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View Full Version : Treasury response to "Don't extend IR35 reforms to Private sector" petition (no news)



matzie
1st December 2017, 03:39
The Government has responded to the petition you signed – “Do not extend IR35 legislation to the private sector.”.

Government responded:

The government will consult on how to tackle non-compliance with the off-payroll working rules in the private sector, drawing on the experience of recent public sector reform.
The Government recognises that many individuals choose to work through their own limited company. There are many legitimate, commercial reasons for people to do this and for businesses to engage them in this way. The off-payroll working rules, more commonly known as IR35, have been in place since 2000 to ensure that, where individuals would have been employees if they were providing their services directly, they pay broadly the same tax and National Insurance as other employees. It is fair that two individuals doing the same job in the same way pay broadly the same tax and National Insurance, even if one of them structures their work through a company.

As highlighted by reports from the Office of Tax Simplification and the House of Lords, it is clear that IR35 is not effective enough. To improve compliance, the Government introduced reforms in the public sector from April 2017. Individuals working through their own company in the public sector are no longer responsible for operating the off-payroll rules. Instead, where an individual’s company is directly engaged by a public sector body, the public sector body is responsible for determining whether or not the rules apply, and deducting any necessary employment taxes on payments to the individual’s company. Where this engagement takes place through an agency, the public sector body is responsible for determining whether or not the rules apply and informing the agency of this decision, in order that any necessary employment taxes can be deducted by the agency.

This is not a new tax on the self-employed. IR35 only applies to those who work like employees and would have been employed were they not working through a company. Genuinely self-employed individuals continue to be unaffected, as has been the case for over 15 years.

The Government is monitoring the impact of its reform of IR35 in the public sector. Initial evidence suggests that it has been successful in improving compliance. More people working through their own company are paying the right tax. However, the cost of non-compliance in the private sector is still growing and will cost taxpayers £1.2 billion a year by 2022/23. Therefore, a possible next step would be to extend these reforms to the private sector.

To take account of the needs of businesses and individuals who would implement any change, the Government will carefully consult on reform in the private sector, drawing on the experience of the public sector reforms, including through external research due to be published in the new year.

HM Treasury

Fred Bloggs
1st December 2017, 05:13
the government has responded to the petition you signed – “do not extend ir35 legislation to the private sector.”.

Government responded:


Ha! Finally we nailed you. You got away with it for nearly 18 years. Consider yourself very fortunate.

hm treasury
Ftfy. Hth. Bidi.

Joolsey86
1st December 2017, 07:59
Yawn...

Say IR35 extension takes place in 2 years.

Is it fair that someone paying the same tax, has no holiday pay, pension, training, redundancy, job security and has to work longer Hours.....?

Fred Bloggs
1st December 2017, 08:06
Yawn...

Say IR35 extension takes place in 2 years.

Is it fair that someone paying the same tax, has no holiday pay, pension, training, redundancy, job security and has to work longer Hours.....?
Yawn........ When you become a temporary employee, sure, I'm guessing you will get all those things. It'd be illegal not to eh? Though redundancy, I'd doubt since a temporary employee wouldn't usually be there long enough. Would they?

Joolsey86
1st December 2017, 08:45
Another aspect which may have been ignored.

If this goes ahead, then it will put more pressure on the permanent market, and contractors are generally more driven and in many cases higher qualified, and may start to push out long term permies from the permanent market.

This could lead to the Contractor market changing from a highly skilled worker confident in themselves, to essentially a TEMP market for those who cannot get a permanent position.

BrilloPad
1st December 2017, 08:53
Another aspect which may have been ignored.

If this goes ahead, then it will put more pressure on the permanent market, and contractors are generally more driven and in many cases higher qualified, and may start to push out long term permies from the permanent market.

This could lead to the Contractor market changing from a highly skilled worker confident in themselves, to essentially a TEMP market for those who cannot get a permanent position.

There was only one aspect considered.

HMRC do not understand technology and think we are glorified typists. They have told their underlings(parliament) to throw us under a bus.

amrhady
1st December 2017, 08:58
No, it's not actually fair for a contractor to pay the same tax as an employee doing the same job.

It seems to me that this premise by the government is intentionally (or ignorantly) failing to highlight the key differences in employee's favour.

Job safety for one(debatable but comparably contracting is far less secure), being out of contract hence lack of income, holiday and sick pay, entitlement to benefits - among others. All these differences do equate to a financial amount, and hence applying same rules is actually NOT fair.

I hope the government and the consultation do take these fundamental differences into account.

Fred Bloggs
1st December 2017, 09:00
Another aspect which may have been ignored.

