time I've started to see rates in the 200s in London (for non help desk Stuff)

Interestingly I've had this same as a couple of times in the last week, so you wonder it they have had many/any applicants !

Ketto
30th September 2016, 10:08
I received a call about a PS role for HMRC. The rate was 50% of the market rate (in the 200s) and stated it was via PAYE. I replied saying no chance and good luck finding anyone on that rate.

May be a one off but this seemed to show a rate decrease AND the tax hit via PAYE, so this possibly suggests they aren't even waiting for their own tax tool.

It's complete madness. At my last PS place there were four contractors, me on a decent rate and the other three guys on a couple of hundered a day in an attempt to save money. They were all gone within 3 months, two for being useless and one who was good (it was his first contract) who worked out that he was being paid peanuts and went elsewhere. This was all while there were over 40 consultants in the next room from one of the big consultancies, costing hundereds of thousands a month and doing bugger all apart from wearing skinny jeans and doodling fancy agile cartoons to stick on the walls. It never seemed to occur to them that saving a few hundered a day on the four contractors wouldn't have much of a positive impact on their burn rate.

boxingbantz
30th September 2016, 10:16
I have a contract with a consultancy and I am carrying out a specific task for them at a defence site (which would be PS). The man in the middle is the agency. My contract is with the consultancy NOT the end client - I'm effectively an associate for this role.

I'm assuming this will be exempt from the rules as I'm not working for the public sector so to speak. I work for the consultancy and this is made very clear every day at work.

Am I correct in assuming this?

northernladuk
30th September 2016, 10:18
I have a contract with a consultancy and I am carrying out a specific task for them at a defence site (which would be PS). The man in the middle is the agency. My contract is with the consultancy NOT the end client - I'm effectively an associate for this role.

I'm assuming this will be exempt from the rules as I'm not working in the public sector so to speak - I'm working for a private company on an engagement for them which HAPPENS to be at a public sector site.

Is that correct?

It would depend on the engagement. A quick read of the consultancy document and how the scope is defined will give you enough information to look at your situation and make an educated guess.

It's impossible for us to say with that level of information.

boxingbantz
30th September 2016, 10:24
It would depend on the engagement. A quick read of the consultancy document and how the scope is defined will give you enough information to look at your situation and make an educated guess.

It's impossible for us to say with that level of information.


What I wanted to know was, the scope of the legislation, is it mainly at contractors who are directly working for the PS as end client with an agency/intermediary in the middle?

Gomez
30th September 2016, 10:33
Yes. You are in scope. You're in a similar position to me. The responsibility for determining IR35 status will pass to the intermediary you have your contract with. Like NLUK says, depends on how that contract is defined.


What I wanted to know was, the scope of the legislation, is it mainly at contractors who are directly working for the PS as end client with an agency/intermediary in the middle?

boxingbantz
30th September 2016, 10:38
Yes. You are in scope. You're in a similar position to me. The responsibility for determining IR35 status will pass to the intermediary you have your contract with. Like NLUK says, depends on how that contract is defined.


My contract with the consultancy I am with is IR35 friendly as are my working practices. That's not the issue really. I didn't think I would be in scope as I'm not working for the public sector per se, I'm working for a consultancy directly.

youngguy
30th September 2016, 10:43
It's complete madness. At my last PS place there were four contractors, me on a decent rate and the other three guys on a couple of hundered a day in an attempt to save money. They were all gone within 3 months, two for being useless and one who was good (it was his first contract) who worked out that he was being paid peanuts and went elsewhere. This was all while there were over 40 consultants in the next room from one of the big consultancies, costing hundereds of thousands a month and doing bugger all apart from wearing skinny jeans and doodling fancy agile cartoons to stick on the walls. It never seemed to occur to them that saving a few hundered a day on the four contractors wouldn't have much of a positive impact on their burn rate.

Yep, all day long.

I was at a PS site where consultants were on double that of contractors and (broadly ) the output and skill was similar. We all know why consultants cost more but output was broadly the same.

What was clear was that contractor PMs at a few hundred a day just didn't have the experience , so they did get some people on below market rates, but those people were soon gone , which resulted in project delays and more recruitment headaches .

To be fair the PS 'recruiters ' I have spoken to know and understand this but their hands are tied based on budget .

youngguy
30th September 2016, 10:45
I have a contract with a consultancy and I am carrying out a specific task for them at a defence site (which would be PS). The man in the middle is the agency. My contract is with the consultancy NOT the end client - I'm effectively an associate for this role.

I'm assuming this will be exempt from the rules as I'm not working for the public sector so to speak. I work for the consultancy and this is made very clear every day at work.

Am I correct in assuming this?

As NLUk says, impossible to say at this stage,however if you are a ltd (PSC in HMRC speak) then I understand the consultation document would see the consultancy collect taxes from you. Have a look at example 3 (iirc) in the doc.

In short. Whoever a ltd is directly linked to is responsible for collecting the taxes .

youngguy
30th September 2016, 10:47
My contract with the consultancy I am with is IR35 friendly as are my working practices. That's not the issue really. I didn't think I would be in scope as I'm not working for the public sector per se, I'm working for a consultancy directly.

Are you a ltd or are you an employee of the consultancy?

If you are a ltd you are probably caught.

boxingbantz
30th September 2016, 10:52
Are you a ltd or are you an employee of the consultancy?

If you are a ltd you are probably caught.

Edit - just seen your reply.

My point is - I'm not working for the public sector. My contract isn't with them.

TheFaQQer
30th September 2016, 10:53
What I wanted to know was, the scope of the legislation, is it mainly at contractors who are directly working for the PS as end client with an agency/intermediary in the middle?

The legislation hasn't been published yet, so it's down to what comes out of the consultation paper. I don't think anyone knows what that is going to be, even those in the treasury or HMRC. Until it's published, it's all speculation.

On the assumption that all this comes to pass, from what I've read about the proposal having a consultancy in the mix is no silver bullet. It would almost certainly take the headache of tax assessment and collection away from the public sector client, because they would rely on the consultancy to do that if necessary (for a no-doubt considerable fee). But I suspect that the legislation will mean that contractors working for a consultancy for a public sector client will still have to be treated in the same way - it just means that the consultancy does the assessment and declares you inside IR35 rather than the ultimate end client.

Until the Autumn Statement is produced I would encourage people to contact their MP, raise your concerns and ask the MP to pass on your concern to the relevant Minister. You may get a standard response back (if you have a Tory MP who pays into their central "research" unit), but the more letters that land on Phil Hammond / David Gauke / Jane Ellison's desks highlighting why this is a bad thing the better.

boxingbantz
30th September 2016, 11:01
The legislation hasn't been published yet, so it's down to what comes out of the consultation paper. I don't think anyone knows what that is going to be, even those in the treasury or HMRC. Until it's published, it's all speculation.

On the assumption that all this comes to pass, from what I've read about the proposal having a consultancy in the mix is no silver bullet. It would almost certainly take the headache of tax assessment and collection away from the public sector client, because they would rely on the consultancy to do that if necessary (for a no-doubt considerable fee). But I suspect that the legislation will mean that contractors working for a consultancy for a public sector client will still have to be treated in the same way - it just means that the consultancy does the assessment and declares you inside IR35 rather than the ultimate end client.

Until the Autumn Statement is produced I would encourage people to contact their MP, raise your concerns and ask the MP to pass on your concern to the relevant Minister. You may get a standard response back (if you have a Tory MP who pays into their central "research" unit), but the more letters that land on Phil Hammond / David Gauke / Jane Ellison's desks highlighting why this is a bad thing the better.

Thank you for a great response - this has answered my question.

My consultancy see me as outside of IR35 but it makes you wonder if when the financial risk is then with them, how they may start to alter their stance...

TheFaQQer
30th September 2016, 11:06
Thank you for a great response - this has answered my question.

My consultancy see me as outside of IR35 but it makes you wonder if when the financial risk is then with them, how they may start to alter their stance...

Almost certainly, they will change stance. Bear in mind that if they have to make the judgement, they carry the risk plus the costs of doing the assessment in the first place - if they have lots of contractors around, then I just don't see them having the time or inclination to spend on assessing every individual. They are likely to declare everyone inside since that means that they only have the additional cost of collecting tax and paying it over to HMRC.

HMRC will then have to fund the way of refunding people when they get the deductions wrong.

youngguy
30th September 2016, 11:29
Edit - just seen your reply.

My point is - I'm not working for the public sector. My contract isn't with them.

It is not about having a contract with the PS, it is about providing services to the PS.

Nothing is certain yet.....BUT if you read the doc and assume they enforce as is then it quite clearly says a PSC (ltd) working with a consultancy that delivers it's services to the PS is caught. I get that you don't like that (I don't either ) but read example 3:-

"A consultancy PLC contracts to provide onsite services to the public sector...The consultancy would need to use the online tool and consider the new rules. They need to operate tax and NI on the payments to the PSC...."

Are you ltd?
Do you provide services to the PS via a consultancy ?
If yes to both of those, the consultancy will collect tax and NI from you (I know the online tool plays a part here but by the questions in the doc it looks like very few would not be caught ).

