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View Full Version : November 22nd - The death of contracting as we know it



eek
29th October 2017, 08:15
See today's Sunday Times - https://www.thetimes.co.uk/edition/business/philip-hammond-eyes-1bn-budget-raid-on-freelancers-9bm6lsjs6

No mention of IPSE instead its Julia Kermode of of the Freelancer and Contractor Services Association the BMA and someone at EY stating its a bad idea...

But unless they remove the escape route the public sector will continue to have a recruitment problem so sharing the pain is the way its going to go...

cojak
29th October 2017, 10:44
It’s behind a paywall but I can imagine the article.

ShandyDrinker
29th October 2017, 10:48
Sadly I think this is the way that it will go. Perhaps I'm wrong but having watched this and other forums over the last 12 months or so since the announcement of and public sector rollout I get the feeling that many have lost the will to fight on this issue.

I know that I'll be writing to my MP yet again but accept it will have little impact as the usual response from the relevant ministers is not encouraging.

I really do hope that if Hammond and co are stupid enough to go through with it that the UK will lose the flexible workforce it seems to have come to rely on. Just look at many of the financial services companies in the City, for example.

While the short term tax gain may be good for the Treasury, I can't help but feel the long term repercussions will be potentially worse.

jamesbrown
29th October 2017, 11:16
This isn’t remotely surprising, and it’s inevitable in the long-term, but it should be viewed as a trial balloon at this point in the cycle. Depending on the pushback from backbenchers (who will be lobbied, heavily) they may not do it. The Chancellor is in a weak position anyway. But it’s the clearest signal yet that they want to do it. All those commenting in the article reflect on the implementation in the PS as being a disaster. :laugh

jamesbrown
29th October 2017, 11:20
I assume it’s OK to quote in full when referenced. Source:

https://www.thetimes.co.uk/edition/business/philip-hammond-eyes-1bn-budget-raid-on-freelancers-9bm6lsjs6


The chancellor is considering a £1bn raid on freelance workers in a new blitz against “disguised employment” in the private sector.

The mooted crackdown could force businesses to add tens of thousands of self-employed staff to their payroll, driving up their tax bills.

The move — which could be unveiled by Philip Hammond in next month’s budget — is aimed at levelling the playing field between salaried staff and freelancers, who enjoy significant tax advantages if they work as independent contractors.

But it would also hand a cash boost to Hammond, who is scrambling to fund public sector pay rises and to increase spending on the NHS and social care. The stagnant economy leaves little scope for giveaways. Earlier this month, the Office for Budget Responsibility warned that weak productivity levels would hit future tax receipts.

The Treasury is targeting IT contractors, consultants and other freelancers who are paid through “personal service companies”. Currently, it is up to the workers to pay the correct personal tax and national insurance contributions. HM Revenue & Customs believes that most of them do not comply in full.

About 450,000 people earn most of their income through personal service companies, figures from the Office for National Statistics suggest. It is unclear how many the change would affect.

A clampdown would shift the onus to employers, to ensure workers do not avoid tax. Those deemed not to be genuine freelancers would have to be put on the payroll. That would drive up revenues for HMRC, which typically collects more from a salaried employee than a contractor in an equivalent role. Freelancers risk losing a chunk of their take-home pay.

In April, similar reforms were introduced for public-sector workers. HMRC expects to reap an extra £265m in the current tax year as a result. Last week, the Treasury said that public bodies added 90,000 people to their payroll in the three months from April to June. Most had been working as contractors.

The British Medical Association has branded the switch an “administrative disaster” for the health service. Chris Sanger, head of tax policy at EY, said ministers should “fix the problems faced by those operating the new rules” before extending them to the private sector.

Julia Kermode, head of the Freelancer and Contractor Services Association, said: “It has been shambolic. We’ve seen skills shortages in public bodies because they have lost such huge numbers of contract workers.”

The Treasury declined to comment.

jamesbrown
29th October 2017, 11:41
More detailed article in the FT with various figures quoted, including 90,000 that have apparently stopped using PSCs in the PS (presumably including those that now use schemes).

https://www.ft.com/content/fc02936c-bb1b-11e7-9bfb-4a9c83ffa852

What’s more interesting about this article is that it directly quotes Mel Stride, Financial Secretary to the Treasury on “fairness”.

The article moots 22 November for a consultation (:laugh) and April 2020 for implementation.

I enjoyed this quote...


Minutes from a July meeting involving HMRC and industry experts said there had been “no evidence of significant impact on attrition rates of contractors working in the public sector”.

The way they operate would be hilarious if it weren’t serious.

eek
29th October 2017, 12:24
More detailed article in the FT with various figures quoted, including 90,000 that have apparently stopped using PSCs in the PS (presumably including those that now use schemes).

https://www.ft.com/content/fc02936c-bb1b-11e7-9bfb-4a9c83ffa852

What’s more interesting about this article is that it directly quotes Mel Stride, Financial Secretary to the Treasury on “fairness”.

The article moots 22 November for a consultation (:laugh) and April 2020 for implementation.

I enjoyed this quote...


The way they operate would be hilarious if it weren’t serious.

Equally from the FT article so you can see where the examples will come from to justify this....


It would also affect many people with relatively low-paid jobs who sell their work through companies, including receptionists, credit controllers, telephonists and chambermaids.

Once again an interest choice of people quoted and not quoted...

also I don't think this is a trial balloon - I suspect (as I have for a while) that this is a done deal.

jamesbrown
29th October 2017, 12:33
Once again an interest choice of people quoted and not quoted...

Yep, they will spin this to within an inch of its life.

It just depends whether Lurch can get it through. There's a good chance he can't, given his personal credibility on the backbenches. Obviously, the big four won't mind, but many big businesses (CBI, BCC, IoD etc.) will lobby hard against this, as they did in 1999, especially with Brexit on the agenda for 2018/19.

eek
29th October 2017, 12:43
Yep, they will spin this to within an inch of its life.

It just depends whether Lurch can get it through. There's a good chance he can't, given his personal credibility on the backbenches. Obviously, the big four won't mind, but many big businesses (CBI, BCC, IoD etc.) will lobby hard against this, as they did in 1999, especially with Brexit on the agenda for 2018/19.

By pushing this through as part of the Taylor report changes - it will sail through with Labour support, which is why it's now and not next year...

cojak
29th October 2017, 12:46
I thought this from the beginning of this sub-forum.

I made my decision July 2015.

jamesbrown
29th October 2017, 12:50
By pushing this through as part of the Taylor report changes - it will sail through with Labour support, which is why it's now and not next year...

The pressure won't come from Labour, it will come from Tory backbenchers before anything becomes HMG policy and hence part of a FB. It depends how strongly they feel about it. Leverage isn't applied vote-by-vote, it's about deals, and there are many other issues on which backbenchers have a decisive vote. If they were just going to do it, they wouldn't be briefing it out three weeks before a budget. They'd just do it in the budget. It's standard trial balloon MO - HMT/HMRC clearly want to do this (and had planned it from the start), but they also want to gauge pushback from business and the backbenches.

eek
29th October 2017, 13:15
The pressure won't come from Labour, it will come from Tory backbenchers before anything becomes HMG policy and hence part of a FB. It depends how strongly they feel about it. Leverage isn't applied vote-by-vote, it's about deals, and there are many other issues on which backbenchers have a decisive vote. If they were just going to do it, they wouldn't be briefing it out three weeks before a budget. They'd just do it in the budget. It's standard trial balloon MO - HMT/HMRC clearly want to do this (and had planned it from the start), but they also want to gauge pushback from business and the backbenches.

I suspect there will be pushback I also suspect that because there will be a lot of pushback from the Taylor report but it will be ignored and this will go through as part of said report (even though its got nowt to do with it)....

Time will tell but everything has so far played out exactly how I suspected it would - this is a year earlier than I expected but the chance to combine with Taylor is probably too good for HMRC to ignore...

jamesbrown
29th October 2017, 13:23
Time will tell but everything has so far played out exactly how I suspected it would - this is a year earlier than I expected but the combination with Taylor is probably too good for HMRC to ignore...

Yep, time will tell. It was always a question of "when". I take your point on Taylor, but Lurch has irritated pretty much every contingent on the backbenches in recent months, and they're looking for any opportunity to trip him. Combined with Brexit, the timing is not ideal. If the pushback is only moderate, they'll go ahead with a consultation in the Budget. I expect the pushback will be coordinated and severe, but that may only succeed in pushing off the implementation date or the details of what is done (after consultation). April 2018 remains impossible IMO.

InsertWittyNameHere555
29th October 2017, 13:29
I am a regular poster but using this account as to not draw myself above the parapet but......

I have seen the new PS rules first hand and there are ways round it which make me think that it will go to the Private Sector and will work.

I have seen people move away from one man bands into micro consultancies, biding for and winning contracts for defined pieces of work, delivering a service rather than a bum on seat, and I think this could work. Many have said we should throw the BoS under the bus if it means we can continue to offer a flexible work force, and if that is the case I will do so (self preservation and all).

We have all seen contractors at clients who are so far inside they are due a gold watch and a pension, they are not freelancers, they are disguised employees.

eek
29th October 2017, 13:29
Yep, time will tell. It was always a question of "when". I take your point on Taylor, but Lurch has irritated pretty much every contingent on the backbenches in recent months, and they're looking for any opportunity to trip him. Combined with Brexit, the timing is not ideal. If the pushback is only moderate, they'll go ahead with a consultation in the Budget. I expect the pushback will be coordinated and severe, but that may only succeed in pushing off the implementation date or the details of what is done (after consultation). April 2018 remains impossible IMO.

April 2018 is impossible but I was expecting April 2020 with things kicked off in November 2018. Now I suspect its kick off now for April 2019...

Qdos Contractor
29th October 2017, 14:33
April 2018 is impossible but I was expecting April 2020 with things kicked off in November 2018. Now I suspect its kick off now for April 2019...

That would be my guess too, perhaps with some refinements to the legislation beforehand. But you never know...

Seb

Graham1967
29th October 2017, 15:51
March 2019 Brexit

April 2019 Off Payroll rules in the private sector.

Glad people who know what they are doing are running this country.

SeanT
30th October 2017, 10:49
They need a couple of years to invent a new way of paying theirselves and their wives, surely?

TheFaQQer
30th October 2017, 11:05
IPSE initial response to the Times article:

IPSE director of policy, Simon McVicker, said: "It looks like the Chancellor will be targeting hard working self-employed people for the second Budget in a row, last time it was all self-employed with NICs and now it appears he is considering a targeted attack on freelancers.

"Changes to how freelancers operate in the public sector only came in recently and they have been a complete shambles. It’s ludicrous the Chancellor would even consider extending these rules when the public-sector roll-out has been so problematic. Because of it, significant numbers have been leaving the NHS causing shortages and we’ve seen reports of serious delays to projects at TfL.

"The UK’s flexible labour market gives us a major competitive advantage over other European countries, and helps to attract investment. The government should be trying to give businesses confidence about leaving the EU not drown them in red tape. Adding additional burdens on business at this time is just plain wrong.

"If the government is serious about addressing disguised employment it should implement a statutory definition of self-employment."

ladymuck
30th October 2017, 12:10
That would be my guess too, perhaps with some refinements to the legislation beforehand. But you never know...

Seb

:rollin:

jamesbrown
30th October 2017, 13:27
:rollin:




a worker personally performs services, or is under obligation to personally perform services for the client
the client is a public authority
the services are provided under circumstances where, if the contract had been directly with the client, the worker would be regarded for Income Tax purposes as an employee of the client or the holder of an office with the client, or the worker actually is an office holder with the client


:D

SimonMac
30th October 2017, 14:17
IPSE initial response to the Times article:

IPSE director of policy, Simon McVicker, said: "It looks like the Chancellor will be targeting hard working self-employed people for the second Budget in a row, last time it was all self-employed with NICs and now it appears he is considering a targeted attack on freelancers.

"Changes to how freelancers operate in the public sector only came in recently and they have been a complete shambles. It’s ludicrous the Chancellor would even consider extending these rules when the public-sector roll-out has been so problematic. Because of it, significant numbers have been leaving the NHS causing shortages and we’ve seen reports of serious delays to projects at TfL.