If this goes ahead, then it will put more pressure on the permanent market, and contractors are generally more driven and in many cases higher qualified, and may start to push out long term permies from the permanent market.

This could lead to the Contractor market changing from a highly skilled worker confident in themselves, to essentially a TEMP market for those who cannot get a permanent position.
Outside the UK, that is pretty much how it works already. Even in the UK, the highly professional contractor who contributes greatly to the client business very often has to rehearse how to say "no thank you" to the client manager who tries to "reward" the contractor with the offer of employment.

Joolsey86
1st December 2017, 09:25
Outside the UK, that is pretty much how it works already. Even in the UK, the highly professional contractor who contributes greatly to the client business very often has to rehearse how to say "no thank you" to the client manager who tries to "reward" the contractor with the offer of employment.

Haha, been there, done that. Last time about 3 weeks ago :freaky:

eek
1st December 2017, 09:40
No, it's not actually fair for a contractor to pay the same tax as an employee doing the same job.

It seems to me that this premise by the government is intentionally (or ignorantly) failing to highlight the key differences in employee's favour.

Job safety for one(debatable but comparably contracting is far less secure), being out of contract hence lack of income, holiday and sick pay, entitlement to benefits - among others. All these differences do equate to a financial amount, and hence applying same rules is actually NOT fair.

I hope the government and the consultation do take these fundamental differences into account.

And yet I look at the gig economy or Sports Direct and see people on zero hour contracts or worse who are paying tax like employees and yet don't have any more rights than we do.

Joolsey86
1st December 2017, 09:59
And yet I look at the gig economy or Sports Direct and see people on zero hour contracts or worse who are paying tax like employees and yet don't have any more rights than we do.

Good point eek.

In life there are many nuances, unless you are HMRC.

BoredBloke
1st December 2017, 12:05
"It is fair that two individuals doing the same job in the same way pay broadly the same tax and National Insurance, even if one of them structures their work through a company."

I wish they would debunk this crock. Hammond used the example of an employee on 100k comparing it to a contractor on 100k. The problem is that the cost to employ the employee is a lot higher than the cost to employ the contractor. It should be that the contractor on 100k should pay broadly the same as an employee whose overall cost of employment is 100k - pensions and employers NI are funded by the employer on top. Also, you can bet that HMRC will boast about the increase in the PAYE tax take, but fail to mention the corresponding drop in Corp and Divi tax.

Swamp Thing
1st December 2017, 14:21
"It is fair that two individuals doing the same job in the same way pay broadly the same tax and National Insurance, even if one of them structures their work through a company."

I wish they would debunk this crock. Hammond used the example of an employee on 100k comparing it to a contractor on 100k. The problem is that the cost to employ the employee is a lot higher than the cost to employ the contractor. It should be that the contractor on 100k should pay broadly the same as an employee whose overall cost of employment is 100k - pensions and employers NI are funded by the employer on top. Also, you can bet that HMRC will boast about the increase in the PAYE tax take, but fail to mention the corresponding drop in Corp and Divi tax.

And don't forget the VAT.
I had 30 mins with my local MP last week, taking him through exactly this point with a number of worked examples. I explained to him that I would deliberately choose to earn less as a PAYE, not the £100K equivalent per this example. Been there and earned +£100K as a perm and the work-life balance went to sh1t; never again. Therefore the tax receipts to Treasury would be less compared to the contractor model. he eventually understood this, but not before he opined that surely I was working just like Uber? FFS.

So I then took him thru contracts and working practices (MOO, RoS, SDC) - yes, after 20 mins he was still listening - and then he understood the difference. He's an intelligent guy, but I realised what a mountain we must all climb when the basics have to be gone thru again and again.

I told him that Treasury was putting up phoney arguments ("bogus employment", "fairness"), and was too scared to argue the real issues. Finished up by suggesting that all the major businesses in his constituency would be up in arms about this, just at a time when we are exiting Brexit, they need max skills and flexibility etc etc. He sat up at that point.

So when the fight comes, it will need more than just a bunch of freelancers marching around Parliament Square. IPSE, REC, FCSA etc will need to mount a robust defence, and loop in as many concerned Plcs as they can. Unlike public sector, there is 2 years to mount this campaign so if we all melt away meekly, we only have ourselves and our complacency to blame.

malvolio
1st December 2017, 14:40
...