If you feel it doesn't apply to you then fine, argue the toss with the consultancy you are subbed to!

youngguy
30th September 2016, 11:32
Thank you for a great response - this has answered my question.

My consultancy see me as outside of IR35 but it makes you wonder if when the financial risk is then with them, how they may start to alter their stance...

Yes I think that will be the case.

If you go by the consultation doc the new rules would put almost everyone currently outside IR35 inside...or as you say the end engage carries the risk so may out you inside to cover themselves.

Hopefully we will get a watered down solution as to what the doc implies

boxingbantz
30th September 2016, 11:48
It is not about having a contract with the PS, it is about providing services to the PS.

Nothing is certain yet.....BUT if you read the doc and assume they enforce as is then it quite clearly says a PSC (ltd) working with a consultancy that delivers it's services to the PS is caught. I get that you don't like that (I don't either ) but read example 3:-

"A consultancy PLC contracts to provide onsite services to the public sector...The consultancy would need to use the online tool and consider the new rules. They need to operate tax and NI on the payments to the PSC...."

Are you ltd?
Do you provide services to the PS via a consultancy ?
If yes to both of those, the consultancy will collect tax and NI from you (I know the online tool plays a part here but by the questions in the doc it looks like very few would not be caught ).

If you feel it doesn't apply to you then fine, argue the toss with the consultancy you are subbed to!

Thanks - I hadn't read the document before so appreciate you highlighting it to me.

Yes I'm limited. Yes the PS is the end client essentially.

My working practices are outside of IR35 as are my working practices, which they have confirmed, so if they went against that and said 'no, actually you could well be in', I'd be on my bike like many on here.

Thanks again.

youngguy
30th September 2016, 11:59
Thanks - I hadn't read the document before so appreciate you highlighting it to me.

Yes I'm limited. Yes the PS is the end client essentially.

My working practices are outside of IR35 as are my working practices, which they have confirmed, so if they went against that and said 'no, actually you could well be in', I'd be on my bike like many on here.

Thanks again.

I didn't renew my last PS and although I haven't ruled out working in the sector I want to see what happens first.

My advice would be to not sign any new contracts until we know more (hopefully Nov). You may also want to ensure the client and consultancy are aware of this. I've heard some depts plan to issue new contracts , which contractors can take or leave but what is just hearsay.

My take is, I may work for the PS post April but I can't set my rate until I know more. My rate would undoubtedly be much higher. If you don't wanna pay then I will stay in the private sector.

jamesbrown
30th September 2016, 15:09
It is not about having a contract with the PS, it is about providing services to the PS.

Sort of. The consultation explicitly considered whether the rules might be extended from intermediaries to private sector engagements for public sector clients, such as subcontractors to private sector contractors that are engaged in delivering a public function. However, it's quite clear that consultancies are within scope, along with agencies (p.13):


The government understands most public sector off-payroll engagements of PSCs are
made through third parties, including employment agencies, outsourcing companies
and consultancy firms. Third parties in this position will be required to take responsibility
for determining if an engagement is in scope of the rules and paying the associated tax.
The new legislation will apply not only to employment agencies and employment
businesses but also other types of business that supply workers to a public sector client,
such as a consultancy or outsourcing specialist. The government thinks that if this
broader definition were not applied, it would be relatively simple to avoid the effect of
this change by restructuring contracts to be about service provision rather than a supply
of a worker.

So, I think this is uncertain only insofar as everything in the consultation is uncertain until it's reflected in legislation. However, I think the intention is clear. Working for a consultancy will be within the scope of the rules, in the same way that working for an agency is within scope. Working as a subcontractor to a private sector client that performs a function within the public sector is another matter, but I don't think that's what you're debating here.

youngguy
30th September 2016, 15:33
Sort of. The consultation explicitly considered whether the rules might be extended from intermediaries to private sector engagements for public sector clients, such as subcontractors to private sector contractors that are engaged in delivering a public function. However, it's quite clear that consultancies are within scope, along with agencies (p.13):



So, I think this is uncertain only insofar as everything in the consultation is uncertain until it's reflected in legislation. However, I think the intention is clear. Working for a consultancy will be within the scope of the rules, in the same way that working for an agency is within scope. Working as a subcontractor to a private sector client that performs a function within the public sector is another matter, but I don't think that's what you're debating here.

Far more eloquently put than me. Nice one

boxingbantz
3rd October 2016, 09:43
Sort of. The consultation explicitly considered whether the rules might be extended from intermediaries to private sector engagements for public sector clients, such as subcontractors to private sector contractors that are engaged in delivering a public function. However, it's quite clear that consultancies are within scope, along with agencies (p.13):



So, I think this is uncertain only insofar as everything in the consultation is uncertain until it's reflected in legislation. However, I think the intention is clear. Working for a consultancy will be within the scope of the rules, in the same way that working for an agency is within scope. Working as a subcontractor to a private sector client that performs a function within the public sector is another matter, but I don't think that's what you're debating here.

This is exactly my position and what I am trying to understand.

jamesbrown
3rd October 2016, 10:31
This is exactly my position and what I am trying to understand.

I thought you were consulting within the PS? The consultation document is very clear about this; a consultancy won't be treated any differently than an agency when the relationship is analogous, as it's just supplying a human resource to the PS. OTOH, if you're subcontracted to deliver something for a private sector client that is resold to the PS (i.e. you're not directly providing consultancy for a PS client), you may be OK. I appreciate that there's a fuzzy boundary between the two but, in practice, I can't really envisage many situations where consultancy would be out of scope, because it's providing a human resource to a PS client.

nucastle
3rd October 2016, 14:19
I left my public sector contract on Friday just gone.

SO - just got off the phone with someone from DWP 'compliance' who started asking me a bunch of things like:

1. who was my line manager
2. who signed my time-sheets
3. were they related day to day with signing my time-sheets on completion of the work set out to me

I suddenly felt very suspicious and stopped him in his tracks to say that I was NOT under direct supervision or control, and my time-sheets were not signed off by a project lead, but by a non-project person, and that I had to be very clear that the words of my contract and working practices did not reflect at all what he was suggesting. I also told him I no longer worked at DWP as of friday just passed.

I asked what the meaning of the call was, and he was saying it was to find out how DWP were engaging with contractors using the CL1 framework.

The conversation ended with me giving him the name of the delivery manager on the project i was assigned to, and the name of who signed my timesheets and him wishing me well on my next endeavour. I couldn't help but feel rather creeped out by the conversation, almost like I was either being scoped out to be drawn into an IR35 investigation, or some other nefarious plot.

SueEllen
3rd October 2016, 14:25
I left my public sector contract on Friday just gone.

SO - just got off the phone with someone from DWP 'compliance' who started asking me a bunch of things like:

1. who was my line manager
2. who signed my time-sheets
3. were they related day to day with signing my time-sheets on completion of the work set out to me

I suddenly felt very suspicious and stopped him in his tracks to say that I was NOT under direct supervision or control, and my time-sheets were not signed off by a project lead, but by a non-project person, and that I had to be very clear that the words of my contract and working practices did not reflect at all what he was suggesting. I also told him I no longer worked at DWP as of friday just passed.

I asked what the meaning of the call was, and he was saying it was to find out how DWP were engaging with contractors using the CL1 framework.

The conversation ended with me giving him the name of the delivery manager on the project i was assigned to, and the name of who signed my timesheets and him wishing me well on my next endeavour. I couldn't help but feel rather creeped out by the conversation, almost like I was either being scoped out to be drawn into an IR35 investigation, or some other nefarious plot.

Hope you have some form of tax insurance. If you do I suggest you contact the provider to warn them of what DWP has done and is doing.

nucastle
3rd October 2016, 14:42
Considering they are about to change the rules to make it the intermediary that decides IR35 status, I'd be surprised if they are now switching back to going after individuals when the legislation in that respect has been an utter failure so far.

I feel more sorry for my other contacts there who are NOT leaving.

malvolio
3rd October 2016, 17:01
No, this is more to do with there being various framework agreements for the hiring of external resources into PS contracts. CLOne are almost certainly going to be treated as IR35 caught. Others, where you are providing explicit skills for a single purpose (e.g. knowledge of a particular COTS application) or providing genuine 3rd party supplies (e.g. tin and wires or bespoke software) won't be. So there is potentially an easy escape route that has to be closed off. What they are checking is that staff are being taken on under the appropriate contractual framework.

jamesbrown
3rd October 2016, 17:22
No, this is more to do with there being various framework agreements for the hiring of external resources into PS contracts. CLOne are almost certainly going to be treated as IR35 caught. Others, where you are providing explicit skills for a single purpose (e.g. knowledge of a particular COTS application) or providing genuine 3rd party supplies (e.g. tin and wires or bespoke software) won't be. So there is potentially an easy escape route that has to be closed off. What they are checking is that staff are being taken on under the appropriate contractual framework.