"The UK’s flexible labour market gives us a major competitive advantage over other European countries, and helps to attract investment. The government should be trying to give businesses confidence about leaving the EU not drown them in red tape. Adding additional burdens on business at this time is just plain wrong.

"If the government is serious about addressing disguised employment it should implement a statutory definition of self-employment."

But HMRC has already said that there was no impact, and Hector is an honourable man

poorautojobber
30th October 2017, 16:20
Feels a little like the last dance of freedom before we all get turned into permie drones doing 20 years for a cheap gold watch and an extra couple of days holiday.
I've actually just taken a new role with this in the back of my mind working for a big Co probably isn't the best place to be as this blanket nonsense seem more likely at a big Co. The main reason i went was for the cash though :tongue

mattfx
30th October 2017, 16:23
Surely as long as you actually aren't a disguised employee, you have nothing to worry about? An effective test for this would be milestone billing for a gig wouldn't it? I.E. If you're billing per deliverable milestone / project, as opposed to signed off timesheets you could easily demonstrate you were not in fact a regular employee. I'm sure there were other things you could do; insist on providing your own laptop (even if you have to front the cost of corporate specific A/V etc. that'd have to be worth it wouldn't it?)

I dare say im looking at it too simply though...

mattfx
30th October 2017, 16:25
Feels a little like the last dance of freedom before we all get turned into permie drones doing 20 years for a cheap gold watch and an extra couple of days holiday.
I've actually just taken a new role with this in the back of my mind working for a big Co probably isn't the best place to be as this blanket nonsense seem more likely at a big Co. The main reason i went was for the cash though :tongue

To be fair, my last boss did 20 years at Fyffes and got a very, very nice Rotary as recompense for his efforts. Pretty sure his salary was very toppy for out of the city, too.

TheFaQQer
30th October 2017, 16:53
insist on providing your own laptop (even if you have to front the cost of corporate specific A/V etc. that'd have to be worth it wouldn't it?)

IIRC, a laptop is specifically listed on CEST as something that doesn't count as providing your own equipment. A desktop, on the other hand...

jamesbrown
30th October 2017, 17:02
I dare say im looking at it too simply though...

Perhaps not too simply, but you may be looking in the wrong place. The change would put the liability on the fee payer. If the fee payer is happy to take the liability by providing an arrangement that is consistent with being an independent contractor, it's pretty simple (they will either complete the CEST to reflect that or use their own approach to assess the situation, but probably the latter).

Will they? A mixed picture, I expect, much like the PS, but the private sector is probably more likely to use their imagination and ensure that many contractors - at least those that are not BAU/BoS - can operate as usual. I wouldn't necessarily assume that BigCos will react negatively though. They are more likely to develop a methodology that applies company-wide, depending on the type of work, but not necessarily one that puts all work inside.

The reaction is guesswork.

washed up contractor
30th October 2017, 17:33
I am a regular poster but using this account as to not draw myself above the parapet but......

I have seen the new PS rules first hand and there are ways round it which make me think that it will go to the Private Sector and will work.

I have seen people move away from one man bands into micro consultancies, biding for and winning contracts for defined pieces of work, delivering a service rather than a bum on seat, and I think this could work. Many have said we should throw the BoS under the bus if it means we can continue to offer a flexible work force, and if that is the case I will do so (self preservation and all).

We have all seen contractors at clients who are so far inside they are due a gold watch and a pension, they are not freelancers, they are disguised employees.

What a miserable little twat you are. Not only are such a snivelling little shit for not having the courage to post that under your 'usual' username (although I could take a guess at what it really is) but, you see quite happy to throw fellow contractors under the bus so you personally can escape the extra tax burden.

Yes, we've all see the odd one or two contractors who are inside. Ive tried to educate them on how to stay outside by having contracts professionally reviewed and not act like a permie etc. Despite that, there remains a very tiny hardcore of contractors who should be taxed as inside IR35 but that is HMRCs job and not ours.

If you've been at places that have legions of these 'so far inside' contractors, maybe you should look at yourself seeing as those clients actually engaged you at some point.

Sadly, there is always a group of people such as yourself who see themselves as better than everyone else.

poorautojobber
30th October 2017, 17:46
I'm happy defending my outside position but that right (and risk) will be taken away from me. If the public sector is anything to go by we will see blanket determinations to start with. I'm sure big Co will get wise but it's the time it'll take. I'm sure the Billion they think they are going to get will end up being a small percentage this just feels like the biggest threat to my way of living. I'm probably wrong and we'll figure it out.

TheFaQQer
30th October 2017, 17:52
I'm happy defending my outside position but that right (and risk) will be taken away from me. If the public sector is anything to go by we will see blanket determinations to start with. I'm sure big Co will get wise but it's the time it'll take. I'm sure the Billion they think they are going to get will end up being a small percentage this just feels like the biggest threat to my way of living. I'm probably wrong and we'll figure it out.

When IR35 was first suggested, the idea was that business should make the assessment and be liable. The CBI and others kicked this back because they argued that the burden on business would be too much and so the responsibility passed to the contractor.

Whether there is the same appetite to fight from all business groups is something that only time will tell.

eek
30th October 2017, 18:03
What a miserable little twat you are. Not only are such a snivelling little tulip for not having the courage to post that under your 'usual' username (although I could take a guess at what it really is) but, you see quite happy to throw fellow contractors under the bus so you personally can escape the extra tax burden.

Yes, we've all see the odd one or two contractors who are inside. Ive tried to educate them on how to stay outside by having contracts professionally reviewed and not act like a permie etc. Despite that, there remains a very tiny hardcore of contractors who should be taxed as inside IR35 but that is HMRCs job and not ours.

If you've been at places that have legions of these 'so far inside' contractors, maybe you should look at yourself seeing as those clients actually engaged you at some point.

Sadly, there is always a group of people such as yourself who see themselves as better than everyone else.

There is a few narrow difference between a tiny minority and a large number - it’s one of perception

Fred Bloggs
31st October 2017, 00:02
Right here is a major blunder in your representatives strategic thinking -

"If the government is serious about addressing disguised employment it should implement a statutory definition of self-employment."
I have said this so many times, but here goes again. You need to be VERY careful what you wish for. Contractors kept themselves outside of IR35 precisely because there is no statutory definition of self employment. Within the frame work of legislation and case law it has been like nailing jelly to a wall. This has played very nicely in favour of contractors. Contractors are not even self employed. Are they? Here we are almost 18 years after the introduction of IR35 and your representatives are calling on the government to draft a definition of your working practices. Guess where that definition is going to place you with respect to IR35? This strategy by your "friends" really is the very last thing you need. What you all REALLY need is much more uncertainty and doubt. That way, it carries on being like nailing jelly to a wall and you'll win many more IR35 cases. A statutory definition? It's going to define you as inside IR35, end of.

unixman
31st October 2017, 11:22
Contrary to popular belief, most contractors do it for the freedom and the extra money, not for tax savings. (Right, lads and lasses?). If the govt. wants to "level the playing field", perhaps it could start by unifying NI and income tax, as it promised to do in 2010.

eek
31st October 2017, 11:40
Contrary to popular belief, most contractors do it for the freedom and the extra money, not for tax savings. (Right, lads and lasses?). If the govt. wants to "level the playing field", perhaps it could start by unifying NI and income tax, as it promised to do in 2010.

I went back contracting to recover control of my career.... and it worked from legacy support back to one of the experts in a tech area I'm interested in....

washed up contractor
31st October 2017, 11:58
There is a few narrow difference between a tiny minority and a large number - it’s one of perception

No there isn't, that statement is not only absurd but also totally unsubstantiated.

We have all been to client sites where there is a contractor who has been continuously 'on site' for 5 or more years. In nearly 20 years contracting, I have only ever come across such a contractor like this once.

Every long term contractor I know, including myself, have had repeat engagements at the same client broken by spells elsewhere. That is the norm not the exception. But if you want to continue a myth or support some agenda, knock yourself out.

eek
31st October 2017, 12:07
We have all been to client sites where there is a contractor who has been continuously 'on site' for 5 or more years. In nearly 20 years contracting, I have only ever come across such a contractor like this once.



that paragraph contradicts itself before I go any further - we have all seen yet I've never seen it....

Equally you haven't noticed that behaviour is a 2 way thing. Many places have a lot of contractors that I would perceive as inside because they treat contractors in the exact same way they treated their permanent employees...

Fred Bloggs
31st October 2017, 12:13
that paragraph contradicts itself before I go any further - we have all seen yet I've never seen it....

Equally you haven't noticed that behaviour is a 2 way thing. Many places have a lot of contractors that I would perceive as inside because they treat contractors in the exact same way they treated their permanent employees...
I would go so far as to say it isn't many places. I would say just about everywhere I have ever worked. Often a client co manager type will proudly proclaim " we treat everyone the same here", then wonder why the contractors are thinking "but we don't want to be treated the same".

mattfx
31st October 2017, 12:30
Certainly for me the main reason for wanting to make the change into contracting was the freedom aspect, not answering to the boss man, etc etc. However because I accepted my first contract at a lower rate than I'd have hoped to achieve in order to get into the market, for me the tax savings are a necessity at the present time. I will probably feel a little better about it once I get on to a higher day rate at a gig requiring slightly sharper skills, but I do think the current tax incentives when working for ones self are a very large motivator.

poorautojobber
31st October 2017, 13:38
They really don't do themselves any favours. Leaving some critical principles out and openly admitting it seems open to challenge.

I agree with Fred Bloggs though opaqueness is sometimes the best option for everyone.

BrilloPad
31st October 2017, 14:08
Contrary to popular belief, most contractors do it for the freedom and the extra money, not for tax savings. (Right, lads and lasses?). If the govt. wants to "level the playing field", perhaps it could start by unifying NI and income tax, as it promised to do in 2010.

Firstly, who cares what the Govt thinks? They will do what their HMRC masters tell them to. Witness the Gauke total U-turn 2009-2011 on BN66.

Secondly the government HATES us. We are seen as a threat to the establishment and have to be kept in our place.

We badly need a Guy Fawkes hacker who can cyber destroy parliament.

BrilloPad
31st October 2017, 14:11
Interesting the date is 22nd November. The date that Maggie got thrown under a bus.

Big Blue Plymouth
31st October 2017, 14:45
Contrary to popular belief, most contractors do it for the freedom and the extra money, not for tax savings. (Right, lads and lasses?). If the govt. wants to "level the playing field", perhaps it could start by unifying NI and income tax, as it promised to do in 2010.

Up to a point but I certainly won't be getting up at 4:30 am on a Monday morning to do a Monday - Friday stopover when I'm footing the bill from my personal finances. Many others I talk to say the same.

Lance
31st October 2017, 14:53
Contrary to popular belief, most contractors do it for the freedom and the extra money, not for tax savings. (Right, lads and lasses?). If the govt. wants to "level the playing field", perhaps it could start by unifying NI and income tax, as it promised to do in 2010.

Hear hear.
Don’t get me wrong, I’m very happy not paying NI but it isn’t fair and it isn’t right.

I think if these changes are rolled out to private sector then clients will move the disguised employees to FTC and make an outside declaration for the others. They will also make sure that working practices are done properly so for real contractors this may well work out better.
Although I don’t have a crystal ball.

eek
31st October 2017, 15:14
Up to a point but I certainly won't be getting up at 4:30 am on a Monday morning to do a Monday - Friday stopover when I'm footing the bill from my personal finances. Many others I talk to say the same.

That's the killer difference - already the public sector are finding that some areas just don't have a big enough local contracting workforce to make inside IR35 contracts worthwhile.

Yes they can still get people on £400 a day but the amount delivered and the quality of the work achieved is far far less...

mudskipper
1st November 2017, 09:43
The £440 million made up figure is now a £700 million made up figure.

jamesbrown
1st November 2017, 09:47
The £440 million made up figure is now a £700 million made up figure.

The figure corresponds to whatever gap they want to fill with it.

unixman
1st November 2017, 11:53
Up to a point but I certainly won't be getting up at 4:30 am on a Monday morning to do a Monday - Friday stopover when I'm footing the bill from my personal finances. Many others I talk to say the same.

Very true. Clients, if they want freelancers, will have to either pay £100 p/d more, let us WFH, or hire local. Let them fight it out with Hammond.