So when the fight comes, it will need more than just a bunch of freelancers marching around Parliament Square. IPSE, REC, FCSA etc will need to mount a robust defence, and loop in as many concerned Plcs as they can. Unlike public sector, there is 2 years to mount this campaign so if we all melt away meekly, we only have ourselves and our complacency to blame.
I think you'll find they are already well into that campaign and have been for a while. Only now is there a glimmer that HMG are listening and the press have taken notice. Both are prerequisites for us contractors to get anywhere, because until that happens MPs simply won't have a Scooby about the whole subject. As you may have noticed...

Swamp Thing
1st December 2017, 15:04
I think you'll find they are already well into that campaign and have been for a while. Only now is there a glimmer that HMG are listening and the press have taken notice. Both are prerequisites for us contractors to get anywhere, because until that happens MPs simply won't have a Scooby about the whole subject. As you may have noticed...

Agreed Mal, although I just see IPSE et al mounting a defence at the moment. I think they will need to build consensus and support outside of their traditional networks and aggressively take the fight to HMG if they are to succeed.

malvolio
1st December 2017, 15:30
Agreed Mal, although I just see IPSE et al mounting a defence at the moment. I think they will need to build consensus and support outside of their traditional networks and aggressively take the fight to HMG if they are to succeed.
I think making an independently researched business case that gives HMG the cost of doing what they're aiming to do counts as aggressive. And there are a lot of bodies in the same battleground.

But yes, it needs two things really; hard-nosed buggers to beat HMG over the head and lots of support form the contractor workforce.

eek
1st December 2017, 15:40
And don't forget the VAT.
I had 30 mins with my local MP last week, taking him through exactly this point with a number of worked examples. I explained to him that I would deliberately choose to earn less as a PAYE, not the £100K equivalent per this example. Been there and earned +£100K as a perm and the work-life balance went to sh1t; never again. Therefore the tax receipts to Treasury would be less compared to the contractor model. he eventually understood this, but not before he opined that surely I was working just like Uber? FFS.

So I then took him thru contracts and working practices (MOO, RoS, SDC) - yes, after 20 mins he was still listening - and then he understood the difference. He's an intelligent guy, but I realised what a mountain we must all climb when the basics have to be gone thru again and again.

I told him that Treasury was putting up phoney arguments ("bogus employment", "fairness"), and was too scared to argue the real issues. Finished up by suggesting that all the major businesses in his constituency would be up in arms about this, just at a time when we are exiting Brexit, they need max skills and flexibility etc etc. He sat up at that point.

So when the fight comes, it will need more than just a bunch of freelancers marching around Parliament Square. IPSE, REC, FCSA etc will need to mount a robust defence, and loop in as many concerned Plcs as they can. Unlike public sector, there is 2 years to mount this campaign so if we all melt away meekly, we only have ourselves and our complacency to blame.

Not VAT again...

There is a reason why certain people want IPSE to create a set of infographics explaining why and how we work the way we do and why its different. Sadly IPSE have never create said posters but we really do need them...

washed up contractor
1st December 2017, 21:38
The Government has responded to the petition you signed – “Do not extend IR35 legislation to the private sector.”.

Government responded:

The government will consult on how to tackle non-compliance with the off-payroll working rules in the private sector, drawing on the experience of recent public sector reform.
The Government recognises that many individuals choose to work through their own limited company. There are many legitimate, commercial reasons for people to do this and for businesses to engage them in this way. The off-payroll working rules, more commonly known as IR35, have been in place since 2000 to ensure that, where individuals would have been employees if they were providing their services directly, they pay broadly the same tax and National Insurance as other employees. It is fair that two individuals doing the same job in the same way pay broadly the same tax and National Insurance, even if one of them structures their work through a company.

As highlighted by reports from the Office of Tax Simplification and the House of Lords, it is clear that IR35 is not effective enough. To improve compliance, the Government introduced reforms in the public sector from April 2017. Individuals working through their own company in the public sector are no longer responsible for operating the off-payroll rules. Instead, where an individual’s company is directly engaged by a public sector body, the public sector body is responsible for determining whether or not the rules apply, and deducting any necessary employment taxes on payments to the individual’s company. Where this engagement takes place through an agency, the public sector body is responsible for determining whether or not the rules apply and informing the agency of this decision, in order that any necessary employment taxes can be deducted by the agency.

This is not a new tax on the self-employed. IR35 only applies to those who work like employees and would have been employed were they not working through a company. Genuinely self-employed individuals continue to be unaffected, as has been the case for over 15 years.

The Government is monitoring the impact of its reform of IR35 in the public sector. Initial evidence suggests that it has been successful in improving compliance. More people working through their own company are paying the right tax. However, the cost of non-compliance in the private sector is still growing and will cost taxpayers £1.2 billion a year by 2022/23. Therefore, a possible next step would be to extend these reforms to the private sector.