That seems a little optimistic to me. Let's say that you provide a "genuine 3rd party supply" through an agency; where's the evidence in the consultation that the agent would not be responsible for determining status under a particular procurement framework? What, specifically, in the legislation is going to give them the confidence they need to make a realistic assessment? You can't legislate for framework agreements. You can provide guidance, but is an agent going to care? I don't think anyone is going to be making distinctions about frameworks and what is "genuine" unless specific frameworks are excluded, explicitly, and, of course, they aren't.

malvolio
3rd October 2016, 17:41
That seems a little optimistic to me. Let's say that you provide a "genuine 3rd party supply" through an agency; where's the evidence in the consultation that the agent would not be responsible for determining status under a particular procurement framework? What, specifically, in the legislation is going to give them the confidence they need to make a realistic assessment? You can't legislate for framework agreements. You can provide guidance, but is an agent going to care? I don't think anyone is going to be making distinctions about frameworks and what is "genuine" unless specific frameworks are excluded, explicitly, and, of course, they aren't.

Ermm... The whole point of the various framework agreements is to classify suppliers properly. In our terms that means manpower replacements (90% or so of all IT contractors) vs third party suppliers. The Agency/Client contract will be subject to one or other frameworks. And yes, you can legislate for them.

nucastle
3rd October 2016, 18:04
No, this is more to do with there being various framework agreements for the hiring of external resources into PS contracts. CLOne are almost certainly going to be treated as IR35 caught. Others, where you are providing explicit skills for a single purpose (e.g. knowledge of a particular COTS application) or providing genuine 3rd party supplies (e.g. tin and wires or bespoke software) won't be. So there is potentially an easy escape route that has to be closed off. What they are checking is that staff are being taken on under the appropriate contractual framework.

Well that is good news to me at least. I was wondering why they cared so much and it instantly got my spider sense tingling.

jamesbrown
3rd October 2016, 19:01
Ermm... The whole point of the various framework agreements is to classify suppliers properly. In our terms that means manpower replacements (90% or so of all IT contractors) vs third party suppliers. The Agency/Client contract will be subject to one or other frameworks. And yes, you can legislate for them.

It depends what you mean by legislate. They aren't about to put clauses on framework agreements in 8(2) of the ITEPA, which is presumably where this will go. Also, while CL1 will obviously require a determination, there is no explicit mapping between framework agreements and supplies for which a determination may or may not be required. Indeed, they haven't definitely ruled out any third-party supplies (it was a point of consultation). All you really have is Example 4 in the consultation, which is an extreme example. I can't see how G-Cloud or ConsultancyOne or whatever other BS frameworks that the PS is currently using (fortunately, I don't work for the PS) are going to be legislated as not requiring a determination and, if a third party needs to make that determination, I can't see it being outside.

northernladuk
3rd October 2016, 19:03
Dunno if it adds anything but they cleaned Gcloud up and moved any supplying single bids off it this last round.

jamesbrown
3rd October 2016, 20:10
Dunno if it adds anything but they cleaned Gcloud up and moved any supplying single bids off it this last round.

As an outside observer, it does seem as though they're getting their house in order w/r to ensuring that existing frameworks aren't being abused and identifying where SD&C definitely applies (e.g. Eek posted some links to updated guidance on contingent labour a while back) - which I assume is the main point that Mal is making - but my skepticism stems from HMRC/HMG not being in the business of precision or legislating for negative cases, i.e. what isn't caught. They always prefer constructive ambiguity, and having the risk transferred away from the supplier to the last intermediary in the chain completely changes the risk/reward.

youngguy
21st October 2016, 17:13
I just got an agent email, about a contract role with HM Treasury. I took great delight in explaining why I would no longer be taking on PS clients (least of all that dept!)

BlasterBates
22nd October 2016, 10:38
I think Neil99 makes a very good point. The changes in the legislation are not to IR35 that doesn't change, it is essentially that the onus is on the agency or public sector body to determine your IR35 status.

This means if you are outside IR35 and the agency or public service decides after April 2017 you are inside IR35 and you agree by signing the extension. that this would mean effectively you were always inside IR35 but you had incorrectly determined yourself to be outside IR35, unless of course you can point to changes in the working conditions.

Old Greg
26th October 2016, 08:16
I just got an agent email, about a contract role with HM Treasury. I took great delight in explaining why I would no longer be taking on PS clients (least of all that dept!)

I don't live in the UK anymore but when I get agents emailing me for gigs in the NHS, I always reply that I would be delighted to as long as they can guarantee it will be outside IR35 from April 2017.

Old Greg
26th October 2016, 08:40
All started from this legend.

https://www.linkedin.com/in/bobshawadiwadi

Bob Shawadiwadi (http://shawadiwadi.blogspot.co.uk/)

Dear, dear Bob.

Re: Limited company director do I need to pay tax? : Indefinite Leave to Remain - Page 2 • Immigrationboards.com (http://www.immigrationboards.com/indefinite-leave-to-remain/re-limited-company-director-do-i-need-to-pay-tax-t140318-20.html)

kolata
26th October 2016, 09:04
On another note: does anyone know (incl. HMRC) how exactly will this work?

I.e. say I am happy to be considered employee and the client is happy to pay me my day rate net. So they will pay extra tax + NI + ENI.

1. How will they know how much tax to take?
2. Where does the net pay go - to my Co's account or to my private account? Surely I don't want to pay corp tax on the net pay.

LondonManc
26th October 2016, 09:05
On another note: does anyone know (incl. HMRC) how exactly will this work?

I.e. say I am happy to be considered employee and the client is happy to pay me my day rate net. So they will pay extra tax + NI + ENI.

1. How will they know how much tax to take?
2. Where does the net pay go - to my Co's account or to my private account? Surely I don't want to pay corp tax on the net pay.

HMRC won't care. They've got their coin and will leave you to clean up after them.

Old Greg
26th October 2016, 09:14
On another note: does anyone know (incl. HMRC) how exactly will this work?

I.e. say I am happy to be considered employee and the client is happy to pay me my day rate net. So they will pay extra tax + NI + ENI.

1. How will they know how much tax to take?
2. Where does the net pay go - to my Co's account or to my private account? Surely I don't want to pay corp tax on the net pay.

You only pay CT on profit, whereas salary is an operating cost, so reduces your profit.

kolata
26th October 2016, 09:17
HMRC won't care. They've got their coin and will leave you to clean up after them.

Is that a fact?
Can it turn out that you might get more money than now if the client agrees to pay the same day rate net? This probably wont happen much but it is possible if the client is pressed for time/resources/expertise. And of course will make you very very expensive for them.

kolata
26th October 2016, 09:19
You only pay CT on profit, whereas salary is an operating cost, so reduces your profit.

What profit?
If you are deemed employee in PS all your day rate is salary so 100% of turnover is salary.

Old Greg
26th October 2016, 09:21
What profit?
If you are deemed employee in PS all your day rate is salary so 100% of turnover is salary.

So there in no CT, back to your previous post.

LondonManc
26th October 2016, 10:04
Is that a fact?
Can it turn out that you might get more money than now if the client agrees to pay the same day rate net? This probably wont happen much but it is possible if the client is pressed for time/resources/expertise. And of course will make you very very expensive for them.

Not a fact at all. I'd imagine that all sorts of new ways of operating will need to come into play to get round the expertise exit post-April. Perhaps expenses paid but being inside IR35 wouldn't be a bad position, especially for those that have to stay away four nights a week.

eek
26th October 2016, 10:04
How in earth do you manage to draw your next breath?

That's actually a logical question. I know where its going to end up but why should the money go into the company account when its my net salary.

Were I caught and not planning to throw everything in a pension to annoy people, I would be trying to get the agency to pay me personally just for the lols and pain it would cause them trying to explain why they can't

LondonManc
26th October 2016, 10:07
That's actually a logical question. I know where its going to end up but why should the money go into the company account when its my net salary.

Were I caught and not planning to throw everything in a pension to annoy people, I would be trying to get the agency to pay me personally just for the lols and pain it would cause them trying to explain why they can't

Interesting bit would be employer vs employee NICs - what would we pay if we were given a net sum or would that net sum simply go straight from corp bank to personal because it's already been "treated"?

kolata
26th October 2016, 10:14
Interesting bit would be employer vs employee NICs - what would we pay if we were given a net sum or would that net sum simply go straight from corp bank to personal because it's already been "treated"?

The fact is that no contractor will agree to pay tax + NIC out of their day rate. We will get more expensive for the PS clients. Fact.
If they agree to cover NIC+tax+ENIC, great.
Very fast calculation showed me that even dropping the day rate by 10-15% will result in more money in my personal account than client > co > CT > divi tax > pocket. This is assuming client > net pay into personal account and taking into account the co's expenses such as directror's payments

LondonManc
26th October 2016, 10:18
The fact is that no contractor will agree to pay tax + NIC out of their day rate. We will get more expensive for the PS clients. Fact.
If they agree to cover NIC+tax+ENIC, great.
Very fast calculation showed me that even dropping the day rate by 10-15% will result in more money in my personal account than client > co > CT > divi tax > pocket. This is assuming client > net pay into personal account and taking into account the co's expenses such as directror's payments

If it's handy for home and they know no other market, then they'd have to take the tax hit rather than end up workless. The PS notice periods will be the main thing that is of interest after April; contractors in PS will continually be on the lookout to jump ship if they're getting screwed over.

eek
26th October 2016, 10:23
Interesting bit would be employer vs employee NICs - what would we pay if we were given a net sum or would that net sum simply go straight from corp bank to personal because it's already been "treated"?