Swamp Thing
1st November 2017, 14:10
I realise this will sound naïve, but where is the debate, the balanced argument, on what contractors do pay that PAYE's don't? E.g. corporation tax, VAT (in some cases), dividend tax.

Surely some analysts have done the math for HMRC, to show that these tax receipts will drop by shoving freelancers into PAYE.

Have I missed something? Or is HMRC simply being obtuse about such distinctions?

I won't both listing the risks that freelancers take and the things they do without c/w PAYEs. I can see HMRC doesn't want to take those on board.

eek
1st November 2017, 14:19
This battle is now over NI and especially employers ni. Apart from that a contractor and a permanent staff member pay roughly the same percentage of tax.

BrilloPad
1st November 2017, 14:21
This battle is now over NI and especially employers ni. Apart from that a contractor and a permanent staff member pay roughly the same percentage of tax.

A really stupid question : what about income shifting?

eek
1st November 2017, 14:25
A really stupid question : what about income shifting?

Not stupid but not as obvious as employers NI.

To be honest I suspect it’s irrelevant as income shifting means some tax is paid - and if I couldn’t income shift I would be maxing out my pension far more rapidly. And I suspect a lot of people are in the exact same boat.

Jolie
1st November 2017, 14:32
I don't the buy the argument that if you don't pay NI that's morally wrong.

It does not matter what the tax is called, we all pay it. Whether it's dividend tax, corporation tax or income tax, we pay it all.

Most contractors pay substantially more tax than permanently employed people, end of. The issue is about fairness.

As to the question of why we started contracting in the first place, that for me was a number of reasons:

In a permanent role, the salaries are usually very restricted.

You are in control of your own destiny, rather than being under the control of a boss or finance director, who can just dump you if they don't like the look of you. After being made redundant for the 4th time I have never had a break in contracting in over 10 years.

You need to run your life like a business, and contracting enables you to accomplish this.

You can negotiate your contract easier, push the limits of your requirements for day rate, flexibility and holidays, insist that you work from your own limited company premises or indeed abroad as some of us do.

If this is rolled through to the private sector, there will be a mass exodus of people to offshore tax havens and many of the rest will just retire.

The contractors this will hit the most are those with young families, those who are on low rates and those who have not invested in their future.

Swamp Thing
2nd November 2017, 11:43
I don't the buy the argument that if you don't pay NI that's morally wrong.

It does not matter what the tax is called, we all pay it. Whether it's dividend tax, corporation tax or income tax, we pay it all.

Most contractors pay substantially more tax than permanently employed people, end of. The issue is about fairness.

+1, but as others have said, HMRC is playing a cute publicity game with the wider earning population.

I ran some numbers last night. Last year I was a PAYE perm, just under £100K p.a. The P60 tax and NI on this was £32.1K.
On my current contracting model, when I tot up the CT, VAT and dividend tax due for the end of my current financial year, the total will be £37K. All the usual expenses and reliefs taken account of.
So in my case, Treasury tax receipt goes down by £5K.

Is HMRC/Treasury doing any modelling of the effects of private sector rollout? If I am anything to go by, they will also be losers..

eek
2nd November 2017, 11:48
+1, but as others have said, HMRC is playing a cute publicity game with the wider earning population.

I ran some numbers last night. Last year I was a PAYE perm, just under £100K p.a. The P60 tax and NI on this was £32.1K.
On my current contracting model, when I tot up the CT, VAT and dividend tax due for the end of my current financial year, the total will be £37K. All the usual expenses and reliefs taken account of.
So in my case, Treasury tax receipt goes down by £5K.

Is HMRC/Treasury doing any modelling of the effects of private sector rollout? If I am anything to go by, they will also be losers..

Remove VAT from your calculations as VAT is considered by HMRC to be revenue neutral for most B2B contracts - as if it wasn't paid out to you, your end client would be paying it to HMRC instead..

eek
2nd November 2017, 12:46
Interestingly a couple of umbrella companies think announcement November 22nd for April 2018...

BrilloPad
2nd November 2017, 12:49
Not stupid but not as obvious as employers NI.

To be honest I suspect it’s irrelevant as income shifting means some tax is paid - and if I couldn’t income shift I would be maxing out my pension far more rapidly. And I suspect a lot of people are in the exact same boat.

Just so I am clear, if I was IR35 caught could I pay myself and my wife an income? Or do I have to pay it all as income to me?

BrilloPad
2nd November 2017, 12:53
The issue is about fairness.

I largely supported your post.

However that sentence ruined it.

It is up to every individual to try to arrange their tax affairs to pay the least tax.

HMRC are worried that computer contractors will upset the "Status Quo". We are "Glorified Typists".

We can argue a lot about what is fair.

Sadly to HMRC fair means we pay whatever they think we ought to pay and get back in or place.

eek
2nd November 2017, 12:54
Just so I am clear, if I was IR35 caught could I pay myself and my wife an income? Or do I have to pay it all as income to me?

If inside it's your salary so it has to be paid to you - no income splitting with the wife.....

It's why if inside you maximise your pension contributions....

HugeWhale
2nd November 2017, 14:05
This won't pass or fail depending on the effect it has on many of the people on this forum. It will all be about the impact on White Van Man. We saw this with the proposed, and subsequently withdrawn, NI increases.

If the WVM who regularly support large companies (maybe delivery drivers, security guards, maintenance, window cleaners etc) are impacted, the proposals won't fly; the Sun will kill them off.

starstruck
2nd November 2017, 14:07
If inside it's your salary so it has to be paid to you - no income splitting with the wife.....

It's why if inside you maximise your pension contributions....

I thought public sector changes were tax deducted at source so you can't pay a company pension anymore.

eek
2nd November 2017, 14:18
I thought public sector changes were tax deducted at source so you can't pay a company pension anymore.

You can be paid via an umbrella in which case the umbrella will receive the full amount before deductions...

starstruck
2nd November 2017, 14:54
You can be paid via an umbrella in which case the umbrella will receive the full amount before deductions...

Ah I see, and umbrella will allow company pension payments I assume.

northernladuk
2nd November 2017, 15:16
Ah I see, and umbrella will allow company pension payments I assume.

Company payments?

eek
2nd November 2017, 15:29
Ah I see, and umbrella will allow company pension payments I assume.

Some (Contractor Umbrella) will allow any salary above the living wage to be paid directly into a pension scheme (it would need to be the umbrella's scheme) and then transferred out to yours....

jamesbrown
2nd November 2017, 15:40
Interestingly a couple of umbrella companies think announcement November 22nd for April 2018...

They would say that (sooner the better for them).

I can't see it.

If they do, expect chaos; I mean, chaos upon chaos.

starstruck
2nd November 2017, 16:03
Some (Contractor Umbrella) will allow any salary above the living wage to be paid directly into a pension scheme (it would need to be the umbrella's scheme) and then transferred out to yours....

So they won't make employer contributions into your SIPP?

poorautojobber
2nd November 2017, 16:03
CEST tool always assumes MOO can't even believe HMRC would admit this in public.

https://www.accountingweb.co.uk/tax/hmrc-policy/ir35-checking-tool-misses-key-test

How would this ever standup in front of a judge?

TheFaQQer
2nd November 2017, 16:10
They would say that (sooner the better for them).

I can't see it.

If they do, expect chaos; I mean, chaos upon chaos.

Would HMRC have time to completely scrap and rewrite CEST so that it references case law (or even just RMC would be a start)?

jamesbrown
2nd November 2017, 17:13
Would HMRC have time to completely scrap and rewrite CEST so that it references case law (or even just RMC would be a start)?

CEST is a flawed concept, in my view, quite apart from the implementation. I don't think this sort of service is deliverable. Were it to come in front of a judge, it would be completely ridiculed. I think its only value is to document an outside position when it's supportive and the information has been entered correctly (i.e. to use it against them), because HMRC have said they will follow that decision (whether they will, is debatable, but it is useful to have it documented).

Perhaps we'll get to a point where machine learning/AI can operate in the way a qualified expert (and, subsequently, a tribunal judge) would consider working practices "in the round", as required by case law. I think we're a long way from that. The algorithm used by ContractorCalculator appears superficially better, because it produces the expected outcome for many historical cases, but whether it is over-fitting the sample data is another matter (I bet it is).

Bottom line, the only thing I would trust is the advice of an independent expert.

FWIW, I don't think the private sector will pay much attention to CEST, because they'll take legal advice, and that advice will be: don't use CEST. HMRC have leverage with the PS, but not the private sector. What the private sector will do instead will inevitably vary, but I expect things won't change much for companies that genuinely wants freelance services rather than disguised permies. In other cases, I'd expect a lot more FTCs.

breaktwister
2nd November 2017, 17:26
If HMRC have conveniently ignored elements of the law (MoO) in creating CEST then why has there been no legal challenge issued? Is it because Hector claims it is only an "advisory" tool? They cannot claim it is only advisory but also claim to stand by the output/decision.

jamesbrown
2nd November 2017, 19:30
I see they punted the abolition of Class 2 NICs for sole traders to 2019, so a 148 quid per year non-tax cut (good day to hide bad news). :laugh

SueEllen
2nd November 2017, 21:48
Maybe we need a "What news UK government departments are burying today" thread.

poorautojobber
2nd November 2017, 23:45
If HMRC have conveniently ignored elements of the law (MoO) in creating CEST then why has there been no legal challenge issued? Is it because Hector claims it is only an "advisory" tool? They cannot claim it is only advisory but also claim to stand by the output/decision.

One of the doctors unions (?) Is in the processes of planning an application for judicial review I read somewhere. They have a consultant who has 8 outside decisions from various review services but CEST say's no. I have a feeling the dimwit clicking the boxes hasn't got a clue what they are doing.
Theirs a real body of cases coming through now that seem to prove its not fit for purpose.
How long before the penny drops at HMRC towers? Probably never they've got ministers calling out the 'unfair' tax advantage to line up the changes they'll have to save face.

WordIsBond
3rd November 2017, 12:40
Just so I am clear, if I was IR35 caught could I pay myself and my wife an income? Or do I have to pay it all as income to me?


If inside it's your salary so it has to be paid to you - no income splitting with the wife.....
To be pedantically precise, he can pay his wife a salary if he wants (she'll take it all eventually anyway :D). He can pay a salary to his next door neighbour for walking his dog if he wants.

But he has to pay personal income tax and NI on the deemed payment, either way. They don't care what he does with the money that is left after the deemed payment is made.

BrilloPad
4th November 2017, 21:15
To be pedantically precise, he can pay his wife a salary if he wants (she'll take it all eventually anyway :D). He can pay a salary to his next door neighbour for walking his dog if he wants.

But he has to pay personal income tax and NI on the deemed payment, either way. They don't care what he does with the money that is left after the deemed payment is made.

So if I am inside IR35 and pay myself just below the upper tax limit and my wife just below the upper tax limit, then no upper rate tax is paid?

mudskipper
5th November 2017, 10:32
So if I am inside IR35 and pay myself just below the upper tax limit and my wife just below the upper tax limit, then no upper rate tax is paid?

No. You have to apply the deemed payment calculation to the income from the engagement for each worker (fee earner) proportionally. So you can't save tax by paying your wife a salary.

eek
5th November 2017, 14:19
To be pedantically precise, he can pay his wife a salary if he wants (she'll take it all eventually anyway :D). He can pay a salary to his next door neighbour for walking his dog if he wants.

But he has to pay personal income tax and NI on the deemed payment, either way. They don't care what he does with the money that is left after the deemed payment is made.

When it comes to tax please don't be pedantic as it usually causes confusion to most people. Keeping what we say simple means that things we suggest aren't likely to come back and bite them later...

WordIsBond
6th November 2017, 14:02
When it comes to tax please don't be pedantic as it usually causes confusion to most people. Keeping what we say simple means that things we suggest aren't likely to come back and bite them later...
Fair enough. It's good to be very precise with tax but in this case it added nothing, so your point is well taken.

midlandlass
7th November 2017, 09:46
When it comes to tax please don't be pedantic as it usually causes confusion to most people. Keeping what we say simple means that things we suggest aren't likely to come back and bite them later...

Does this help... inside IR35 = PAYE on all income only tax saving is pension or childcare if operating via a brolly!