To take account of the needs of businesses and individuals who would implement any change, the Government will carefully consult on reform in the private sector, drawing on the experience of the public sector reforms, including through external research due to be published in the new year.

HM Treasury

HMT FUD right there.
It is fair that two individuals doing the same job in the same way pay broadly the same tax and National Insurance, even if one of them structures their work through a company.

What, when one is a public sector employee so does not create one single new penny of tax and NI revenue to HMT but the other, a contractor does? Is it 'right' when one is not an employee of the company requiring the work done so may only be at the client for a short term, has to make their own provisions for a pension, account for VAT, periods of no income or 'employment,' has no employment 'rights'........ ah **** it. Glad Im retiring in the New Year.

billybiro
4th December 2017, 15:47
And yet I look at the gig economy or Sports Direct and see people on zero hour contracts or worse who are paying tax like employees and yet don't have any more rights than we do.

Mark my words, within about 5 years, both contractors and employees will be largely in the same boat. There's a homogenisation that's been happening between the two markets and the forthcoming private-sector-IR35-determinisation is just a small part of that. Where we'll all be in the future is having the lack of job security of a contractor, the lack of "rights" of a contractor, all whilst having to pay tax/NI as an employee.

Zero hour contracts are the start of this within the employment sector. Expect this method of engagement to become more and more prevalent across every industry. At the same time, contractors, who are already effectively on "zero-hour" contracts (i.e. can be terminated at anytime with no notice) will have their "lucrative" tax burdens squeezed to elicit more and more money for HMRC.

Welcome to the future.

craigy1874
5th December 2017, 09:09
Mark my words, within about 5 years, both contractors and employees will be largely in the same boat. There's a homogenisation that's been happening between the two markets and the forthcoming private-sector-IR35-determinisation is just a small part of that. Where we'll all be in the future is having the lack of job security of a contractor, the lack of "rights" of a contractor, all whilst having to pay tax/NI as an employee.

Zero hour contracts are the start of this within the employment sector. Expect this method of engagement to become more and more prevalent across every industry. At the same time, contractors, who are already effectively on "zero-hour" contracts (i.e. can be terminated at anytime with no notice) will have their "lucrative" tax burdens squeezed to elicit more and more money for HMRC.

Welcome to the future.

Jesus I bet you are fun at a party!

billybiro
5th December 2017, 09:14
Jesus I bet you are fun at a party!

If I told you that we're all going to die someday would it make you feel better?

:rollin::rollin::rollin:

flamel
5th December 2017, 12:39
They have told their underlings(parliament) to throw us under a bus.

Only after a "consultation" that concluded it would be good for buses in general and that being run over by a bus would have no material impact on your body.

Joolsey86
20th December 2017, 10:44
"the initial evidence suggests that reforms to IR35 in the public sector have been successful in improving compliance. However the cost of non-compliance in the private sector is still growing. If a possible next step would be to extend these reforms to the private sector, the government has said it will carefully consult on this, taking into account the needs of businesses and individuals such as yourself."

I.e. LALALA not listening, I don't care, just following party line.

I will never vote Conservative again. I will take pleasure in telling him in two words (IR and 35) why I will never vote for them again - the next time he is canvassing outside my station to be elected.

They are too focussed on power, and not principle.

BrilloPad
20th December 2017, 12:23
"the initial evidence suggests that reforms to IR35 in the public sector have been successful in improving compliance. However the cost of non-compliance in the private sector is still growing. If a possible next step would be to extend these reforms to the private sector, the government has said it will carefully consult on this, taking into account the needs of businesses and individuals such as yourself."

I.e. LALALA not listening, I don't care, just following party line.

I will never vote Conservative again. I will take pleasure in telling him in two words (IR and 35) why I will never vote for them again - the next time he is canvassing outside my station to be elected.

They are too focussed on power, and not principle.

Then you are missing the point.

In 2008 David Gauke described retrospection as abhorrent. 2 years later he was saying how wonderful it was.

MPs do as the HMRC masters tell them.

I am not sure of the solution(though I have not voted Tory/Liebour for a few years and never will again). However at least I understand the problem.

Joolsey86
20th December 2017, 13:05
Then you are missing the point.

In 2008 David Gauke described retrospection as abhorrent. 2 years later he was saying how wonderful it was.

MPs do as the HMRC masters tell them.

I am not sure of the solution(though I have not voted Tory/Liebour for a few years and never will again). However at least I understand the problem.

I am not missing the point and know how it works.

But if the supposed party of free enterprise listens to the trots in HMRC, then they cannot have my vote.