Supposedly its going to be already treated with all NI and estimated income tax deducted (that's why actually fighting if inside is pointless you ain't getting that proportion of the money back).

Its the reason why I would be going give me everything as a pension - I will not be taking any salary for this project.

LondonManc
26th October 2016, 10:29
Supposedly its going to be already treated with all NI and estimated income tax deducted (that's why actually fighting if inside is pointless you ain't getting that proportion of the money back).
That's pretty much my question (not that I'm looking at PS) - why aren't they simply putting in big red letters to your accountant - treat this contract as inside IR35 and you pay the full whack on it. Rather than trying to do the accountant's job for them, they're actually confusing things.


Its the reason why I would be going give me everything as a pension - I will not be taking any salary for this project.

Would that be permissible? Also, I presume you have some other sort of war chest to cover the PS contract if you're asking for it as such?

mudskipper
26th October 2016, 10:47
Supposedly its going to be already treated with all NI and estimated income tax deducted (that's why actually fighting if inside is pointless you ain't getting that proportion of the money back).

Its the reason why I would be going give me everything as a pension - I will not be taking any salary for this project.

Subject to the 40K a year limit.

eek
26th October 2016, 11:15
Subject to the 40K a year limit.

Got plenty to carry over at the moment. Plus it means I'm only there 3-4 months so gives me an excuse to leave asap.

youngguy
26th October 2016, 17:25
I think these Qs prove exactly how complex and cumbersome it will be. Qs such as eek's (why not put it into my personal account given I have paid tax on it, can the PS pay direct into my pension rather than pay me a salary etx) will inundate the HMRC helpline and they absolutely won't have thought of such scenarios . They seem to forget that most contractors think a little outside the standard box with regards to finances and most have accountants for advice.

youngguy
26th October 2016, 17:31
Not a fact at all. I'd imagine that all sorts of new ways of operating will need to come into play to get round the expertise exit post-April. Perhaps expenses paid but being inside IR35 wouldn't be a bad position, especially for those that have to stay away four nights a week.

I mentioned this previously and think it is an obvious compromise. All Gov depts have ways of booking hotels and travel , so allow the contractor to book theirs this way (after all they are a disguised employee). That takes care of the lion share of expenses. Now we just need a solution for insurances, training and pension costs 😀

jamesbrown
26th October 2016, 18:21
I think these Qs prove exactly how complex and cumbersome it will be. Qs such as eek's (why not put it into my personal account given I have paid tax on it, can the PS pay direct into my pension rather than pay me a salary etx) will inundate the HMRC helpline and they absolutely won't have thought of such scenarios . They seem to forget that most contractors think a little outside the standard box with regards to finances and most have accountants for advice.

A lot of this falls into place when you understand that the fundamental contractual relationship hasn't changed. You cannot pay someone/thing that is not party to the contract. The contract remains between YourCo and the agency or PS client. The proposal involves nothing more than a change in how IR35 is evaluated and, in response to that, a withholding tax that is administered by the client/agency. In many cases, that withholding will be hopelessly wrong, but the proposed changes are otherwise administrative in nature.

youngguy
26th October 2016, 18:35
A lot of this falls into place when you understand that the fundamental contractual relationship hasn't changed. You cannot pay someone/thing that is not party to the contract. The contract remains between YourCo and the agency or PS client. The proposal involves nothing more than a change in how IR35 is evaluated and, in response to that, a withholding tax that is administered by the client/agency. In many cases, that withholding will be hopelessly wrong, but the proposed changes are otherwise administrative in nature.The added confusion and possible plethora of Qs comes from how Gov are attempting to implement this and do the withholding.

Their easiest way would have been to declare Gov contracts as inside at point of approval. As you said, the collection of taxes would therefore be easy and fall under everyone's current understanding.

The collection of such taxes from the end agent creates the Qs about treatment, changes to terms in contracts(eg the wording in clone contracts will have to change) and then leads to the kind of ingenuity Eek has come up with plus the 'tax me an employee, give me rights' argument.

It may turn out to be merely administrative changes , but those changes affect agents, contractors and accountants in a potentially big way

jamesbrown
26th October 2016, 19:09
The added confusion and possible plethora of Qs comes from how Gov are attempting to implement this and do the withholding.

Their easiest way would have been to declare Gov contracts as inside at point of approval. As you said, the collection of taxes would therefore be easy and fall under everyone's current understanding.

The collection of such taxes from the end agent creates the Qs about treatment, changes to terms in contracts(eg the wording in clone contracts will have to change) and then leads to the kind of ingenuity Eek has come up with plus the 'tax me an employee, give me rights' argument.

It may turn out to be merely administrative changes , but those changes affect agents, contractors and accountants in a potentially big way

Sure, but my point was not about simplicity/complexity, but about what flows from the absence of any change in the contractual relationship.

The reason it's favourable for HMG/HMRC to address this through withholding, rather than identifying contracts as being inside and then relying on normal IR35 accounting procedure, is that they get the money upfront and don't need to chase it and prosecute evasion. Obviously, it makes sense for everyone except HMG/HMRC to have normal procedure in place.

youngguy
26th October 2016, 19:35
Sure, but my point was not about simplicity/complexity, but about what flows from the absence of any change in the contractual relationship.

The reason it's favourable for HMG/HMRC to address this through withholding, rather than identifying contracts as being inside and then relying on normal IR35 accounting procedure, is that they get the money upfront and don't need to chase it and prosecute evasion. Obviously, it makes sense for everyone except HMG/HMRC to have normal procedure in place.

Yep, not to mention HMRC need to force Gov depts to play ball, as the depts know the whole ir35 issue just means they struggle to get the interims they need. Depts care about delivery, not tax

eek
26th October 2016, 19:47
Yep, not to mention HMRC need to force Gov depts to play ball, as the depts know the whole ir35 issue just means they struggle to get the interims they need. Depts care about delivery, not tax

The senior managers of the departments don't, however, want to find themselves managing minor offices in Outer Mongolia rather than Whitehall. And there is enough other changes around the edges to ensure that that will be the consequences of trying to bypass the rules.

Outside central government it may not be so bad but anything that is part of a Government Department is going to be a no-no.

youngguy
26th October 2016, 20:07
The senior managers of the departments don't, however, want to find themselves managing minor offices in Outer Mongolia rather than Whitehall. And there is enough other changes around the edges to ensure that that will be the consequences of trying to bypass the rules.

Outside central government it may not be so bad but anything that is part of a Government Department is going to be a no-no.

HMRC do seem to have it all wrapped up this time.

Managers won't have much left to manage however if there is a mass exodus. Every Gov programme I worked on for nearly a decade was at least 75% interim resourced.

missinggreenfields
27th October 2016, 09:06
The senior managers of the departments don't, however, want to find themselves managing minor offices in Outer Mongolia rather than Whitehall.

Sir Humphrey: How would you like to be Deputy Secretary in charge of defence procurement?
Bernard: Oh, gosh
Sir Humphrey: In Sunderland or Berwick-upon-Tweed or Lossiemouth?
Bernard: Is that a place?
Sir Humphrey: Lossiemouth? What did you think it was?
Bernard: A dog food

mickael28
15th November 2016, 19:52
Hi guys,

Totally beginner question. I've always worked in a totally different sector in the private sector, but I was just now offered a new contract role in the public sector to which I agreed, then I noticed the title of this thread just now...

What is changing after April 2017? and would it affect every single contractor in the public sector?

SlipTheJab
15th November 2016, 19:55
Hi guys,

Totally beginner question. I've always worked in a totally different sector in the private sector, but I was just now offered a new contract role in the public sector to which I agreed, then I noticed the title of this thread just now...

What is changing after April 2017? and would it affect every single contractor in the public sector?

You'll be inside IR35 bang on, perm tax with none of the benefits, I refuse to consider PS contracts out of principle now.

mickael28
15th November 2016, 20:03
You'll be inside IR35 bang on, perm tax with none of the benefits, I refuse to consider PS contracts out of principle now.

Ah really, what a coincidence! I just told 2 other agents to cancel 2 interviews tomorrow for the private sector...

and when will that new legislation start, beginning of May 2017?

eek
15th November 2016, 20:07
Ah really, what a coincidence! I just told 2 other agents to cancel 2 interviews tomorrow for the private sector...

and when will that new legislation start, beginning of May 2017?

April 2017 depending on what is finally announced next Wednesday / Thursday in the Autumn Statement.
There is one month grace before a decision is made so it will be May before you see the impact...

DotasScandal
15th November 2016, 20:15
Ah really, what a coincidence! I just told 2 other agents to cancel 2 interviews tomorrow for the private sector...
and when will that new legislation start, beginning of May 2017?

Maybe it's not too late to un-cancel.