TheFaQQer
7th November 2017, 09:46
Does this help... inside IR35 = PAYE on all income only tax saving is pension or childcare if operating via a brolly!

Minus 5% expenses?

Fred Bloggs
7th November 2017, 09:57
Minus 5% expenses?
ISTR that the public sector version of IR35 wasn't even allowing the 5% before calculating deemed salary?

eek
7th November 2017, 10:34
So they won't make employer contributions into your SIPP?

no they need to pay the money into their group scheme. you can then extract it from there and transfer it to your SIPP. So a secondary question for any umbrella after how much can I put into the pension scheme is what exit fees do they charge....

eek
7th November 2017, 10:36
ISTR that the public sector version of IR35 wasn't even allowing the 5% before calculating deemed salary?

Correct there is no 5% allowance with the public sector rules - that is going to be equally true when its deployed to the private sector - after all you are an employee why should you need any allowances...

regron
7th November 2017, 10:45
Let's be honest, it has never been about HMRC ensuring people pay their fair share, be it self employed or otherwise. It has always been about getting as many people on PAYE as possible.

Even they can see a mile off that putting a contractor inside IR35 still doesn't put them on an even keel with Permies, who get paid holidays, company benefits etc.....

Fred Bloggs
7th November 2017, 11:09
Correct there is no 5% allowance with the public sector rules - that is going to be equally true when its deployed to the private sector - after all you are an employee why should you need any allowances...
Exactly, just like the bloke/lady next to you who is on a FTC deal, as many people are these days.

Big Blue Plymouth
7th November 2017, 11:40
Correct there is no 5% allowance with the public sector rules - that is going to be equally true when its deployed to the private sector - after all you are an employee why should you need any allowances...

What about, for example, the various insurances I'm presumably still going to need to take out each year?

Fred Bloggs
7th November 2017, 11:42
What about, for example, the various insurances I'm presumably still going to need to take out each year?
Employees do not need insurance.

Big Blue Plymouth
7th November 2017, 11:50
Employees do not need insurance.

Well, let's keep our fingers crossed & hope we dodge the bullet. Again.

PTP
7th November 2017, 11:57
What about, for example, the various insurances I'm presumably still going to need to take out each year?
Employees do not need insurance.

Exactly. So if we've got to shell out £1,800/year for indemnity that they don't, why shouldn't we get an allowance for it?

northernladuk
7th November 2017, 12:18
Exactly. So if we've got to shell out £1,800/year for indemnity that they don't, why shouldn't we get an allowance for it?

How much????

jamesbrown
7th November 2017, 12:27
How much????

Probably one or more of: being ripped off; in a high-risk industry; massive policy ceiling; or dealing with North American clients.

PTP
7th November 2017, 12:44
Answer: In a high-risk industry

or so that's what brollies and indemnity providers think.

That's why brollies refuse to take on contractors in this industry.

Fred Bloggs
8th November 2017, 01:37
Exactly. So if we've got to shell out £1,800/year for indemnity that they don't, why shouldn't we get an allowance for it?
Simples. When you are an employee you do not need any liability insurances. What's more, the insurance company won't cover you nor will it pay out on a claim anyway. The insurance is for a business, not an employee. Employers have the insurance, you are entitled to see it and by law it must be posted in a place where staff can read it anyway. Though, I guess not all employers comply.

theroyale
8th November 2017, 06:06
Surely there needs to be a contractor group mounting a legal challenge to this? IR35 cases have gone to court and HMRC have consistently lost over the years. What has changed from a legal perspective between then and now? Nothing as far as I am aware. If we were outside then, we are outside now. Why are we leaving it to the doctors (another post on this thread) to mount this challenge, what is the plan of IT contractors beyond a pub conversation on threads like this?

eek
8th November 2017, 06:32
Surely there needs to be a contractor group mounting a legal challenge to this? IR35 cases have gone to court and HMRC have consistently lost over the years. What has changed from a legal perspective between then and now? Nothing as far as I am aware. If we were outside then, we are outside now. Why are we leaving it to the doctors (another post on this thread) to mount this challenge, what is the plan of IT contractors beyond a pub conversation on threads like this?

What has changed is that HMRC has got far cleverer. The public sector ir35 changes left very few angles to attack heck read the history on here and you can see how any possibilities were easily shot down.

There is probably a judicial review being requested by locum doctors. That isn’t actually aimed at HMRC but rather at the nhs where nhs improvement stated everyone must be inside, then publicly changed that statement but seemingly kept the private advice the same. So they are attacking that not the principle itself.

mudskipper
8th November 2017, 07:58
Surely there needs to be a contractor group mounting a legal challenge to this? IR35 cases have gone to court and HMRC have consistently lost over the years. What has changed from a legal perspective between then and now? Nothing as far as I am aware. If we were outside then, we are outside now. Why are we leaving it to the doctors (another post on this thread) to mount this challenge, what is the plan of IT contractors beyond a pub conversation on threads like this?

Contractor groups have repeatedly asked for people who believe they have a strong case to challenge the PS body's decision to come forward. People don't want to stick their head above the parapet. If anyone knows an IPSE member who believes they have such a case, and is prepared to fight it then they should contact policy@ipse.co.uk.

northernladuk
8th November 2017, 09:50
Contractor groups have repeatedly asked for people who believe they have a strong case to challenge the PS body's decision to come forward. People don't want to stick their head above the parapet. If anyone knows an IPSE member who believes they have such a case, and is prepared to fight it then they should contact policy@ipse.co.uk.

Tough call that one though. I spoke to IPSE about my last PS gig which a blanket job. I got in trouble just for raising it with my client so IPSE supporting me to take it legal wasn't going to work. IPSE didn't do anything wrong, it's just a very big ask to go that far that they can help. Fighting a case against an ex client while you're benched didn't seem that attractive.

eek
8th November 2017, 09:53
Tough call that one though. I spoke to IPSE about my last PS gig which a blanket job. I got in trouble just for raising it with my client so IPSE supporting me to take it legal wasn't going to work. IPSE didn't do anything wrong, it's just a very big ask to go that far that they can help. Fighting a case against an ex client while you're benched didn't seem that attractive.

+1. Assuming you are not incredibly specialised chances are a contractor is substitutable. Hence trouble makers can be easily substituted with another contractor and moved to the bench...

As I stated earlier there is a reason why fighting these changes is far harder than previous ones...

pr1
8th November 2017, 10:49
+1. Assuming you are not incredibly specialised chances are a contractor is substitutable. Hence trouble makers can be easily substituted with another contractor and moved to the bench...

As I stated earlier there is a reason why fighting these changes is far harder than previous ones...

fun fact, 15 of your last 20 posts end with ellipses...

mudskipper
8th November 2017, 10:52
Tough call that one though. I spoke to IPSE about my last PS gig which a blanket job. I got in trouble just for raising it with my client so IPSE supporting me to take it legal wasn't going to work. IPSE didn't do anything wrong, it's just a very big ask to go that far that they can help. Fighting a case against an ex client while you're benched didn't seem that attractive.

You're right, and it wasn't intended as a criticism. But that's why it's not so easy to mount a legal challenge - people who are prepared to go through that need to come forward.

poorautojobber
8th November 2017, 15:54
Surely there needs to be a contractor group mounting a legal challenge to this? IR35 cases have gone to court and HMRC have consistently lost over the years. What has changed from a legal perspective between then and now? Nothing as far as I am aware. If we were outside then, we are outside now. Why are we leaving it to the doctors (another post on this thread) to mount this challenge, what is the plan of IT contractors beyond a pub conversation on threads like this?

Challenging IR35 is pointless the case law is well known. What is wrong is an online tool which doesn't take into account all case law to make a determination I would imagine the only true determination would be by a judge. That probably is challengeable but it will require the right cases and the willingness to follow it through.
If you have none PS skills (i never have and never will work PS) vote with your feet.
I'm in the process of taking another contract and am getting the contract and practices reviewed NOW so if this does get rolled in Private sector I have some amunition with the client.
I think Hector will find this being much harder for them in the private sector and no way are they going to return the revenue they expect. I think a lot of agents/clients will start buying insurance policy to cover them.
We'll have to wait and see how it really affects us I'm not convinced we'll actually see much change but I could and probably are wrong.

mudskipper
9th November 2017, 22:54
I know people are sceptical about the impact of writing to MPs

But the Tory government is clinging on by a shoestring - if ever there was a time to get your MP on your side, it's now. There's dozens of seats where the self employed constituency is larger than the Tory majority.

It's much better to put a letter into your own words, but if you're struggling, there's a template here. Use it for ideas to compose your own rant/missive. Make your voice heard.

https://www.ipse.co.uk/our/fighting-ir35.html

Fred Bloggs
10th November 2017, 00:11
Admin - Where is the "puts head in hands" emoticon when you need it please?

Edit - OK, this will do for now -

https://images.gr-assets.com/hostedimages/1440614951ra/15999831.gif

Who else here thinks that it needs to be pointed out that there is nobody on this forum who is self employed? (OK, perhaps there might be a gardener or a bricklayer, maybe. But I doubt it). It is precisely this kind of wrong headed, muddled (lack of) thinking that has got you all where you are now.

Are you a micro/nano business? Or are you self employed? Because you cannot be both. Whingeing and complaining about the government will get you precisely nowhere when all the government has to do is the same question I just did. Credibility? Zero.

SussexSeagull
10th November 2017, 01:30
Admin - Where is the "puts head in hands" emoticon when you need it please?

Edit - OK, this will do for now -

https://images.gr-assets.com/hostedimages/1440614951ra/15999831.gif

Who else here thinks that it needs to be pointed out that there is nobody on this forum who is self employed? (OK, perhaps there might be a gardener or a bricklayer, maybe. But I doubt it). It is precisely this kind of wrong headed, muddled (lack of) thinking that has got you all where you are now.

Are you a micro/nano business? Or are you self employed? Because you cannot be both. Whingeing and complaining about the government will get you precisely nowhere when all the government has to do is the same question I just did. Credibility? Zero.

Having to prove I have a Limited Company so they could put me on their system as a supplier at my current client would suggest I am a business and not a freelancer.

People know more about the history of these things than I do but I am lead to believe contractors up to the 70s were basically self employed but changes in legislation and client demands made everyone move to a LTD or Umbrella.

I would agree we really should all be self-employed but legally most of us haven't been for a long time.

Fred Bloggs
10th November 2017, 02:05
Having to prove I have a Limited Company so they could put me on their system as a supplier at my current client would suggest I am a business and not a freelancer.

People know more about the history of these things than I do but I am lead to believe contractors up to the 70s were basically self employed but changes in legislation and client demands made everyone move to a LTD or Umbrella.

I would agree we really should all be self-employed but legally most of us haven't been for a long time.
On your first point, yes I would tend to agree with you. I think working and delivering against a client company purchase order that you tendered for and invoicing when achieving pre-agreed milestones is as good as it gets, pretty much. Sadly, it is not a silver bullet and you could still be investigated for IR35. But you are not self employed, that's very clear.

Secondly, you are pretty much spot on again. Yes, contractors could be sole traders, in the past self employed. It is no longer an option and today's contractor is not self employed.

One of the main reasons (in my opinon) IR35 enforcement has been like nailing jelly to the wall is that contractor's are nano businesses and not self employed. The difficulty in nailing down precisely who is IR35 caught and who isn't has basically saved thousands of contractors many thousand GBP a year for the last 17/18 years. PCG recognised this (or I thought they did, any way) and successfully kept the nailing jelly to the wall situation in hand very efficiently. The latest muddled headed conflation of who or what a contractor is is playing right into the hands of HMRC and HMG. FFS, why on earth do you press HMG for a legal definition of what a contractor is when it is precisely the lack of a definition that kept IR35 away from the community for so long? And why refer to contractors as self employed when they clearly aren't?

jamesbrown
10th November 2017, 02:43
Who else here thinks that it needs to be pointed out that there is nobody on this forum who is self employed?

The whole point of IR35 is to cast aside the intermediary, build a hypothetical contract in which the worker directly provides their services to the client, and establish whether that relationship resembles one of employment. That is the topic of this thread, right? The Intermediaries legislation didn't invent any new tests for distinguishing between employment, one the one-hand, and not employment (self-employment) on the other. The term "self-employment" is perfectly valid in this context and doesn't need to be conflated w/ being a sole trader.