As a gaggle of contractors we need to be more forceful about how many lost votes this policy will cause the Conservatives.

BrilloPad
20th December 2017, 13:14
I am not missing the point and know how it works.

But if the supposed party of free enterprise listens to the trots in HMRC, then they cannot have my vote.

As a gaggle of contractors we need to be more forceful about how many lost votes this policy will cause the Conservatives.

So you are still missing the point. Whoever gets into power will not tackle HMRC.

"we"? "we"? Contractors make cats look organized.

Look through this forum sub-section threads. Several posters welcome these HMRC changes! As they are not caught, everyone else is.

They do not realize that HMRC believe we are all caught. HMRC want every decision both ways. Have their cake and eat it. Applied retrospectively - applied with powers more suitable to NK.

I have tried to change the law twice - once through f4j. Once through NTRT. At least f4j we achieved some measure of practical changes. NTRT spectacularly unsuccessful. Proof that HMRC lied to parliament and no way of rectifying it.

Now I am getting a bit fed up of being nice to you. You are clearly too stupid to listen. Any further responses and I am going to invite you outside(i.e. a thread in general) where I can give you a proper shoeing. I am very depressed (due to HMRC) and could do with an innocent to take it out on.....

LondonManc
20th December 2017, 14:10
"the initial evidence suggests that reforms to IR35 in the public sector have been successful in improving compliance."

What that means is that a self-fulfilling prophecy has come to pass.
HMRC has determined that x,000 contracts should be inside IR35 and told public sector to do it. A high percentage have complied regardless of the right or wrong of doing so and judging each contract on its own merit, as the guidelines suggested. QED, more compliance.

The problem is that the right people need throwing under a bus - those behaving as employees. No retrospection, just a case of, right, we're doing it this way now, fold your company, go umbrella. I've seen contractors gladly using permie discounts left, right and centre yet staunchly believe they are outside because the agency said so.

Joolsey86
20th December 2017, 14:33
So you are still missing the point. Whoever gets into power will not tackle HMRC.

"we"? "we"? Contractors make cats look organized.

Look through this forum sub-section threads. Several posters welcome these HMRC changes! As they are not caught, everyone else is.

They do not realize that HMRC believe we are all caught. HMRC want every decision both ways. Have their cake and eat it. Applied retrospectively - applied with powers more suitable to NK.

I have tried to change the law twice - once through f4j. Once through NTRT. At least f4j we achieved some measure of practical changes. NTRT spectacularly unsuccessful. Proof that HMRC lied to parliament and no way of rectifying it.

Now I am getting a bit fed up of being nice to you. You are clearly too stupid to listen. Any further responses and I am going to invite you outside(i.e. a thread in general) where I can give you a proper shoeing. I am very depressed (due to HMRC) and could do with an innocent to take it out on.....

I think you are a bit too full of your own hubris (accusing anyone who disagreed with you as stupid), and need to calm down mate (bad use of the word mate). You should use your brillopad to wipe away your acerbic edge.

-- And I know whoever is in power will let the HMRC do whatever they will to increase their revenue, (so long as it doesn't affect them). It doesn't mean a lifelong Conservative voter (who thought he was voting for low tax and free enterprise), cannot express his dissatisfaction in them stooping so low.

TheFaQQer
20th December 2017, 15:13
"the initial evidence suggests that reforms to IR35 in the public sector have been successful in improving compliance."

There is a difference between "improving compliance" and "increased tax revenue".

Even if every contract was assessed as outside, there would still be improved compliance because there is more evidence that people are making the decisions based on the situation. Improved compliance is easy to claim. Increased tax revenue (the main reason to do this) is a different matter.

mattfx
20th December 2017, 17:10
I think you are a bit too full of your own hubris (accusing anyone who disagreed with you as stupid), and need to calm down mate (bad use of the word mate). You should use your brillopad to wipe away your acerbic edge.

-- And I know whoever is in power will let the HMRC do whatever they will to increase their revenue, (so long as it doesn't affect them). It doesn't mean a lifelong Conservative voter (who thought he was voting for low tax and free enterprise), cannot express his dissatisfaction in them stooping so low.

But what Brillo is saying is correct - why on earth do you think it'l make a difference? Tory, Labour, Lib Dem, whoever gets in, will all bow down to HMRC. You'd be just as well going into the ballot box and drawing a phallus on your paper as a protest vote.