You'll thank us later.

mickael28
15th November 2016, 20:15
Thanks for the info. I'll keep more updated on this from now on... I still cannot believe that this has been approved, ie, contracting conditions are not that great if you cannot organise your financial affairs in a convenient way to cover for periods where you're out of job, or other eventualities. I guess they're just trying that some people move onto permanent positions? but not sure if clients will want to get more permanent employees at that point... We'll see how this ends up

SueEllen
15th November 2016, 20:38
Thanks for the info. I'll keep more updated on this from now on... I still cannot believe that this has been approved, ie, contracting conditions are not that great if you cannot organise your financial affairs in a convenient way to cover for periods where you're out of job, or other eventualities. I guess they're just trying that some people move onto permanent positions? but not sure if clients will want to get more permanent employees at that point... We'll see how this ends up

No because they don't want the head count on the books due to the pension liabilities.

mickael28
15th November 2016, 21:01
Ah really? so the purpose is basically just to get more tax? or are they doing this change for another specific reason?

cojak
15th November 2016, 22:19
Ah really? so the purpose is basically just to get more tax? or are they doing this change for another specific reason?

Nope, just to get more tax.

eek
15th November 2016, 23:10
Nope, just to get more tax.

+1. The last examples focussed on Employers NI so I that is one area the new proposals are focused on (making sure they are paid by the party who employs the contractor so they are not avoided).

Between that and their desire to use SDC as the determining factor everything was going swimmingly for HMRC until the Uber ruling appeared. I do hope my letter regarding the consequences of that and the equality act 2010 has reached the appropriate red boxes by now...

missinggreenfields
16th November 2016, 09:26
Nope, just to get more tax.

The fact that more tax minus tribunal costs minus difference in engaging a big 4 consultancy minus cost of project delays is a huge negative number is lost on HMRC, sadly.

SlipTheJab
16th November 2016, 09:33
April 2017 depending on what is finally announced next Wednesday / Thursday in the Autumn Statement.
There is one month grace before a decision is made so it will be May before you see the impact...

I'm seeing a lot of PS roles mandating inside ir35 now, so no grace period, they're got you by the short and curlies straight away.

eek
16th November 2016, 09:42
I'm seeing a lot of PS roles mandating inside ir35 now, so no grace period, they're got you by the short and curlies straight away.

That's fine. It's a market I'm just not interested in (more because I don't want to be at some ones beck and call rather than the money side of things).

Cirrus
16th November 2016, 09:45
The fact that more tax minus tribunal costs minus difference in engaging a big 4 consultancy minus cost of project delays is a huge negative number is lost on HMRC, sadly.Who said they need to engage a Big Four employee? They can just get a contractor as before, only now the contractor pays more tax.

DaveB
16th November 2016, 09:47
Who said they need to engage a Big Four employee? They can just get a contractor as before, only now the contractor puts their day rate up to cover the extra tax.

FTFY.

malvolio
16th November 2016, 09:57
FTFY.
Yep, brilliant idea. Happens all the time; my costs go up so a higher day rate is immediately agreed by the client.

Can I come and live in your world please...

LondonManc
16th November 2016, 10:00
Yep, brilliant idea. Happens all the time; my costs go up so a higher day rate is immediately agreed by the client.

Can I come and live in your world please...

New to petrol stations? ;)

missinggreenfields
16th November 2016, 10:07
Who said they need to engage a Big Four employee? They can just get a contractor as before, only now the contractor pays more tax.

One thing they almost certainly won't do is engage a big four employee.

The presumption that they can get a contractor as before relies on contractors accepting the massive hit that they face - which is a big assumption to make.

DaveB
16th November 2016, 10:08
Yep, brilliant idea. Happens all the time; my costs go up so a higher day rate is immediately agreed by the client.

Can I come and live in your world please...

I'm not working in the PS now. If I was I would be renegotiating my contract when the changes come, in since it would need the existing contract to be cancelled and a new one issued to cover the new payment terms. If they don't want to pay the rate then I'll walk. If I get approached for PS contracts after that my rate will be adjusted to take account of the additional costs. If I don't get the gig fair enough. Plenty enough work elsewhere and I'd still be better value for money than some fresh faced Crapita graduate charged out at £1000 a day.

DotasScandal
16th November 2016, 10:26
The fact that more tax minus tribunal costs minus difference in engaging a big 4 consultancy minus cost of project delays is a huge negative number is lost on HMRC, sadly.

A cynic might say that the primary objective is not to "maximize the amount of tax collected" by HMRC, but to "maximize the amount of kickbacks collected" by those key people who attribute PS contracts.
From the original IR35 to contractor APNs to this "new and improved" IR35, everything seems designed more to clear the field for the benefit of big consultancies rather than maximizing revenue for HMRC (how much did IR35 bring in, again?). It's crony capitalism, pure and simple.

jonnyboy
23rd November 2016, 15:57
First - sorry.. this is a post I put in the "Autumn statement" general discussion thread.. but nobody replied to it, so I am posting it here as well. Please don't ban/spank/kill me for doing so, I really need other peoples thought (and a decent calculator to work all this out)....

So, that didn't take long for the waves to go up and come down in the place that I am currently working... just got an email from my budget paying head manager, where they are offering to compensate me for the budget changes after 1st April. Not sure if I have everything right in my mind with the recent changes.

Currently, I am working in a PS contract, with my own Ltd company doing a fair chunk of Freelance work as well. My company is NOT on the FRS. my contract is in London, and I am claiming travel costs via my company to get to my FS client when I have to travel in to London (other times I can dial in from home). So assume this all goes ahead (I assume IPSE and others will now wake up from there long term slumber and actually start some fight/appeal action), come april I am bang, inside IR35. I assume...

1) I cant come up with some clever 'doing this project at fixed rate' solution to avoid the bum on seat inside IR35 thing?
2) I have to now pay travel personally?
3) I will be taxed at full whack (employee and employer full tax) by the agency, with no dividends possible from my company (only from the freelance work)

The boss man is offering to drop his pants and pay me so I not out of pocket, but I dont even know how I would go about working out what the balance day rate would need to be so I am not out of pocket. The other thing to do is end my contract at xmas (thats the next break point) and look for a private gig, but I assume there will be 40,000 other contractors looking to do the same.

Any tips?

eek
23rd November 2016, 16:08
and look for a private gig, but I assume there will be 40,000 other contractors looking to do the same.

Any tips?

Only those who pay attention to what is happening will know about these changes. I would guess your competition would be 4000 max at Christmas.

The other option is to escape CL1 and go via the other schemes. I'm looking at that at the moment but its one more thing to do when I don't have much time.

DotasScandal
23rd November 2016, 16:08
The other thing to do is end my contract at xmas (thats the next break point) and look for a private gig, but I assume there will be 40,000 other contractors looking to do the same.
Any tips?

Start looking NOW and you may still avoid the stampede.
The more forward thinking people have been making their exits more or less discreetly for months now...

jonnyboy
23rd November 2016, 16:11
Ok - so let me ask this question.... lets say I quit this PS contract, and went 100% freelance. Then I wrote to PS organisation A (who I have never worked for before, so no agency contract), and they need a software widget developed, and I go fixed price... "here is quote 6726 for development of a widget, which costs £6,000" - with no agency, fixed cost, no bum on seat, does this skip all this IR35 whoo-har?

missinggreenfields
23rd November 2016, 16:22
The boss man is offering to drop his pants and pay me so I not out of pocket, but I dont even know how I would go about working out what the balance day rate would need to be so I am not out of pocket. The other thing to do is end my contract at xmas (thats the next break point) and look for a private gig, but I assume there will be 40,000 other contractors looking to do the same.

Any tips?

1) Do the sums and whack the rate up - I'd add about 45% to the day rate
2) Leave

Gaz_M
24th November 2016, 09:08
Start looking NOW and you may still avoid the stampede.
The more forward thinking people have been making their exits more or less discreetly for months now...

I'm currently in the PS & did a quick straw poll of the other 7 contractors here yesterday after the Autumn Statement.

Unbelievably 5 out of the 7 didn't know what I was talking about and the other two said "they'll worry about it at the time".

Are 90% of contractors really that stupid?

I'll be leaving here in January to give me two months to find a private sector gig which will probably keep me contracting for one or two more years (depending on when they hit private too).

westtester
24th November 2016, 09:13
I'm currently in the PS & did a quick straw poll of the other 7 contractors here yesterday after the Autumn Statement.

Unbelievably 5 out of the 7 didn't know what I was talking about and the other two said "they'll worry about it at the time".

Are 90% of contractors really that stupid?

I'll be leaving here in January to give me two months to find a private sector gig which will probably keep me contracting for one or two more years (depending on when they hit private too).

They deserve to get caught out with a complacent attitude like that. I buggered off from PS first chance I got after the MoD introduced enforced IR35. You only have to look at what happened with UKHO to see what could happen in April to everywhere else. I think the sooner you get out, the better.