Fred Bloggs
10th November 2017, 07:12
The whole point of IR35 is to cast aside the intermediary, build a hypothetical contract in which the worker directly provides their services to the client, and establish whether that relationship resembles one of employment. That is the topic of this thread, right? The Intermediaries legislation didn't invent any new tests for distinguishing between employment, one the one-hand, and not employment (self-employment) on the other. The term "self-employment" is perfectly valid in this context and doesn't need to be conflated w/ being a sole trader.
You're perfectly entitled to hold that opinion of course, even when you're wrong. The IR35 test is not how you describe it. It is a test of whether you are a disguised employee or not. It is not whether you are self employed or employed. The term self employed has a precise and specific meaning and is not to be conflated with being either an employee (if you have an employment contract) or an officer of a nano business (if you don't), the nano business is a Ltd Company, usually. The latest moves in the public sector and perhaps the private sector soon do not change the actual core IR35 legislation or case law one little bit.

To help you out a bit take a look here -

https://www.gov.uk/working-for-yourself

Where you'll see -


If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed - even if you haven’t yet told HM Revenue and Customs (HMRC).

And (after explaining some stuff) it says -


Many of these also apply if you own a limited company but you’re not classed as self-employed by HMRC. Instead you’re both an owner and employee of your company.

Hobosapien
10th November 2017, 08:28
Much of the confusion is due to how over the years various entities have sought to protect themselves from liabilities (employment/tax law) when wanting to offer work to an individual rather than a company.

So we have all the hassle of individuals having to operator via a Ltd as the client/agency wouldn't offer a direct contract to the individual, yet the individual is still named on the contract as they don't want the Ltd sending just anyone to do the work the individual interviewed for.

The only way to avoid it is to enter a true b2b relationship where no individual is named on the contract, like consultancies and tender winning companies achieve. The client is sold on the company's ability to deliver what they need not on specific individuals within that company having passed an interview.

Of course for the majority of contracts that is not possible as the client just wants an individual as a specific resource. Hence why the government is chasing tax from those individuals due to them appearing to be employees similar to those on fixed term contracts with no employment rights and only a limited term in contract.

So the solution is for individual contractors to form consultancies based on their skillset and the consultancy enters contracts with the clients on a b2b basis. It's been tried and done before but has its own set of issues, but if the majority of contractors only operated that way the clients would start to entertain it more. That or they'd get more cheap labour from abroad that are willing to operate as temporary employees and pay the tax accordingly.

poorautojobber
10th November 2017, 08:50
I ' run a business' and I'm 'self-employed' the terms get used interchangeably whatever you use doesn't really matter except to HMRC and a judge.
What HMRC are trying to do is take your right to present your argument to a judge away and put it in the hands of someone who maybe can barely read let alone understand the law.

I'm getting out of a big Co as we speak because I'm not convinced they would have the skill or knowledge to implement any changes in the short term correctly they will get wise but could take years.
Get your contracts reviewed confirm you really do have a right of substitution and as far as HMRC CEST seems concerned you are not subject to IR35. I'm not btw just incase hectors watching <modsnip>

mudskipper
10th November 2017, 09:01
So use whatever terms you're comfortable with (but make sure they are ones that your MP will understand)

I doubt there's nearly as many constituencies where the contractor community is larger than the majority - sometimes it's useful to throw our hat in with others who work for themselves, regardless of vehicle.

Whilst IR35 does not apply to SchedD self-employed, their employment status is still subject to challenge. They have seen their own attacks. The message 'leave the self employed alone' is a good one.

If course, you're perfectly within your rights to do nothing, say it's all pointless and that IPSE and others do not know what they're doing. Or you can write to your MP, using your own language to describe what you do and the impact that such a rollout would have on your way of working.

jamesbrown
10th November 2017, 10:53
You're perfectly entitled to hold that opinion of course

Transparently, you've taken an anti-IPSE rant and hung it on a technical point that is pedantic at best. The term self-employment is widely used to mean "not employment", which is the antonym of employment in the relevant case law, including cases involving intermediaries, where the intermediary is cast aside in the hypothetical contract. As an aside, it's amusing that you've sought clarification from the pages of HMG/HMRC. :laugh

Guvernator
10th November 2017, 11:08
My local MP is Labour, if I wrote to her I'd probably get even more short change as I'm not sure who hates contractors more at the moment so what's the point? We really don't have any friends to fight our cause on this one, even the general public have been turned against us.

TheFaQQer
10th November 2017, 11:19
My local MP is Labour, if I wrote to her I'd probably get even more short change as I'm not sure who hates contractors more at the moment so what's the point? We really don't have any friends to fight our cause on this one, even the general public have been turned against us.

You won't know until you try.

My Labour MP has a greater understanding of the issues facing us than the previous Lib Dem MP, and has always been very supportive of the issues that I've raised with her.

"what's the point?" - if they don't understand, educate them. If they still don't understand, educate them more. "All that is necessary for the triumph of evil is that good men do nothing" and all that.

Swamp Thing
10th November 2017, 11:25
Much of the confusion is due to how over the years various entities have sought to protect themselves from liabilities (employment/tax law) when wanting to offer work to an individual rather than a company.

So we have all the hassle of individuals having to operator via a Ltd as the client/agency wouldn't offer a direct contract to the individual, yet the individual is still named on the contract as they don't want the Ltd sending just anyone to do the work the individual interviewed for.

This is a fair observation, however I work with procurement teams and have seen all kinds of consultancy contracts where named individuals appear on the statement of work or services schedule. This includes the large consultancies including the Big 4. Getting quite common now, because end clients want transparency and for certain staff with specific skillsets to deliver the project. Yes, things really are at this micro-level regarding consultancy contracts.

So, if that's what's happening with big consultancies, I don't think being named on a services schedule is an issue now for micro-businesses like ourselves.

The key issues to remain outside IR35 are still the key contractual clauses that we all know off heart by now, and to ensure that your working practices mirror the contract.

If HMRC want to run a bulldozer through all of this PS-style, then I think it will underestimate the appetite of private sector to challenge. Clients have too much to lose in terms of cost and resource flexibility - especially pre-Brexit, and recruitment agencies don't want to give up on the contractor fees model.

Also bear in mind that the PS bodies were more likely to not put up a fight with Treasury/HMRC - they didn't want to prejudice their other agendas, e.g. funding, resources. Many private sector clients don't have this relationship with HMRC/Treasury and so aren't in the same position.

eek
10th November 2017, 11:36
This is a fair observation, however I work with procurement teams and have seen all kinds of consultancy contracts where named individuals appear on the statement of work or services schedule. This includes the large consultancies including the Big 4. Getting quite common now, because end clients want transparency and for certain staff with specific skillsets to deliver the project. Yes, things really are at this micro-level regarding consultancy contracts.

So, if that's what's happening with big consultancies, I don't think being named on a services schedule is an issue now for micro-businesses like ourselves.

The key issues to remain outside IR35 are still the key contractual clauses that we all know off heart by now, and to ensure that your working practices mirror the contract.

If HMRC want to run a bulldozer through all of this PS-style, then I think it will underestimate the appetite of private sector to challenge. Clients have too much to lose in terms of cost and resource flexibility - especially pre-Brexit, and recruitment agencies don't want to give up on the contractor fees model.

Also bear in mind that the PS bodies were more likely to not put up a fight with Treasury/HMRC - they didn't want to prejudice their other agendas, e.g. funding, resources. Many private sector clients don't have this relationship with HMRC/Treasury and so aren't in the same position.

Everything SW says.

Both my final end customers explicitly have my name on the contract between the consultancy and themselves - as I know their staff and internal systems / procedures.

Guvernator
10th November 2017, 11:59
My local MP is Labour, if I wrote to her I'd probably get even more short change as I'm not sure who hates contractors more at the moment so what's the point? We really don't have any friends to fight our cause on this one, even the general public have been turned against us.

I've written to MP's before, as with most politicians they are very good at replying in a placating manner and disassembling without actually answering your question or promising to bring it up. I really wouldn't trust anything they say, If the allegedly pro small business Tories are trying to shaft us what do you think Labour think of us overpaid tax dodging contractors?

I've also thought of something else. If they blanket IR35 everybody in the private sector like they did in the public and the majority of the Ltd company contractors decide to close up shop, what will happen to the rather large support industry that has grown up around contractors like accountants, recruitment agents etc? If I were the larger contractor accounting firms I'd be getting especially worries right about now.

Swamp Thing
10th November 2017, 12:35
If they blanket IR35 everybody in the private sector like they did in the public and the majority of the Ltd company contractors decide to close up shop, what will happen to the rather large support industry that has grown up around contractors like accountants, recruitment agents etc? If I were the larger contractor accounting firms I'd be getting especially worries right about now.

I think it's been raised on this thread already, but the smart thing for recruitment agencies to do would be to develop insurance against incorrect outside IR35 assessments - assuming end clients do the likely thing which is to put the liability back onto them. I'm sure the case could be made - based on case law to date - that the incidence of incorrect assessments would be low, so that the insurable risk is manageable. If the coverage doesn't yet exist, they need to get talking with the insurance companies. The premiums could be paid out of contractor day rates (yes, I don't think we'd get off scott-free) and/or the fees charged to end clients. It just needs courage and imagination.

It would however require the insurers to accept that case law is the true arbiter of inside/outside assessment decisions - not the crappy HMRC-rigged CEST tool.

Fred Bloggs
10th November 2017, 13:14
Transparently, you've taken an anti-IPSE rant and hung it on a technical point that is pedantic at best. The term self-employment is widely used to mean "not employment", which is the antonym of employment in the relevant case law, including cases involving intermediaries, where the intermediary is cast aside in the hypothetical contract. As an aside, it's amusing that you've sought clarification from the pages of HMG/HMRC. :laughEven more amusing is that you don't seem to see that HMRC is THE reference. They make the rules. The friends you refer to have even asked HMG and HMRC to give a LEGAL DEFINITION of what a freelance contractor is. If you can't see how muddle headed and insanely stupid that is, then you really do deserve all the IR35 s**t that's coming your way. Doesn't bother me either way, I'm out of it and have been the last 18 months, and I am not coming back any time soon.

unixman
10th November 2017, 13:29
Worst case scenario, contractors either:

- take the hit and pay for accommodation etc. out of pocket
- obtain contracts nearer home, which should be easier as other contractors turn down distant gigs
- go umbrella

All while charging a bit more.

jamesbrown
10th November 2017, 13:40
Even more amusing is that you don't seem to see that HMRC is THE reference. They make the rules. The friends you refer to have even asked HMG and HMRC to give a LEGAL DEFINITION of what a freelance contractor is. If you can't see how muddle headed and insanely stupid that is, then you really do deserve all the IR35 s**t that's coming your way. Doesn't bother me either way, I'm out of it and have been the last 18 months, and I am not coming back any time soon.

You seem bothered. :D

The reference for what exactly? The ITEPA is the reference for IR35, which applies to intermediaries. Case law is the reference for employment status, regardless of whether a worker operates through an intermediary. The irony here is that they're attempting to circumvent the rules with CEST, because the rules haven't worked in their favour. What with the judiciary being independent 'n all. :laugh

Swamp Thing
10th November 2017, 16:21
Folks, I have sent a letter to my MP (Conservative), and will be going one of his surgeries later this month to put my point across.

Will let you know how it goes. I'm sure it will be a drop in the ocean, but I'm not going down without a fight. Ooh, I'm getting all Gina Miller about this!

Fred Bloggs
10th November 2017, 23:30
You seem bothered. :D

The reference for what exactly? The ITEPA is the reference for IR35, which applies to intermediaries. Case law is the reference for employment status, regardless of whether a worker operates through an intermediary. The irony here is that they're attempting to circumvent the rules with CEST, because the rules haven't worked in their favour. What with the judiciary being independent 'n all. :laugh
I'm bothered by sitting here watching thousands of decent contractors being sold down the river not only by HMG but also the people you regards as friends. So for myself, I am not bothered. For everyone else I am deeply bothered.

jamesbrown
10th November 2017, 23:46
I'm bothered by sitting here watching thousands of decent contractors being sold down the river not only by HMG but also the people you regards as friends. So for myself, I am not bothered. For everyone else I am deeply bothered.