The bigger issue is the country has a massive deficit and needs to collect additional tax revenue. HMRC cannot be bothered to go after large enterprises paying minimal amounts of tax in this country because that costs them money, and is too difficult (and all the HMRC permies like their 3pm finish on a Friday and other such cushy permie perks). So instead of going after these large corps, they elect to raise revenue through the only means they know how; via small businesses - easy, defenseless targets. By voting away from Tory you're effectively voting Corbyn in, and he's already said he wants to increase corp tax. So you can kiss your divi thresholds goodbye too, because they will be next.

Unfortunately, a vote for Tory leads to increased taxation, and a vote away from Tory leads to even further increased taxation. It's a lose lose.

Personally, I shall by practicing my best Phallic drawing with my favourite colour of Crayola.

MrMarkyMark
20th December 2017, 17:25
But what Brillo is saying is correct - why on earth do you think it'l make a difference? Tory, Labour, Lib Dem, whoever gets in, will all bow down to HMRC. You'd be just as well going into the ballot box and drawing a phallus on your paper as a protest vote.

The bigger issue is the country has a massive deficit and needs to collect additional tax revenue. HMRC cannot be bothered to go after large enterprises paying minimal amounts of tax in this country because that costs them money, and is too difficult (and all the HMRC permies like their 3pm finish on a Friday and other such cushy permie perks). So instead of going after these large corps, they elect to raise revenue through the only means they know how; via small businesses - easy, defenseless targets. By voting away from Tory you're effectively voting Corbyn in, and he's already said he wants to increase corp tax. So you can kiss your divi thresholds goodbye too, because they will be next.

Unfortunately, a vote for Tory leads to increased taxation, and a vote away from Tory leads to even further increased taxation. It's a lose lose.

Personally, I shall by practicing my best Phallic drawing with my favourite colour of Crayola.

https://cdn.drawception.com/images/panels/2012/4-8/3d5mg4Fnkg-12.png

HTH :D

LondonManc
21st December 2017, 07:52
There is a difference between "improving compliance" and "increased tax revenue".

Even if every contract was assessed as outside, there would still be improved compliance because there is more evidence that people are making the decisions based on the situation. Improved compliance is easy to claim. Increased tax revenue (the main reason to do this) is a different matter.

Well in that case, we've gone from 100% compliance to 100% compliance - all contracts were and are declared inside or outside so your statement makes no sense. They see compliance as "you will comply" and you will be taxed like a permie with none of the benefits; the fact that it increases tax revenue is both the important part and the irrelevant part in their twisted world.

BrilloPad
21st December 2017, 08:06
But what Brillo is saying is correct - why on earth do you think it'l make a difference? Tory, Labour, Lib Dem, whoever gets in, will all bow down to HMRC. You'd be just as well going into the ballot box and drawing a phallus on your paper as a protest vote.

The bigger issue is the country has a massive deficit and needs to collect additional tax revenue. HMRC cannot be bothered to go after large enterprises paying minimal amounts of tax in this country because that costs them money, and is too difficult (and all the HMRC permies like their 3pm finish on a Friday and other such cushy permie perks). So instead of going after these large corps, they elect to raise revenue through the only means they know how; via small businesses - easy, defenseless targets. By voting away from Tory you're effectively voting Corbyn in, and he's already said he wants to increase corp tax. So you can kiss your divi thresholds goodbye too, because they will be next.

Unfortunately, a vote for Tory leads to increased taxation, and a vote away from Tory leads to even further increased taxation. It's a lose lose.

Personally, I shall by practicing my best Phallic drawing with my favourite colour of Crayola.

I agree with you entirely. And I have no better way forward. Very frustrating....

TheFaQQer
21st December 2017, 09:50
Well in that case, we've gone from 100% compliance to 100% compliance - all contracts were and are declared inside or outside so your statement makes no sense.

Did every public sector engagement actually make a status check? How many people actually did that compared with the number of people who weren't making any declaration at all, but were operating as outside? I'd suggest that there were a high number of people working in the public sector who were completely ignorant of IR35, and therefore they were not actually making any declaration at all, they were merely operating in one particular way.

The moment that shifts to someone with (theoretically at least) more knowledge, actively making a determination, then someone could argue that there are more people complying with the legislation - the number of people who are ignorant of IR35 (from the contractor perspective at least!) tails off dramatically, therefore there are more people making checks, therefore more people are compliant.

mattfx
21st December 2017, 10:03
https://cdn.drawception.com/images/panels/2012/4-8/3d5mg4Fnkg-12.png

HTH :D

You got almost all my favourite colours of Crayola in there MarkyMark! :D And who said political / IR35 threads couldn't be funny?! :laugh

LondonManc
21st December 2017, 10:04
Did every public sector engagement actually make a status check? How many people actually did that compared with the number of people who weren't making any declaration at all, but were operating as outside? I'd suggest that there were a high number of people working in the public sector who were completely ignorant of IR35, and therefore they were not actually making any declaration at all, they were merely operating in one particular way.