IR35 dispute prompts mass walkout of IT contractors from MoD agency (http://www.computerweekly.com/news/450400847/IR35-dispute-prompts-mass-walkout-of-IT-contractors-from-MoD-agency)

QCApproved
24th November 2016, 09:22
I'm wondering if there is some wishful thinking on the actual possibility of a mass exodus to the private sector form the PS. Where are the roles in the private sector people expect to migrate to.
The FS institution I work for has released scores of contractors in the last year. I've never been sent PS CVs - I think rightly or wrongly the perception is that PS contractors don't have the commitment or flexibility for the Private Sector, particularly those that have been there for years in essentially the same role.

LandRover
24th November 2016, 10:16
I'm wondering if there is some wishful thinking on the actual possibility of a mass exodus to the private sector form the PS. Where are the roles in the private sector people expect to migrate to.
The FS institution I work for has released scores of contractors in the last year. I've never been sent PS CVs - I think rightly or wrongly the perception is that PS contractors don't have the commitment or flexibility for the Private Sector, particularly those that have been there for years in essentially the same role.

Agree, and yet there must be a real fear that HMRC will take the line post April 2017.

"Ok you were a contractor who alleged you were outside IR35 last week, now you are inside, and yet your working conditions are no different."

Worrying indeed. Will IR35 investigations increase?

gables
24th November 2016, 10:26
Agree, and yet there must be a real fear that HMRC will take the line post April 2017.

"Ok you were a contractor who alleged you were outside IR35 last week, now you are inside, and yet your working conditions are no different."

Worrying indeed. Will IR35 investigations increase?

Knowing HMRC it wouldn't surprise me but putting that aside for the moment, a reason people will be inside now is not because they should be inside working practice wise, but purely because HMRC have dictated that they're inside and therefore a retro investigation is inappropriate, but this is HMRC so no need to be appropriate.

DotasScandal
24th November 2016, 10:40
Knowing HMRC it wouldn't surprise me but putting that aside for the moment, a reason people will be inside now is not because they should be inside working practice wise, but purely because HMRC have dictated that they're inside and therefore a retro investigation is inappropriate, but this is HMRC so no need to be appropriate.

This.
If there is perception (correct or not) that there is money to be made, believe they will go for it.
As someone wrote on AccountingWeb, HMRC are not a tax collection authority anymore, they are a highway robber.

Plan accordingly.

DotasScandal
24th November 2016, 10:42
I'm wondering if there is some wishful thinking on the actual possibility of a mass exodus to the private sector form the PS. Where are the roles in the private sector people expect to migrate to.
The FS institution I work for has released scores of contractors in the last year. I've never been sent PS CVs - I think rightly or wrongly the perception is that PS contractors don't have the commitment or flexibility for the Private Sector, particularly those that have been there for years in essentially the same role.

Absolutely agree.
The level of hubris amongst contractors at large is much higher that we ever imagined.
The attitude to the APN legislation was an eye opener.
Yes, many are really "that stupid".

QCApproved
24th November 2016, 10:42
Agree DR nothing can be ruled out retro or otherwise

QCApproved
24th November 2016, 10:53
Given the way projects seem to be run in the PS no wonder so much tax needs to be collected in the first place. There appears to be no location strategy/offshoring etc not to mention huge pension provisions etc - its about time these organs of the state were more prudent with our money. Then they might not need to hold us up for so much.

MarkT
24th November 2016, 12:18
No matter what - I'll just go the umbrella route and stay contracting. Still earning more and still free to make my own decisions.

Not sure what is a better solution to be honest.

MarkT
24th November 2016, 12:26
No matter what - I'll just go the umbrella route and stay contracting. Still earning more and still free to make my own decisions.

Not sure what is a better solution to be honest.

I should add - being a contractor for 15 years has become less and less profitable, however, it's still a lifestyle choice and it's still far better paid (even if being paid via PAYE) than working permanently.

The idea of shutting down my Ltd, opting to be inside IR35 and having no more worries about expenses, 2 year rules, FRS, Income Shifting and the like kind of feels very tempting.

It's a case of £550pd vs £70k a year and being told when to take holidays, performance reviews and the like. Easy one surely.

gables
24th November 2016, 13:22
I should add - being a contractor for 15 years has become less and less profitable, however, it's still a lifestyle choice and it's still far better paid (even if being paid via PAYE) than working permanently.

The idea of shutting down my Ltd, opting to be inside IR35 and having no more worries about expenses, 2 year rules, FRS, Income Shifting and the like kind of feels very tempting.

It's a case of £550pd vs £70k a year and being told when to take holidays, performance reviews and the like. Easy one surely.

Not sure about the shutting of Ltd etc but I do get where you're coming from.

For me, to net the monthly IR35 amount of my current rate (which is not high at all) on a permie salary I'd need £62K, where I am currently the majority of IT bods are in the range £32k-£45k with only very senior bods at the £62k mark. before anyone says, I know there's more to it than just monthly net, but its the monthly net that pays the bills.

youngguy
24th November 2016, 14:40
I should add - being a contractor for 15 years has become less and less profitable, however, it's still a lifestyle choice and it's still far better paid (even if being paid via PAYE) than working permanently.

The idea of shutting down my Ltd, opting to be inside IR35 and having no more worries about expenses, 2 year rules, FRS, Income Shifting and the like kind of feels very tempting.

It's a case of £550pd vs £70k a year and being told when to take holidays, performance reviews and the like. Easy one surely.

I suppose it depends on your situation. If you have high expenses then it may not be so appealing , especially with the risk of bench time etc

550pd will get you, what...5-6k net pcm and your tax will increase 2-3 times ? That's quite a loss for many

MarkT
24th November 2016, 15:34
I suppose it depends on your situation. If you have high expenses then it may not be so appealing , especially with the risk of bench time etc

550pd will get you, what...5-6k net pcm and your tax will increase 2-3 times ? That's quite a loss for many

Well I currently take around £8500 or so - paying it all via a brolly I'd take £6500 or so (give or take). My wife will go back to work next year and will take around £2k a month net, so it might be a no brainer for me at some point.

Still it is better than going perm and better than taking a FTC.

youngguy
24th November 2016, 19:32
Well I currently take around £8500 or so - paying it all via a brolly I'd take £6500 or so (give or take). My wife will go back to work next year and will take around £2k a month net, so it might be a no brainer for me at some point.

Still it is better than going perm and better than taking a FTC.

I hear you, and I get that covers the monthly stuff. It is however an additional 20+ K in tax....for me that's my pension fund, training fund, bench fund. All of those issues go away with a perm role so contracting suddenly seems a whole lot more risky overall (I'm not saying for you specifically but in general).

jonnyboy
25th November 2016, 13:45
All, I said in another thread I would speak to my accountant and see what his thoughts were on the AS and IR35 going forward... I post them here (with some editing to remove parts which are of no interest to the general discussion) for comments, thoughts and information....


Yes it’s a wonderful world! And I apologise for not having a definitive answer, Simply because of the paragraph that follows.
As far we can see in the technical articles that we receive,” a worker who supplies their services to the public sector via a PSC, the public sector organisation will be responsible for paying the correct employment taxes”
At the time of writing there is as far as I can see, and advised, no legislation for the above – just what said in the 2015 Autumn statement, and ourselves, tax writers and consultants are waiting for that to appear, and my best guess is as below:
So assuming an example of a day rate of £350.00 a day would simply be taxed under the PAYE rules and your company would receive the net salary to pay to you.
It is impossible to say what tax or nic would be deducted as this would be determined by the tax code/rate of tax operated and the number of days worked. We suspect that the “employer” will be required to deduct 40%, on possibly on a week one basis, or some other code which is specific to this scenario, all of which distorts the calculation.
A simple calculation would be £350 less tax, inc nic ees 40+12 = 52% = a net of £168 to the company, plus the vat thereon, so 350 *20% = 70.00 = 168+70= £238.00
It is further complicated by non IR35 income, salary and dividends drawn from the non IR35 income .
So your personal tax position will included salary income via a P60 we believe from the IR35 “employer” a P60 from your company which when both are added together would equal the salary deduction in the accounts of your company, along with any dividends etc drawn from your company.
The income from the IR35 employer in the accounts of your company would be equal to the gross salary deduction from that source.
Added to this mix is of course the upper earnings thresholds for employees nic, and a claim should you go over that threshold be made on an annual basis, as the deduction is made per employment, our personal tax software shouts at us on this, but as we do not control your personal tax affairs it is something to be aware of in the coming years.
Once we have the legislation then we can look at the effect in more detail, I would hope that will be published early in the New Year, and as I said firstly I wish I could be definitive but I cannot until the legislation is published.

And finally (AND THIS WILL BE MISSED BY MANY): Note that any attempt to invoice in advance for services to be provided on or after 1 April 2017, to capture that invoice within the FRS, will be treated as if the invoice was issued on 1 April 2017 (para 8.2 and 9.7 of VAT notice 733).

youngguy
25th November 2016, 14:57
All, I said in another thread I would speak to my accountant and see what his thoughts were on the AS and IR35 going forward... I post them here (with some editing to remove parts which are of no interest to the general discussion) for comments, thoughts and information....

So are you clearer?!

Very complicated (not your accountant,this whole approach )

jonnyboy
25th November 2016, 15:05
So are you clearer?!