I take a balanced view. Look through my posting history; I don't blindly support IPSE. OTOH, you clearly have an axe to grind. A statutory definition of self-employment carries obvious risks, but so do all the alternatives. To understand the risks properly, you need to take a realistic view about the counterfactuals. Not one of them is the status quo. A statutory definition that has some possibility of being shaped (arguable, of course) or a winding road, beginning with a failed rollout of the PS rules, to something far more draconian (such as the strict deeming criteria employed in many other jurisdictions). You're welcome to the latter. :laugh But you appear more than a little paranoid in believing that IPSE is somehow out to get your mates or to "sell them down the river". They just take a different view from you.

In the long-run, I'm pretty fatalistic TBH, especially for BoS/BAU contractors. The Treasury isn't going to stop until a certain (high) percentage are operating through full PAYE with ErNI deducted. If the PS rollout fails, in terms of revenue (narrowly defined), something else will follow. Afterall, it's about stopping the bad press too (post student loans company, BBC etc.).

poorautojobber
12th November 2017, 09:22
I'm bothered by sitting here watching thousands of decent contractors being sold down the river not only by HMG but also the people you regards as friends. So for myself, I am not bothered. For everyone else I am deeply bothered.

Totally agree with this the the ultimate burden will be on us. The clients will see a hit but not as much as us and they certainly won't be improving rates.
HMRC see a short term gain and don't care about the damage.
That leaves us footing the bill.

BoredBloke
12th November 2017, 10:56
Worst case scenario, contractors either:

- take the hit and pay for accommodation etc. out of pocket
- obtain contracts nearer home, which should be easier as other contractors turn down distant gigs
- go umbrella

All while charging a bit more.

There is a reason I work away from home and it's not because I don't like my house. For me the real kicker with IR35 is that it will price me out of contracts away from home, leaving me with the crappy ones I choose to avoid by working away from home.

stek
12th November 2017, 20:50
There is a reason I work away from home and it's not because I don't like my house. For me the real kicker with IR35 is that it will price me out of contracts away from home, leaving me with the crappy ones I choose to avoid by working away from home.

It might work out ok tho - an end to Contactor A passing Contract B on the motorway travelling and living in each others manor at no real benefit to either.

meanttobeworking
13th November 2017, 09:58
Everyone seems really convinced that this potential change will automatically mean an inside decision for them. Either that’s because they ultimately see themselves as being inside but currently getting away with claiming to be outside (and they’re worried this will spell the end of that gravy train), or they’re worried that the end client will make an incorrect determination.

Given that (IMHO) only for the most inside-of-inside gigs would a client object to favourable SDC and MOO terms and actual working practices, and that ROS only really sound scary to them when worded as it is in the HMRC tool, wouldn’t IPSE’s efforts be better spent helping us educate end clients on the matter rather than fighting what seems to be a losing battle against the introduction of the legislation?

I think it’s fair to say that the fight is not that we want it to be ok to do the old Friday/Monday perm to freelance trick, but more that we object to being unfairly categorised as one thing when in fact we are another? And that we are left to use three relatively wooly “pillars” to support our position?

This is not an IPSE dig btw, I’m a Plus member and have been for many years. I just think that if we ARE outside, maybe the emphasis should be on proving that, rather than fighting the rules.

poorautojobber
13th November 2017, 18:37
Everyone seems really convinced that this potential change will automatically mean an inside decision for them. Either that’s because they ultimately see themselves as being inside but currently getting away with claiming to be outside (and they’re worried this will spell the end of that gravy train), or they’re worried that the end client will make an incorrect determination.

Given that (IMHO) only for the most inside-of-inside gigs would a client object to favourable SDC and MOO terms and actual working practices, and that ROS only really sound scary to them when worded as it is in the HMRC tool, wouldn’t IPSE’s efforts be better spent helping us educate end clients on the matter rather than fighting what seems to be a losing battle against the introduction of the legislation?

I think it’s fair to say that the fight is not that we want it to be ok to do the old Friday/Monday perm to freelance trick, but more that we object to being unfairly categorised as one thing when in fact we are another? And that we are left to use three relatively wooly “pillars” to support our position?

This is not an IPSE dig btw, I’m a Plus member and have been for many years. I just think that if we ARE outside, maybe the emphasis should be on proving that, rather than fighting the rules.

I think the issue people have is it's out of their control and part of running a business is controlling your own destiny. I have a contract that puts me 'outside' but that may not mean anything to a legal department scared of the liability. I swing polar opposites on a weekly basis to be honest it's all rather depressing.

meanttobeworking
13th November 2017, 20:57
I think the issue people have is it's out of their control and part of running a business is controlling your own destiny. I have a contract that puts me 'outside' but that may not mean anything to a legal department scared of the liability. I swing polar opposites on a weekly basis to be honest it's all rather depressing.

Couldn’t agree more, and I’m exactly the same.

eek
13th November 2017, 21:04
Couldn’t agree more, and I’m exactly the same.

That’s why I agree with moving ir35 decisions to the client prior to advertising. The simple fact is I won’t take an inside ir35 contract.

And I will accept that it may reduce the market I’m targeting but in reality I don’t care - the customer is likely to get what they deserve.

Fred Bloggs
14th November 2017, 00:56
That’s why I agree with moving ir35 decisions to the client prior to advertising. The simple fact is I won’t take an inside ir35 contract.

And I will accept that it may reduce the market I’m targeting but in reality I don’t care - the customer is likely to get what they deserve.
If, at last, the new rules put all those inside IR35 who should have been all along, then in my analysis this can only be a good thing. Then, for the small minority who remain, when you engage on a gig in a true B2B relationship, the client taking the risk of the IR35 determination, everyone is happy. The contractor no longer needs the ridiculous parasitic overheads of IR35 insurance and the like. For those on a B2B contract, it is a happy outcome. Ofcourse, if as the majority are, you are really a disguised temporary employee then belly ache all you like, you had a good run but now it's over. Suck it up.

meanttobeworking
14th November 2017, 08:42
If, at last, the new rules put all those inside IR35 who should have been all along, then in my analysis this can only be a good thing. Then, for the small minority who remain, when you engage on a gig in a true B2B relationship, the client taking the risk of the IR35 determination, everyone is happy. The contractor no longer needs the ridiculous parasitic overheads of IR35 insurance and the like. For those on a B2B contract, it is a happy outcome. Ofcourse, if as the majority are, you are really a disguised temporary employee then belly ache all you like, you had a good run but now it's over. Suck it up.

You seem to be confident in your assessment of everyone else’s IR35 status - what is it that gives you the clarity that everyone else lacks?

Fred Bloggs
14th November 2017, 08:56
You seem to be confident in your assessment of everyone else’s IR35 status - what is it that gives you the clarity that everyone else lacks?
Seriously? OK take a look around your office. And try to count those who really do have a B2B relationship with the client. How many did you count? None at all? One or two out of a hundred?

northernladyuk
14th November 2017, 09:19
Seriously? OK take a look around your office. And try to count those who really do have a B2B relationship with the client. How many did you count? None at all? One or two out of a hundred?

In terms of any one factor out of MoO, D&C and SoR or in terms of some alternative determinants you've decided on.

Turn it around and ask how many contractors really do have an employer to employee relationship?

ChimpMaster
14th November 2017, 09:36
In terms of any one factor out of MoO, D&C and SoR or in terms of some alternative determinants you've decided on.

Turn it around and ask how many contractors really do have an employer to employee relationship?

Eye of the beholder.

Ask CEST and 90% of contractors are deemed employees. That's how HMRC will see it.

Ask your client and they will say you are a deemed employee; it's easier to squash an ant than fight an elephant.

Ask yourself and you'll realise your opinion will count for nothing in this new world.

meanttobeworking
14th November 2017, 09:40
Seriously? OK take a look around your office. And try to count those who really do have a B2B relationship with the client. How many did you count? None at all? One or two out of a hundred?

That's the whole problem with IR35 though isn't it. There are (in my view) a minority of people that are CLEARLY well outside. There are (in my view) a number that are CLEARLY well inside. But there is (in my view) a much larger group that sit in the grey area between those two extremes who are left to try and weigh up their status based on some pretty fluffy principles. And some of those people come here to try and get clarity. When I look around my office, I see a range of people that seem to fall into all of these categories, and could be further split into those that know IR35 and those that don't.

It seems from your previous post(s) that (in your view) you're in that first minority that are clearly outside, and that anyone below that bar is (in your view) inside IR35, which totally misses out the people in the grey area. But perhaps you're just a victim of misunderstanding as we can't hear your tone of voice. I certainly don't doubt your knowledge and interest in the subject, I know you're a regular poster.

Are you saying that in your view that the guy sitting next to me that got sent home the other week without being paid because the work dried up is inside because he sometimes helps out on projects that aren't listed in his contract? He doesn't look at everything through a pair of IR35 spectacles (sometimes I'm jealous of him!), or always try to operate like a true B2B relationship, but does that make him inside? I don't expect a yes or no answer, it's just a question that tries to demonstrate it's not quite as black and white as your post makes out. And I'm genuinely interested in your answer :)

Jog On
14th November 2017, 10:15
Wouldn't surprise me to see some really valuable/irreplaceable contractors getting outside contracts because the client simply cannot do without them - a bit like those employees in banks that walk around with long hair, shorts and flip flops.

Then the more middle of the road and 'replaceable' ones will get forced inside or walk a la forced rate reduction model. In practice it will have nothing to do with actual working arrangements or status.

If they absolutely cannot do without you - you will get the contract you want - or a significant rate increase to compensate.

meanttobeworking
14th November 2017, 10:21
Wouldn't surprise me to see some really valuable/irreplaceable contractors getting outside contracts because the client simply cannot do without them

Bang goes your RoS then. Another IR35 paradox.

Fred Bloggs
14th November 2017, 11:10
OK, as you're interested in my semi random thoughts, I'll try my best, where Hector has failed the last almost 18 years:laugh


That's the whole problem with IR35 though isn't it.


Pretty much, yes.

There are (in my view) a minority of people that are CLEARLY well outside.


Again, pretty much, yes. I've been in both camps. But as a niche technical specialist, as another poster says,
am I "so specialised" that my RoS is a sham?

There are (in my view) a number that are CLEARLY well inside.


I would go further than that, but, generally, yes, I agree. Though I would tend to say a large majority.

But there is (in my view) a much larger group that sit in the grey area between those two extremes who are left to try and weigh up their status based on some pretty fluffy principles.


This is really the same group as above. The simple (to me) fact is that distinguishing between disguised employees and contractors has been horrendously difficult in actual practice. It is this fact alone that has kept you out of IR35. PCG and others did a sterling job in maintaining that situation.The HMG and HMRC have now learned to not to try nailing jelly to the wall any more. It became an untenable situation as fine lines between in and out of IR35 got ever finer. In one case, a person started off outside and then was found to have moved to inside later on. A crass situation.

And some of those people come here to try and get clarity.


There is no clarity. That's why you stayed outside IR35 for so long. Lack of clarity worked in your favour for nearly 18 years.

When I look around my office, I see a range of people that seem to fall into all of these categories, and could be further split into those that know IR35 and those that don't.


See above.

It seems from your previous post(s) that (in your view) you're in that first minority that are clearly outside, and that anyone below that bar is (in your view) inside IR35, which totally misses out the people in the grey area.


I have been both. If I worked against a purchase order for a client, I was outside. If I worked on a project as one of a number of other people doing the same thing on a standard agency deal, I was probably inside. But I got away with it like everyone else did.

But perhaps you're just a victim of misunderstanding as we can't hear your tone of voice.


Certainly an issue on BB's, I agree.

I certainly don't doubt your knowledge and interest in the subject, I know you're a regular poster.



There are many, many people here just as or more knowledgeable. I hold a semi controversial view, but it makes it no more or less valid than anyone else's. I am used to being in a minority of one in my professional life, so it's nothing unusual for me. I hope some people stop and think a second that's all. The repeat non-thinkers are on my ignore list anyway. As I probably am on theirs.