The moment that shifts to someone with (theoretically at least) more knowledge, actively making a determination, then someone could argue that there are more people complying with the legislation - the number of people who are ignorant of IR35 (from the contractor perspective at least!) tails off dramatically, therefore there are more people making checks, therefore more people are compliant.

I don't disagree with what you're saying but what you're saying still points to each contract being operated one way or another.

I think what's missing in each case is the because clause.

A simple this contract is inside IR35 because we need to exercise full SD&C, there is MoO and they cannot substitute or this contract is outside IR35 because it requires a niche skill set and we are looking to this contractor to tell us what to do; they can similarly bring in an equally experienced business partner to substitute when they are unavailable because we want continuity.

mattfx
21st December 2017, 11:30
I don't disagree with what you're saying but what you're saying still points to each contract being operated one way or another.

I think what's missing in each case is the because clause.

A simple this contract is inside IR35 because we need to exercise full SD&C, there is MoO and they cannot substitute or this contract is outside IR35 because it requires a niche skill set and we are looking to this contractor to tell us what to do; they can similarly bring in an equally experienced business partner to substitute when they are unavailable because we want continuity.

^ This. In my opinion because the legislation around IR35 is so woolly it leaves a lot open to interpretation. If HMRC actually produced a proper set of guidelines that worked (because we all know CEST is tulip) with some actual real life examples of what was inside, and what was outside, I think people wouldn't be so upset about the whole situation.

Maslins
21st December 2017, 12:38
After giving it some thought, I think it will work fairly well, though of course interested in opposing viewpoints.

Yes, there will be quite a few "contractors" who will end up drifting away from the Ltd Co model. They will be ones who in reality always were inside IR35, they just perhaps didn't declare it. When the risk is on the end client, and the end client realises they wouldn't have a hope in hell of demonstrating outside IR35, it'll force some action.

It's in both the contractor & the end client's interest to make things outside IR35 where they can. As some public sector organisations have realised, if they blanketly opt for inside, and other organisations don't, then some contractors will vote with their feet. It's therefore a risk to them to insist on inside IR35.

I therefore think it will encourage end clients to actually care, and work with the contractor to demonstrate outside IR35. Up until this point the end client hasn't cared, so it's HMRC against the contractor, with end client not bothered either way. If the rules are transferred to the private sector, then it'll become HMRC against the contractor and end client teamed up. To my mind that will have a big impact (negatively for HMRC).

It will be a bit of a risk for end clients, but I imagine the likes of QDOS/Abbey Tax etc will get involved, giving suggested contracts to use combined with stipulations on certain working practices to ensure they do/don't do...and an insurance package to back it up.

So end result will maybe be a quarter of contractors drift to umbrella/PAYE, and life actually improves for the remainder. Reason being the contractor no longer has to worry about IR35 looming over their head, the client does. HMRC will consider it a "win", though perhaps a smaller win than they might have hoped.

LondonManc
21st December 2017, 12:43
Maslins,

I think the key to all that is the communication to the end client that life is easier and contractors will generally be better if the role is outside IR35. Without that, you're simply suggesting the version that has been push out on to the public sector.

TheFaQQer
21st December 2017, 13:14
So end result will maybe be a quarter of contractors drift to umbrella/PAYE, and life actually improves for the remainder. Reason being the contractor no longer has to worry about IR35 looming over their head, the client does. HMRC will consider it a "win", though perhaps a smaller win than they might have hoped.

If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

And if you are working through an agency who is not smart enough / geared up enough / prepared to take on the risk that their client might get it wrong and so they refuse to work with "difficult" contractors who will not operate via an umbrella if they believe the role to be outside IR35, then there is a problem for the "legitimate" contractor more than those who should always have been inside IR35.

Some big agencies will be able to take the risk easily, because they have the resources to take that on. Smaller agencies won't be able to do that - and some of the smaller agencies are better to work with than the bigger ones who are more intent on claiming market share via Brylcreem salespeople, which means that the contractor and the client end up with a sub-optimal experience. And where does that leave the contractor (and the client)?

eek
21st December 2017, 13:25
If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

And if you are working through an agency who is not smart enough / geared up enough / prepared to take on the risk that their client might get it wrong and so they refuse to work with "difficult" contractors who will not operate via an umbrella if they believe the role to be outside IR35, then there is a problem for the "legitimate" contractor more than those who should always have been inside IR35.