Very complicated (not your accountant,this whole approach )

Nope - the figures scare me. But I am no clearer in terms of...

1) If I have my client agree no SCD, does this effect me (yes, I know its in terms of agency risk) - so what if I have no SCD in black and white but the agent disagrees - do I have a right of appeal, can I drop the agent but still work for the same client?
2) If I do project work (I develop X at home, then install it in 6 months and charge you £500) - is factor into IR35 (I have asked my accountant, no reply as yet)
3) What about say support and maintenance payments from PS companies from work I did 4 years ago?

The consultation documents and workflow tends to suggest that in all these examples, IR35 and the changes will not impact, but then again, no-one has agreed that they are clear of IR35.

jonnyboy
25th November 2016, 15:24
Ok - regarding the billing for the project work, I asked my accountant if he thought this would be captured as well (as would be Support) and he felt yes, if its a PSC, it would be captured.

Then he shared the following advice nice that he had just received from Indicator, which I share in full (does not actually tell us anything we did not already know)...


INTERMEDIARIES
Public sector contractors to be hit by changes
The 2016 Budget announced that there would be a change regarding how IR35 rules would apply to contractors working in the public sector. How will the rules affect your contractor clients and what can you do to help them maintain their income?
ANNOUNCEMENT
Under the current IR35 rules (the intermediaries legislation), where a contractor provides their services via a personal service company (PSC), - either directly or via an agency or other third party - the responsibility for determining the IR35 status rests with the PSC. Failure to do this correctly is therefore not the problem of the public body, and so it may not pay too much heed to the nature of the engagement.
From April 2017, however, where public sector bodies engage the services of workers provided through an intermediary, the responsibility will be that of the engaging body, or the agency or other third party, i.e. the engager, as appropriate.
UPSHOT
What this means in practice is that the engager will be liable for paying over any associated tax and NI if IR35 should apply. The engager will therefore need to be extremely careful and make an informed decision as to whether to operate PAYE or not. It will be subject to the penalty regime for failing to do so correctly. Affected public bodies will include:
o government departments and agencies
o the NHS
o police and fire authorities
o universities and other educational establishments
This list is non-exhaustive.
RISK AVERSION
There is a very real concern that public sector engagers will adopt a highly risk averse approach, and apply IR35 on a virtually wholesale basis. This could see genuinely self-employed workers paying employment taxes and having to suffer the rigmarole of arguing and reclaiming overpayments from HMRC. It may prove difficult to argue the case once the engager has made the decision, at least without resorting to the Tribunal.
It is hoped that the government’s promised online tool, based on a simple algorithm, will mean that this is not going to be systematic (see Follow up ). However, it’s still probable that more workers will be treated as “inside” IR35 . Unfortunately, the new rules will not entitle any of your clients to employment rights if the engager decides PAYE needs to be applied.
IMPACT
Let’s review how this might affect a client that contracts with their local council via their PSC. Your client has a contract to work 15 hours per week, for 40 weeks of the the year at £100 per hour. He provides IT support and security. From his company he takes £8,000 in salary and the rest as dividends. He claims no expenses from the council.
The council informs him that due to the changes, it will be operating the IR35 rules and deducting tax and NI via PAYE from April 2017. The respective position for your client for 2016/17 and 2017/18 looks like this:
2016/17 2017/18
Income £60,000 £60,000

PAYE - -
EEs’ NI - -
Dividend tax £4,170 -
ERs ‘NI - -
Corporation tax £10,400 -

IR35 PAYE - £9,623
IR35 ERs’ NI - £5,942
IR35 EEs’ NI - £4,354

Total taxes £14,570 £19,919
Your client would therefore be £5,349 worse off in 2017/18. Note. 2016/17 rates have been used for both scenarios for simplicity. We have also assumed that the 5% flat rate deduction available under IR35 will continue to apply - though this is one area of uncertainty, as illustrated in the published consultation (see Follow up ).
ADVISING
The reality is that if an authority does go for the cautious approach, any contractor dealing with them will be in the same boat as your client. This means your client should be able to negotiate increased terms to leave them unaffected - others will be doing exactly the same so there is little chance of being priced out if the engager looks elsewhere.
Example. Your client (from above) would require the income to be increased to £109.06 per hour to leave him in the same take home position under an employment contract if forced to go “on the books” by the engager.
Pro advice. Prepare side by side calculations for potentially affected clients so that they can use them in their contract negotiations or renewals with public bodies.
IR35 algorithm
Consultation on off payroll working in the public sector
From April 2017 engagers will determine IR35 status not your clients. This could mean they are subject to PAYE as a precaution. Prepare side by side computations showing how much they would need to be paid to avoid a loss of take home income so that they can negotiate improved payment terms.
________________________________________
The next step
o IR35 algorithm
[Document]
o Consultation on off payroll working in the public sector
[Document]
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northernladuk
25th November 2016, 15:35
All, I said in another thread I would speak to my accountant and see what his thoughts were on the AS and IR35 going forward... I post them here (with some editing to remove parts which are of no interest to the general discussion) for comments, thoughts and information....

If you are asking your accountants about the cost of IR35 then fine. I'd be asking contract specialists like QDOS about IR35. Accountants aren't always the best people for IR35 so I wouldn't assume they are right.

jonnyboy
25th November 2016, 16:07
QDOS have been quiet on these forums since the AS (I expect, very busy).
I have QDOS tax insurance, but not IR35 insurance..... maybe somebody who is interested in the answer and has a fuller QDOS cover would be good enough to ask???

eek
25th November 2016, 16:22
QDOS have been quiet on these forums since the AS (I expect, very busy).
I have QDOS tax insurance, but not IR35 insurance..... maybe somebody who is interested in the answer and has a fuller QDOS cover would be good enough to ask???

QDOS have sent an email out that linked to a blog post (https://www.qdoscontractor.com/news/2016/11/25/autumn-statement-2016).

Don't panic and we are working with agencies seems to be their response. Personally I don't think leaving the public sector is panicking I think its a sensible approach until you know how things have settled.

northernladuk
25th November 2016, 16:44
QDOS have been quiet on these forums since the AS (I expect, very busy).
I have QDOS tax insurance, but not IR35 insurance..... maybe somebody who is interested in the answer and has a fuller QDOS cover would be good enough to ask???

It's only 2 days since the announcement so I'd hope unlike many of us on here they are sifting through it carefully to make sure their response is timely and full unlike the knee jerk stuff we've had on here for the last two days.

They have mailed as eek said but it's going to take a bit of time for any business to get a decent response together.

youngguy
25th November 2016, 16:48
Nope - the figures scare me. But I am no clearer in terms of...

1) If I have my client agree no SCD, does this effect me (yes, I know its in terms of agency risk) - so what if I have no SCD in black and white but the agent disagrees - do I have a right of appeal, can I drop the agent but still work for the same client?
2) If I do project work (I develop X at home, then install it in 6 months and charge you £500) - is factor into IR35 (I have asked my accountant, no reply as yet)
3) What about say support and maintenance payments from PS companies from work I did 4 years ago?

The consultation documents and workflow tends to suggest that in all these examples, IR35 and the changes will not impact, but then again, no-one has agreed that they are clear of IR35.

Just wondering, have you sought your agent's view? I wonder what they think/feel after the AS

jonnyboy
25th November 2016, 16:55
Just wondering, have you sought your agent's view? I wonder what they think/feel after the AS

Yep - first thing this morning, by email. Nothing back yet. I tried to call, but they 'were not available'

youngguy
25th November 2016, 17:00
Yep - first thing this morning, by email. Nothing back yet. I tried to call, but they 'were not available'

I can't imagine they want x amount of angry contractors on the phone demanding rate increases or terminating.

Although at my last PS, very few contractors had any idea about this at all and didn't grasp it when I told them.....

Ketto
25th November 2016, 17:45
Thank heavens for CUK, gave me plenty of upfront warning about this so i could get myself into the private sector in good time. Wasn't easy after 10 years straight in the public sector!

Qdos Contractor
25th November 2016, 18:41
QDOS have been quiet on these forums since the AS (I expect, very busy).
I have QDOS tax insurance, but not IR35 insurance..... maybe somebody who is interested in the answer and has a fuller QDOS cover would be good enough to ask???

Yep, it's been busy. Struggled to follow the forum in detail but feel free to ask any questions (can't promise I'll have many answers).

Seb

jonnyboy
25th November 2016, 19:15
Yep, it's been busy. Struggled to follow the forum in detail but feel free to ask any questions (can't promise I'll have many answers).

Seb

What I find surprising (IPSE and QDOS, feel free to respond) is the same thing I found surprising about the brexit vote.
If I was prime minister before brexit, way before the vote, I would have had a plan. then on the morning, instead of coming out with my tail betwen my legs, I would have come out with 200 people - 100 people from the depts of T&I/InternationalTrade, and 100 people from places like the LondonSchoolOfEconomics, saying 'right, we are where we are, nobody panic, we have planned for this - these two people (1 gov, 1 LSOE) wil be going straight to india, these 2 to china, these 2 to brazil, these 2 to france, etc.

This thing was going to go 3 ways... 1) No comment (not going to happen), 2) We are not ready (pushed out by a year or two) or 3) Full Monty In.

I am so surprised that the likes of IPSE and QDOS (I am a customer BTW) did not have al these basis covered, rather than the wait and see option. I have been working on my own plan B (just in case) since August.

After all, this thing is going to decimate the contractor market, therefore your collective user bases.

northernladuk
25th November 2016, 20:04
That's why you are just a contractor;)

swamp
25th November 2016, 20:13
Hi QDOS, will you be providing an insurance policy for agents to cover them for IR35 in the public sector?

If so, what prerequisites will this policy require, and how much do you think it will cost?

Many thanks.

Qdos Contractor
25th November 2016, 20:17
Ok, I understand where you're coming from.

Naturally we've been doing a lot of work over the last few months; we responded to the consultation (using our clients' feedback), have met with HMRC and have invested a lot of time in developing processes/solutions for what we think is going to happen. There are a lot of details we simply don't know yet, and won't until 5th December.

I guess what you think is missing is an immediate and public statement of intent. As referred to earlier in the thread we have put out a brief post, but it's dangerous to make any significant declaration until we've seen the devil in the detail.

Also bear in mind the main parties we need to help initially are agencies and engagers, not contractors. I can assure you we've been working hard on that front.

I obviously don't have lobbyists or the ear of parliament, but we're doing everything we can.

Qdos Contractor
25th November 2016, 20:21
Hi QDOS, will you be providing an insurance policy for agents to cover them for IR35 in the public sector?

If so, what prerequisites will this policy require, and how much do you think it will cost?

Many thanks.

Yes.

Cost: I don't know yet; lots of factors to consider.

Prerequisites: IR35 factors haven't changed so will be based on our opinion.

youngguy
25th November 2016, 23:20
Yep, it's been busy. Struggled to follow the forum in detail but feel free to ask any questions (can't promise I'll have many answers).

Seb

Seb,

Given your discussions with agencies etc, what do you sense their appetite is for looking at 'outside ir35' engagements , or are we all correct in assuming most will be in because of the risk to the agent ?

Qdos Contractor
25th November 2016, 23:30
Seb,

Given your discussions with agencies etc, what do you sense their appetite is for looking at 'outside ir35' engagements , or are we all correct in assuming most will be in because of the risk to the agent ?

Obviously it's early days, but every agency I've spoken to is genuinely trying to ensure contractors working outside IR35 can continue to do so. Granted the sample I've communicated with (so far) is relatively small in the scheme of things, but there has been no suggestion of forcing all contractors inside.

Seb

Bigb
29th November 2016, 18:48
Is there any detail around what definition of the 'public sector' is being used? I.e. is it just central & local government or will it cover the 3rd sector, e.g. housing associations who receive some government funding?

Qdos Contractor
29th November 2016, 21:44
Is there any detail around what definition of the 'public sector' is being used? I.e. is it just central & local government or will it cover the 3rd sector, e.g. housing associations who receive some government funding?

Any organisation covered by the FOI act. It's quite extensive.

See here (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/526614/Off-payroll_working_public_sector-reform_intermediaries_legislation.pdf): page 12 for the overview and then page 47 onwards for the detail.

youngguy
30th November 2016, 09:10
I've had two calls this last week about PS roles and both times have been told by the agents they are confident they will be able to provide IR35 compliant contracts post April. One even upped the rate for the role by £50 per day whilst on the call when I said about the risk!

eek
30th November 2016, 11:48
Just turned a public sector role down again.

westtester
30th November 2016, 13:02
Obviously it's early days, but every agency I've spoken to is genuinely trying to ensure contractors working outside IR35 can continue to do so. Granted the sample I've communicated with (so far) is relatively small in the scheme of things, but there has been no suggestion of forcing all contractors inside.

Not yet. The reason we are all assuming that's what agencies will do is because we've worked with them for many years and experience suggests they will do what suits them and not us.

jonnyboy
30th November 2016, 13:15
Myself and another person who I work with in my current (soon to end) PS role have the same agency. We have separately emailed them to ask their position on the changes, SCD get outs, will they stay in the PS, will they deem everybody in IR35, and they have not replied to either of us. Yes, I know (now) that they cant say what they dont know (until the 5th).. but they didnt even bother with a holding pattern email.

BoredBloke
30th November 2016, 13:27
Not yet. The reason we are all assuming that's what agencies will do is because we've worked with them for many years and experience suggests they will do what suits them and not us.

Exactly! Why would an agency run the risk of paying contractors outside IR35 when they have no knowledge of the working practices/SDC aspects of the contract and when HMRC can raise the issue many years after the contract ended. They will take the safest option which will be to remove the risk of IR35 by ensuring contractors work via a brolly or on the payroll through IR35.

difficulttimes
30th November 2016, 13:38
I read today that the online tool will NOT be mandatory and there are no changes to the definition of IR35 so what stops an agency making a call that this contract is outside of IR35. The tool itself can't be used in a tribunal anyway and won't agencies just take out insurance in the unlikely case that there is a challenge from HMRC? Am I missing something?

eek
30th November 2016, 13:41
I read today that the online tool will NOT be mandatory and there are no changes to the definition of IR35 so what stops an agency making a call that this contract is outside of IR35. The tool itself can't be used in a tribunal anyway and won't agencies just take out insurance in the unlikely case that there is a challenge from HMRC? Am I missing something?

Yep the post by boredbloke directly above yours. Agencies are risk adverse and this could currently go in any direction

northernladuk
30th November 2016, 13:44
I read today that the online tool will NOT be mandatory and there are no changes to the definition of IR35 so what stops an agency making a call that this contract is outside of IR35. The tool itself can't be used in a tribunal anyway and won't agencies just take out insurance in the unlikely case that there is a challenge from HMRC? Am I missing something?

The tools itself might not be used but the tool is there to help quantify the contractors position based on a number of factors. Those factors WILL be used in a tribunal so effectively the same thing.

difficulttimes
30th November 2016, 13:46
Agencies are a dime a dozen.. it has to be the most competitive market out there and they come and go like the wind - I could set one up by the end of the day. Doesn't this make give an agency a competitive advantage? Many PS clients these days also don't always follow the frameworks and can be added to it afterwards.

difficulttimes
30th November 2016, 13:50
The tools itself might not be used but the tool is there to help quantify the contractors position based on a number of factors. Those factors WILL be used in a tribunal so effectively the same thing.

The tool is just there to help make a decision if the end client and intermediary are happy that so be it. Has HMRC ever won a IR35 decision? All this has done is put the fear of god through everyone - they will use this fear to force people inside IR35. Unless there is a tightening up of the legislation that states that this tool has to be used in all cases of off-payroll working then why use it if all parties are comfortable that it sits outside?

BoredBloke
30th November 2016, 14:20
Out of interest - if you and the agency and the client deem the contract to be outside IR35 and you are paid as such, if HMRC then decide you are not, who are they going to come after for the extra tax, repayment of monies taken in lieu of expenses etc - my guess, as you've already been paid and you don't have access to expensive lawyers, HMRC will be after you.

difficulttimes
30th November 2016, 14:31
Well it is the intermediary then right? Who will have insurance to cover this unlikely event. They have no 'greater powers' than they do at the moment to go after you and in some respect you are more protected. The reason the tool is not mandatory is that it will be changed along the way and what happens then? Do you have to re-take the test and then re-do your contract everytime HMRC have updated the tool? Please that is never going to happen. Also, won't forums like this promote how to 'answer' the questions? As it's not mandatory they can't use this at a tribunal judge can they and even if it was they would have to change the original 2000 IR35 legislation which they are not.

BoredBloke
30th November 2016, 15:50
Well it is the intermediary then right? Who will have insurance to cover this unlikely event. They have no 'greater powers' than they do at the moment to go after you and in some respect you are more protected. The reason the tool is not mandatory is that it will be changed along the way and what happens then? Do you have to re-take the test and then re-do your contract everytime HMRC have updated the tool? Please that is never going to happen. Also, won't forums like this promote how to 'answer' the questions? As it's not mandatory they can't use this at a tribunal judge can they and even if it was they would have to change the original 2000 IR35 legislation which they are not.

Possibly...but it could also be you. So all parties agree that a contract that should now be inside IR35 is outside. The agency pay you the non ir35 amount. Then at a later date HMRC come along and decide that the contract should have been inside IR35 and the agency didn't deduct the IR35 tax, my guess is that the agency will be able to worm out of it and it's back to the contractor for the ir35 back taxes. Even if they still hit the agency for the taxes, they'll probably hit the contractor for any and all expenses claimed on a contract where they shouldn't have been able to claim any.

But then regarding the insurance....have you any idea how expensive it would be for an agency to insure itself against the tax liabilities for each and every contractor working through them - spanning years? It's not going to happen. Instead they will simply adopt the default that the contract is inside IR35. In exactly the same way they did when they stopped allowing contractors to be classed as self employed in the 70's. It will simply be the case that if you want the contract you'll to work via their brolly or you could still use your limited company but tax will be deducted at source and you'll still have all the other company expenses to pay out of your post tax income!