Are you saying that in your view that the guy sitting next to me that got sent home the other week without being paid because the work dried up is inside because he sometimes helps out on projects that aren't listed in his contract?


It's just one factor isn't it? In a marginal case it might swing a favourable verdict. In another, it could be part of a rock solid defence. In another case, it could be that the guy was otherwise a de-facto employee. That's part of the problem.

He doesn't look at everything through a pair of IR35 spectacles (sometimes I'm jealous of him!), or always try to operate like a true B2B relationship, but does that make him inside?


I think you can see that in isolation, no it doesn't. If you are in a typical office based project environment it is always going to be hard to give a true B2B service. The client just wants a bum on the seat delivering stuff to schedule and quality. The client is not interested in a B2B relationship. Just on delivery.

I don't expect a yes or no answer,


I hope you aren't disappointed then.

it's just a question that tries to demonstrate it's not quite as black and white as your post makes out.


HMG and HMRC are doing their darndest to bring in a black and white scenario. Since the jelly nailing approach has failed. They've learned that they need to take a different approach. If the looking around the office approach shows that everyone looks the same, and everyone acts the same, and everyone fails the on line status tool, then you're caught. Simple. And the better defined your role is,
the easier it is for HMRC to match you up against the kind of statutory definition of what a contractor is that's being called for in some quarters.

And I'm genuinely interested in your answer :)

meanttobeworking
14th November 2017, 15:40
But as a niche technical specialist...

That niche wouldn't be Advanced CUK Forum Post Formatting would it? I'm impressed :)

Taking on board everything you've said, for me it boils down to this...

If it's as simple as most contracts and contractors being inside, then it should be far simpler for HMRC and whoever else to make a clear distinction as to who that elite group is that can operate outside. "Outside IR35" PS gigs on Jobserve would be a) few and far between (which they're not) and b) distinctly different from both the Inside PS roles and all the Private Sector ones too (which they're not). It shouldn't be about fine lines or nuances. The fact that, today, it IS about fine lines and nuances means that nobody really knows for sure, and nobody wants to draw a line for fear of the 'other side' simply organising their affairs to place themselves nicely on the side of the line they want to be on.

In short, nobody knows anything for sure. Good job, HMRC.

SueEllen
14th November 2017, 15:59
That niche wouldn't be Advanced CUK Forum Post Formatting would it? I'm impressed :)

He is niche.

jamesbrown
14th November 2017, 16:45
In short, nobody knows anything for sure. Good job, HMRC.

We're also guessing about how the "private sector" (as a vast aggregation of various sectors) will respond. It will respond differently to the PS, we can be fairly sure about that. There's a range of possible outcomes. It's pretty clear that a line will be drawn in the morass of grey, but how close or far away that line is drawn from BAU/BoS contractors remains to be seen.

Jenme
16th November 2017, 00:49
Just so I am clear, if I was IR35 caught could I pay myself and my wife an income? Or do I have to pay it all as income to me?

You have to pay it all to yourself. Also, take a look at the Employment Allowance. You can’t that claim if you’re the director and the only employee paid above the Secondary Threshold or you’re a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary (such as your personal service company, limited company or partnership).

Thought I'd compound the good news :(

washed up contractor
19th November 2017, 12:25
If, at last, the new rules put all those inside IR35 who should have been all along, then in my analysis this can only be a good thing. Then, for the small minority who remain, when you engage on a gig in a true B2B relationship, the client taking the risk of the IR35 determination, everyone is happy. The contractor no longer needs the ridiculous parasitic overheads of IR35 insurance and the like. For those on a B2B contract, it is a happy outcome. Ofcourse, if as the majority are, you are really a disguised temporary employee then belly ache all you like, you had a good run but now it's over. Suck it up.

The naivety in this post is as nauseating as it is laughable. Carry on believing if HMG \ HMRC capture the, by inference, 'majority' that they'll never come for the minority eventually.

And then you'll squeal like the pig you are that's about to be slaughtered.

matzie
19th November 2017, 13:07
I'm starting to think there might not be any direct mention of IR35 this time around - but instead a big jump in dividend tax, with measures to protect pensioners and target us.

eek
19th November 2017, 13:09
I'm starting to think there might not be any direct mention of IR35 this time around - but instead a big jump in dividend tax, with measures to protect pensioners and target us.

So you clearly haven't seen today's mail on Sunday...

matzie
19th November 2017, 17:20
So you clearly haven't seen today's mail on Sunday...

:-( No... what does it say? Sigh.

matzie
19th November 2017, 17:26
:-( No... what does it say? Sigh.

Self-employed face new onslaught in the Budget | Daily Mail Online (http://www.mailonsunday.co.uk/money/news/article-5096373/Self-employed-face-new-onslaught-Budget.html)

Nothing new really.

Fred Bloggs
20th November 2017, 05:06
The naivety in this post is as nauseating as it is laughable. Carry on believing if HMG \ HMRC capture the, by inference, 'majority' that they'll never come for the minority eventually.

And then you'll squeal like the pig you are that's about to be slaughtered.
'snot gonna be me squealing. Nope. Not a chance.

eek
20th November 2017, 06:02
Self-employed face new onslaught in the Budget | Daily Mail Online (http://www.mailonsunday.co.uk/money/news/article-5096373/Self-employed-face-new-onslaught-Budget.html)

Nothing new really.

The fact it’s repeating 2 week old news 3 days before the budget is significant. It means those items haven’t been rejected and are likely to be announced

eek
20th November 2017, 06:06
The naivety in this post is as nauseating as it is laughable. Carry on believing if HMG \ HMRC capture the, by inference, 'majority' that they'll never come for the minority eventually.

And then you'll squeal like the pig you are that's about to be slaughtered.

Hardly, I suspect Fred is fully prepared for the future. I know I am.

SueEllen
20th November 2017, 06:08
The naivety in this post is as nauseating as it is laughable. Carry on believing if HMG \ HMRC capture the, by inference, 'majority' that they'll never come for the minority eventually.

And then you'll squeal like the pig you are that's about to be slaughtered.

He's not in the UK.

One advantage of being a niche experienced engineer.

Fred Bloggs
20th November 2017, 07:03
Hardly, I suspect Fred is fully prepared for the future. I know I’m.
LOL! Perhaps a little TOO prepared? :laugh

Fred Bloggs
20th November 2017, 07:04
He's not in the UK.

One advantage of being a niche experienced engineer.
Yep, no squealing here, SE :smokin

SueEllen
20th November 2017, 09:13
Yep, no squealing here, SE :smokin

Ahhh but he's sooo miserable it's fun to rub in things he could have easily found out himself.

Fred Bloggs
20th November 2017, 09:26
Ahhh but he's sooo miserable it's fun to rub in things he could have easily found out himself.
:glasses

SueEllen
20th November 2017, 09:54
Just got an email with the UK Hydrographic Office advertising roles on the Digital Marketplace - oddly not that many takers. :laugh

Big Blue Plymouth
20th November 2017, 11:38
Just got an email with the UK Hydrographic Office advertising roles on the Digital Marketplace - oddly not that many takers. :laugh

They were making people go via brolly even before the PS rules came into effect.

Always getting calls about roles there.

TheFaQQer
20th November 2017, 11:52
They were making people go via brolly even before the PS rules came into effect.

Always getting calls about roles there.

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)

NonnyMouse
20th November 2017, 12:04
Guido Fawkes has it today https://order-order.com/2017/11/20/hammond-trying-strangle-golden-goose/#disqus_thread

Tasslehoff
20th November 2017, 12:32
Guido Fawkes has it today https://order-order.com/2017/11/20/hammond-trying-strangle-golden-goose/#disqus_thread

Content produced and sponsered by IPSE

eek
20th November 2017, 12:38
Content produced and sponsered by IPSE

Does it matter provided people read it and understand it

SueEllen
20th November 2017, 13:44
They were making people go via brolly even before the PS rules came into effect.

Always getting calls about roles there.

Not seen the roles on the Digital Marketplace before.

Platypus
20th November 2017, 15:14
Does it matter provided people read it and understand it

There are comments, some I think from people on here

PokemonStay
20th November 2017, 15:22
There are comments, some I think from people on here

Ask your accountant? Don't be a cretin? Have you tried bleeding the radiators? Get a DFS sofa?

SueEllen
20th November 2017, 16:06
There are comments, some I think from people on here

Not all of them are from people on here and IPSE members, as you know like I do, most people in both groups are in IT and still working so don't talk about things like CIS and being put out of business in the 90s.

Oh hello HMRC :wave:

bingobob777
21st November 2017, 12:31
Dear Mr X

Thank you for your email. I am aware of these rumours, but I would stress that that is all that they are at the moment. Unfortunately I, like you, will only find out what is in the Budget when it is read out in the Commons by the Chancellor but I would be deeply concerned about any measures which undermined or punished small businesses. There are various rumours circulation, from the extension of IR35 to private sectors, to the announcement of a consultation, to the tidying-up of some areas from the current position in the public sector with no move to the private sector. Expectations are that no changes, even if they announced, would come into force for a couple of years.

Since my election I have worked hard to promote local SMEs, working closely with Business Gateway and other organisations, as East Ren has a particularly vibrant small and micro-enterprise community which we need to cultivate and help grow.

As you set out, there are real concerns with the impact of extending out IR35 which business is understandably kicking back on.

Whilst we will wait and see what is actually in the Budget, I would hope that if there measures which would, on any view, be detrimental to small business are announced they would be mitigated by a significant package of other forms of support.

The Conservatives must continue to be the party that champions small and local business, and I will be uncomfortable with anything which goes against this.

I will however pass your comments onto the Treasury team.

Kind regards

Paul


Paul Masterton MP
Member of Parliament for East Renfrewshire

craigy1874
22nd November 2017, 08:01
FT thinking he wont announce private sector roll out today...

https://www.google.co.uk/amp/s/amp.ft.com/content/0635965e-cdf5-11e7-9dbb-291a884dd8c6

Behind a paywall. Says the following:

The chancellor considered a controversial crackdown on bogus self-employment in the private sector, but he is thought to have concluded not to rush the move and that more public consultation is required.

jamesbrown
22nd November 2017, 08:06
FT thinking he wont announce private sector roll out today...

https://www.google.co.uk/amp/s/amp.ft.com/content/0635965e-cdf5-11e7-9dbb-291a884dd8c6

Yeah, but a public consultation towards that end, which was always more likely. Implementation in 2018 was never likely, but that’s why they raise these trial balloons: to gauge pushback. It’s still coming...

eek
22nd November 2017, 08:25
As I commented elsewhere note how this almost now feels inevitable and not that bad compared to a month ago.

The binned VAT starting point change has made something that a month ago was awful now feel not as bad as it could have been

KUWTC
22nd November 2017, 08:56
Near the end of this article, there is some talk about how extending the IR35 reforms to the private sector could be good for contractors in the long run. Particularly if you're near retirement age, one has to assume. :freaky:

IR35 reforms: Economic concerns raised over prospect of private sector roll-out (http://www.computerweekly.com/news/450430459/IR35-reforms-Economic-concerns-raised-over-prospect-of-private-sector-roll-out)

boxingbantz
22nd November 2017, 09:02
So, what are we thinking - IR35 reforms included in this budget or not?

I am going to go with NO. :smile

KUWTC
22nd November 2017, 09:08
So, what are we thinking - IR35 reforms included in this budget or not?

I am going to go with NO. :smile

I'm thinking it's a no for now, but I'd say it's inevitable that it will happen.

I agree with some points in that article above that they'd be stupid to rush it through for April 2018 without a full consultation, and - in my experience - the private sector has been completely disengaged while this process has been going on in the public sector, so they will have a lot of catching up to do from a compliance standpoint.

ChimpMaster
22nd November 2017, 09:17
I say NO for now too.

I do however expect a number of other 'attacks' on the so called gig economy. Reduced dividend allowance and increased NI are 2 options.

SeanT
22nd November 2017, 09:22
increased NI

Well I guess the only way it can go is up, if you're currently paying none. And I'm going to cry in my cereal about losing the massive £2k a year allowance completely. Should be an interesting one - pretty sure they'll find a way to screw almost everyone anyway.

webberg
22nd November 2017, 10:14
For what it's worth, my view is that:

1. We will not get a blunt instrument of IR35 being imposed on the private sector.
2. We may get a "consultation" on how to extend the rules to private sector "in due course" perhaps April 19
3. We may see changes to IR35 which tilt the playing field even more to employee status

My fear is that we get a radical change. Imagine if IR 35 was removed (yay) and replaced with a blanket - you're an employee unless you get HMRC clearance.