Some big agencies will be able to take the risk easily, because they have the resources to take that on. Smaller agencies won't be able to do that - and some of the smaller agencies are better to work with than the bigger ones who are more intent on claiming market share via Brylcreem salespeople, which means that the contractor and the client end up with a sub-optimal experience. And where does that leave the contractor (and the client)?

The larger agencies will spend their time educating their clients to ensure contractors don't end up inside IR35. Smaller agencies won't have that option but no doubt third parties such as QDOS will provide similar schemes.

The one big issue you have missing from your comment above is the need to ensure that were a fee payer (agency) to go bankrupt due to a false interpretation the client becomes responsible for the payment and the innocent contractor isn't made liable....

Maslins
21st December 2017, 13:52
Maslins,

I think the key to all that is the communication to the end client that life is easier and contractors will generally be better if the role is outside IR35. Without that, you're simply suggesting the version that has been push out on to the public sector.

For the contractors in demand, then normal economics of supply and demand should deal with it. The contractor prefers outside. Any end clients who are insistent all contractors are inside will suffer, assuming other end clients aren't so restrictive. The public sector has seen this to an extent, but there's far more choice in the private sector.

meanttobeworking
21st December 2017, 20:00
Regarding insurance, is it possible that QDOS and co can offer insurance that the contractor takes out that lets them indemnify the end client? I’m not sure if you can take insurance to cover someone else’s loss/liability. Just trying to find a way for contractors to make it a no brainer for clients to evaluate things fairly rather than go for a cautious inside assessment.

Acme Thunderer
22nd December 2017, 00:06
Regarding insurance, is it possible that QDOS and co can offer insurance that the contractor takes out that lets them indemnify the end client? I’m not sure if you can take insurance to cover someone else’s loss/liability. Just trying to find a way for contractors to make it a no brainer for clients to evaluate things fairly rather than go for a cautious inside assessment.

If an end client has lots of contractors in similar roles and HMRC gets one on being inside IR35 then HMRC could easily argue the rest are also caught, after all they are likely to have the same end client to agency contract terms/working practices.

Don't see QDOS covering that liability.

BrilloPad
22nd December 2017, 09:18
If an end client has lots of contractors in similar roles and HMRC gets one on being inside IR35 then HMRC could easily argue the rest are also caught, after all they are likely to have the same end client to agency contract terms/working practices.

Don't see QDOS covering that liability.

Neither can I.

The HMRC idea is to bully employers into not offering contract roles.

meanttobeworking
22nd December 2017, 09:25
Maybe HMRC should offer their own insurance policy, taking £300 a year from each contractor should increase their coffers nicely, and no need to do any enquiries as they’d only have to pay the bill themselves. Any any similarity to paying mafia protection money would be entirely coincidental :/

WordIsBond
22nd December 2017, 10:03
If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

This is one of the glorious stupidities that only government could devise -- the end client makes the determination but the liability falls on someone else.

BrilloPad
22nd December 2017, 10:15
This is one of the glorious stupidities that only government could devise -- the end client makes the determination but the liability falls on someone else.

HMRC devised it. They "won" Rangers but actually lost as liabilty falls on employer. So now they are trying to retrospectively change the rules so anyone HMRC choose is responsible.

Government issue is listening to everything HMRC say.

And today Government claimed they are ready for a Russia cyber attack. IT contractors are ready to fight the enemy. But its not Russia. Its HMRC....

washed up contractor
22nd December 2017, 11:32
The larger agencies will spend their time educating their clients to ensure contractors don't end up inside IR35. Smaller agencies won't have that option but no doubt third parties such as QDOS will provide similar schemes.

Hahaha, yeah, sure the' big agencies' will educate their clients! Where have you been hiding since 2001!?

I dont know of a single agency, big or otherwise, who have educated their clients towards contractors in any respect never mind IR35. Good luck with that particular piece of blindness.

BrilloPad
22nd December 2017, 11:35
Hahaha, yeah, sure the' big agencies' will educate their clients! Where have you been hiding since 2001!?

I dont know of a single agency, big or otherwise, who have educated their clients towards contractors in any respect never mind IR35. Good luck with that particular piece of blindness.

Where it earns the agents money, they will do whatever is necessary.

These HMRC reforms could kill off contract agencies entirely. I don't think they earn as mupart from where they earn money, I do agree with you.

PurpleGorilla
2nd January 2018, 11:45
Yawn...

Say IR35 extension takes place in 2 years.

Is it fair that someone paying the same tax, has no holiday pay, pension, training, redundancy, job security and has to work longer Hours.....?

You actually pay MORE tax. How many employees pay there own Employers NI?