That would cause utter chaos.

TheFaQQer
22nd November 2017, 10:17
My fear is that we get a radical change. Imagine if IR 35 was removed (yay) and replaced with a blanket - you're an employee unless you get HMRC clearance.

That would cause utter chaos.

A million (or more) people suddenly requiring HMRC to review their working practices and contracts before / during every piece of work? The headcount requirements alone would be horrendous.

jamesbrown
22nd November 2017, 10:48
So, what are we thinking - IR35 reforms included in this budget or not?

I am going to go with NO. :smile

I’m going with a yes in the form of a consultation that leads inexorably there, but not a definite implementation date.

webberg
22nd November 2017, 10:51
A million (or more) people suddenly requiring HMRC to review their working practices and contracts before / during every piece of work? The headcount requirements alone would be horrendous.

I agree but HMRC could say "you're all employees and if and when we get around to saying you really are not, we will refund the PAYE or credit your self employed tax account".

meanttobeworking
22nd November 2017, 10:53
A million (or more) people suddenly requiring HMRC to review their working practices and contracts before / during every piece of work? The headcount requirements alone would be horrendous.

They’d need to scale up with some freelancers...

jamesbrown
22nd November 2017, 10:58
I agree but HMRC could say "you're all employees and if and when we get around to saying you really are not, we will refund the PAYE or credit your self employed tax account".

Not going to happen in the current Parliament. It only takes a tiny minority of Tory MPs to rebel, and a sizeable minority want to see the end of spreadsh!t Phil. Ordinarily, this would be exactly the right Budget for radical change, being early in the Parliament. Not going to happen.

TheFaQQer
22nd November 2017, 10:59
I agree but HMRC could say "you're all employees and if and when we get around to saying you really are not, we will refund the PAYE or credit your self employed tax account".

They could say that, but it's a backlog that they could never ever shift. Can't see any politician being that crazy that this is a policy that might do anything other than cause chaos.

webberg
22nd November 2017, 11:14
If I were an HMRC/Treasury type trying to get this sort of thing through, I might argue along the following lines.

Contractors have been avoiding tax for 20 years.

We have introduced law after law after law and still they don't pay their way.

Now we need them to pay their way to pay for Bexit.

If you (Tory MP) want to oppose that, you risk being called out as supporting tax avoidance.

Therefore be a good boy/girl and don't make waves.

Yes, we know HMRC will make a horrendous mess of getting to everybody, but we have the money in the bank and the initiative is on individuals.

By the way, the Daily Hate will run stories that say "tax avoiders finally brought to heel" and therefore no fear of the redtops being offside.

And by the way it takes the news away from our rich and big corporate friends who can carry on avoiding tax for a bit longer.

(I'm not by the way an HMRC/Treasury type).

mattfx
22nd November 2017, 11:54
We've been very fortunate in that the press over the last couple of days has lumped the IR35 and VAT changes together and pinned the government as "attackers of small business" - which includes sole traders; plumbers, decorators, etc. Whoever that came from, we owe them many many pints.

Looking over the comments in various forms of media, the general public appear to be behind us and not the government on this one, for now.

Swamp Thing
22nd November 2017, 12:17
We've been very fortunate in that the press over the last couple of days has lumped the IR35 and VAT changes together and pinned the government as "attackers of small business" - which includes sole traders; plumbers, decorators, etc. Whoever that came from, we owe them many many pints.

Looking over the comments in various forms of media, the general public appear to be behind us and not the government on this one, for now.

Yep, that seems to be the case. For a projected gain to Treasury of just £1bn, this is nothing more than political populism at play by Stride, Hammond et al. With all the other horrors going on in the Tory party right now, they have to calculate whether or not to put this out as a hard policy change and incur the wrath of all small/micro-businesses.
This could still bite back to Hammond the way S/E NICs did. All the tabloids have to do is spin the effect of this across other spends:

"Hammond hammers small business again for £1.2bn, yet overseas aid still £12bn and Brexit bill now £40bn."

boxingbantz
22nd November 2017, 13:20
No mention of anything yet...

boxingbantz
22nd November 2017, 13:23
Higher rate of income tax-free allowance to rise to £46,350...

SueEllen
22nd November 2017, 13:25
Paper on tax challenge on digital economy.

boxingbantz
22nd November 2017, 13:25
The point at which small businesses pay VAT will be kept at £85,000...

Now moving onto housing so hopefully that's all for now? Or does he not announce everything in the speech?

regron
22nd November 2017, 13:30
The point at which small businesses pay VAT will be kept at £85,000...

Now moving onto housing so hopefully that's all for now? Or does he not announce everything in the speech?

There is always more to digest in the full blown document that will be published.

boxingbantz
22nd November 2017, 13:33
There is always more to digest in the full blown document that will be published.

Surely though IR35 would've been something he would've discussed or am I being naïve?

boxingbantz
22nd November 2017, 13:37
Stamp duty abolished for first time buyers up to £300k.

Didn't see that one coming...

eek
22nd November 2017, 13:47
Surely though IR35 would've been something he would've discussed or am I being naïve?

Of no interest to the general public and technical so it would be hidden in the detail

Camsteack
22nd November 2017, 13:50
3.7 Off-payroll working in the private sector – The government reformed the off-payroll
working rules (known as IR35) for engagements in the public sector in April 2017. Early
indications are that public sector compliance is increasing as a result, and therefore a possible
next step would be to extend the reforms to the private sector, to ensure individuals who
effectively work as employees are taxed as employees even if they choose to structure their work
through a company. It is right that the government take account of the needs of businesses and
individuals who would implement any change. Therefore the government will carefully consult
on how to tackle non-compliance in the private sector, drawing on the experience of the public
sector reforms, including through external research already commissioned by the government
and due to be published in 2018.

TheFaQQer
22nd November 2017, 13:50
3.7 Off-payroll working in the private sector – The government reformed the off-payroll working rules (known as IR35) for engagements in the public sector in April 2017. Early indications are that public sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company. It is right that the government take account of the needs of businesses and individuals who would implement any change. Therefore the government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018.

MarkT
22nd November 2017, 13:51
IPSE are tweeting that there will be a consultation on IR35 in the private sector in 2018.

TheFaQQer
22nd November 2017, 13:52
IPSE are tweeting that there will be a consultation on IR35 in the private sector in 2018.

Section 3.7 of the Red Book (see above)

MarkT
22nd November 2017, 13:53
Section 3.7 of the Red Book (see above)

Yep I was posting as you were so we crossed.

As Blackadder once said, I think the phrase rhymes with clucking bell.

Unix
22nd November 2017, 13:54
IPSE are tweeting that there will be a consultation on IR35 in the private sector in 2018.

Tories will be out by then, so all good. :laugh

boxingbantz
22nd November 2017, 13:54
April 2019 it is then...

SteelyDan
22nd November 2017, 14:08
So what happened? we get away with it for a bit longer? is there a link to that red book thing?

TheFaQQer
22nd November 2017, 14:12
So what happened? we get away with it for a bit longer? is there a link to that red book thing?

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661480/autumn_budget_2017_web.pdf

SteelyDan
22nd November 2017, 14:16
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661480/autumn_budget_2017_web.pdf

cheers

TheFaQQer
22nd November 2017, 14:16
So what happened? we get away with it for a bit longer? is there a link to that red book thing?

There will be a consultation on how to tackle non-compliance in the private sector, but AFAIK there is no timeline on when the consultation will start or end. There will be external research from government next year and there will be many more fights around this issue over the coming months and (probably) years.

But well done to everyone who helped to get this kicked down the road - let's continue the fight and get it kicked further and further away from us all.

Unix
22nd November 2017, 14:18
There will be a consultation on how to tackle non-compliance in the private sector, but AFAIK there is no timeline on when the consultation will start or end. There will be external research from government next year and there will be many more fights around this issue over the coming months and (probably) years.

But well done to everyone who helped to get this kicked down the road - let's continue the fight and get it kicked further and further away from us all.

My guess is they are still performing analysis on the impact on the public sector, it will take a few years for the full effects to become known.

webberg
22nd November 2017, 16:09
Seems to suggest that research on extending IR35 to the private sector has already been commissioned and will be reported next year.

Any guesses as to the answer?

It is important I think that the reform to public sector was couched as having "increased compliance". If that is the focus rather than the effect on the end client and the economy as a whole, it rather suggests that the position is already loaded.

I'm going to stop commenting here after this as we are working on something (see elsewhere) and I don't want to be accused of sneaky advertising etc.

Guvernator
22nd November 2017, 16:43
These are my thoughts also, in fact wasn't the IR35 rumour going to the private sector actually started because someone stated they'd hired a contractor to work on this exact problem so either

A) They didn't have time to complete the research (typical contractor dragging it out to maximise billing :wink)

B) The research was inconclusive, ie they didn't get the answer they wanted

or

C) All the public pressure, people writing to MP's etc made them do a last minute u-turn.

I'd love to see what was on that last minute note that Hammond was alleged to have been passed, just before he started his speech.

I'm hoping it was something like

"Phil we've been knobbled, whatever you do, don't mention IR35

Love Tess xx"

TheFaQQer
22nd November 2017, 16:48
Seems to suggest that research on extending IR35 to the private sector has already been commissioned and will be reported next year.

"Therefore the government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018"

That could be read as you have (ie "we've already done research into private sector impact and we'll publish it next year") or it could be read as "part of the experience of public sector reforms will be examined through external research that we have already commissioned and that research will be published next year".

SueEllen
22nd November 2017, 17:03
"Therefore the government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018"

That could be read as you have (ie "we've already done research into private sector impact and we'll publish it next year") or it could be read as "part of the experience of public sector reforms will be examined through external research that we have already commissioned and that research will be published next year".

I suspect they are planning to merge it with the Taylor report findings, which now are backed up by two House of Parliament Committees, to get it through.

It is far easier to write a complicated bit of tax code that involves all sorts of workers making it difficult for people like us to complain. After all if that delivery driver is now an employee, it is easier to make a higher skilled worker pay tax like an employee as it is only fair.

Guesstimator
28th November 2017, 16:44
"Therefore the government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018"

That could be read as you have (ie "we've already done research into private sector impact and we'll publish it next year") or it could be read as "part of the experience of public sector reforms will be examined through external research that we have already commissioned and that research will be published next year".

It's that.

Posted on LinkedIn earlier (credit to the finder who I shan't name but if you're here, nice one) here's the award of research:


https://www.contractsfinder.service.gov.uk/Notice/5737c3f3-a793-4eeb-8c3d-ad44a9b4d647?p=@jJNT08=UFQxUlRRPT0=N&lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3Bi8 rvxkT4Ry6HY4hvqnRQyA%3D%3D

Apologies if already posted.

SeanT
28th November 2017, 17:00
It's that.

Posted on LinkedIn earlier (credit to the finder who I shan't name but if you're here, nice one) here's the award of research:


https://www.contractsfinder.service.gov.uk/Notice/5737c3f3-a793-4eeb-8c3d-ad44a9b4d647?p=@jJNT08=UFQxUlRRPT0=N&lipi=urn%3Ali%3Apage%3Ad_flagship3_pulse_read%3Bi8 rvxkT4Ry6HY4hvqnRQyA%3D%3D

Apologies if already posted.

Research is being completed by a shit paying zero hour agency... https://www.glassdoor.co.uk/Reviews/IFF-Research-Reviews-E618794.htm

ProInDisguise
1st December 2017, 15:13
Research is being completed by a tulip paying zero hour agency... https://www.glassdoor.co.uk/Reviews/IFF-Research-Reviews-E618794.htm


Who on earth is awarding such an important piece of research to two bob organisation like that? Central government procurement :(

TheFaQQer
1st December 2017, 15:15
Who on earth is awarding such an important piece of research to two bob organisation like that? Central government procurement :(

And I'm sure that as part of their research they have spoken to members of the IR35 forum to collect evidence about the impact on the public sector :rolleyes: