ir35 in private sector

[SueEllen]

And the answer is, No.

"I have spoken with the insurer and they have told me that if you were to instigate and investigation this would not be covered by your IPSE membership. This is because this wouldn’t be treated as a routine check / enquiry from HMRC and therefore there effectively isn’t an insured event under the terms of the policy.

If you did want to instigate an enquiry Abbey Tax would be able to help you but this would be on a fee paying basis. If you have any further queries please let me know."

Which makes me wonder if the IPSE insurance would then become redundant from 2019, or from whatever period of time HMRC feel they can morally no longer instigate an investigation...??

Why do you want to cause an investigation? Are you fecking nuts?

[eek]

Why do you want to cause an investigation? Are you fecking nuts?

Simes argument is that once the private sector IR35 changes are implemented the contractor will be deemed inside and he / she will be able to reclaim the tax incorrectly deducted by contesting the decision afterwards.

Now there are about to be a lot of employment tribunals about inside IR35 decisions kicking off. But they actually have very little to do with IR35 and a lot more to do with agencies advertising inside IR35 rates as £150 a day when that £150 a day was before Employers NI and umbrella company costs (note I'm purposefully using the rates for teachers as that is an areas the unions are focussed on).

So I think I know why he's talking about initiating a case himself but the grounds people are currently using are not the ones I think he thinks they are.

As an aside this is one reason why Contractor Calculator appear to be more vocal than IPSE at the moment. They've found a suitable means of attack which may make October onwards very painful for many agencies and public sector organisations.

[malvolio]

Indeed.

For any of those having trouble, insert the words 'membership benefit' between 'IPSE' and 'Insurance' and I think this should cover it.

Granted all else you say, I doubt there is any misunderstanding there at all. Mine is just querying the efficacy after 2019, or thereabouts.

If all IPSE did was support IR35 cases you might, just barely, have a point. But they don't.

HTH.

[malvolio]

Simes argument is that once the private sector IR35 changes are implemented the contractor will be deemed inside and he / she will be able to reclaim the tax incorrectly deducted by contesting the decision afterwards.

Now there are about to be a lot of employment tribunals about inside IR35 decisions kicking off. But they actually have very little to do with IR35 and a lot more to do with agencies advertising inside IR35 rates as £150 a day when that £150 a day was before Employers NI and umbrella company costs (note I'm purposefully using the rates for teachers as that is an areas the unions are focussed on).

So I think I know why he's talking about initiating a case himself but the grounds people are currently using are not the ones I think he thinks they are.

As an aside this is one reason why Contractor Calculator appear to be more vocal than IPSE at the moment. They've found a suitable means of attack which may make October onwards very painful for many agencies and public sector organisations.

I think that's a reasonable point, tbh. However since he hasn't explained that here and presumably not to IPSE either, it's not surprising he's getting the wrong answer.

IPSE will support off-the-wall cases that further the cause of us contractors (Arctic had the potential to kill them off and was nothing to do with IR35, for example) but they have to have the reasons why they should properly and clearly stated.

[WordIsBond]

I think that's a reasonable point, tbh. However since he hasn't explained that here and presumably not to IPSE either, it's not surprising he's getting the wrong answer.

He explained it here entirely adequately. You presumably missed it because of a well-known-by-most-of-us tendency to give a knee-jerk response to anything that you perceive to be negative towards IPSE. In this case it was entirely wasted because he wasn't trying to be negative, he was just asking what the benefits would cover.

Here are some of his comments, I've added emphasis.

Thing is, IR35 insurance is for if you get investigated by the HMRC. An HMRC lead action.

Correct me if I am wrong, but following private sector reform, what is the likelihood that IR35 investigation is instigated by the contractor to recoup already paid taxes? Does IR35 insurance cover that?

Perhaps a question to go to IPSE and membership perks.

The bold is exactly what eek said he was talking about and which you said he hadn't explained. The italic makes clear that he well understands that they aren't selling insurance but that is a membership perk, something you felt necessary to correct him on.

Thus inspired by my own post above, I have popped the question to IPSE to see if their membership would ever be tailored towards contractors instigating the IR35 actions and the provision of legal support thereafter...

That makes clear that he is not even talking about the current membership benefits, he is asking if there is any plan to make a change in future to accommodate this Brave New World (TM) by supporting contractors who wish to challenge an Inside decision by a client.

This does indeed sound very clear to anyone bothered to read what he's said.

And the answer is, No.

"I have spoken with the insurer and they have told me that if you were to instigate and investigation this would not be covered by your IPSE membership. This is because this wouldn’t be treated as a routine check / enquiry from HMRC and therefore there effectively isn’t an insured event under the terms of the policy.

If you did want to instigate an enquiry Abbey Tax would be able to help you but this would be on a fee paying basis. If you have any further queries please let me know."

Which makes me wonder if the IPSE insurance would then become redundant from 2019, or from whatever period of time HMRC feel they can morally no longer instigate an investigation...??

And in the context of his other posts, he is not asking if IPSE MEMBERSHIP would be redundant but whether this particular benefit of membership would be redundant.

And instead of knee-jerk reactions on forums, maybe you should go back to your friends at IPSE and raise his point with them. Because if next year brings a situation where the fee-payer is liable, the whole world changes. The people who will need IR35 insurance of some kind will be agents and clients. The only IR35 insurance contractors will need is the kind he is asking about -- to cover a claim for wrongly deducted taxes.

If IPSE thinks that they won't lose much of their membership in that world if their benefits offering doesn't change, if they don't think that IR35 protection is the main driver (or at least a significant part) of their membership roles, then they can go on as before. If they actually want to consider changing their membership benefits to fit the new world that HMRC is set on giving us, though, they need to think about the things simes is asking.

The current IR35 membership benefit will really only be useful, in that new world, to those of us with foreign clients. And HMRC is unlikely to pursue IR35 in the cases of foreign clients because the payoff is so low -- no employer NI applies. After setting off CT and dividend tax vs IT and employee NI, it's close enough to a wash that it will gain them almost nothing.

[simes]

If they actually want to consider changing their membership benefits to fit the new world that HMRC is set on giving us, though, they need to think about the things simes is asking.

Perhaps I wasn't clear enough in the descriptions. And where I have failed, you have certainly added the colour and the context. Thanks.

As to your quote, I did ask this very same of them with my thanks to their response, but I won't be chasing anything down. I reckon, (if indeed They understood my points - perhaps this is now open to question bearing in mind the above (insert smilie to denote joke)) this would take some consideration to formulate.

Time will tell. Brave New World indeed.

[malvolio]

As far as I can tell the IPSE package is continually changing in line with the world we all live in, you can even get an inside-IR35 contract template now. And even by HMRC's numbers, well over 50% of contracts will remain outside IR35 in reality (if not by decree) so the tax investigation cover will still be a key part of the package.

Yes, the protection environment will change is the private sector changes occur and if the private sector doesn't implement some kind of avoidance to minimise their labilities and if a lot of other things. But I will take a bet that the agencies won't be affected; contract clauses about transfer of liability to the worker will still be signed by people who haven't tried to keep up for example.


As for not mentioning NIC deductions in advertised rates and similar dubious practices, that is about mis-selling rather than taxation and is already covered by current legislation.

[jamesbrown]

contract clauses about transfer of liability to the worker

IMHO, this is unlikely to work for both contract law reasons and commercial reasons. The contract will still be between the agency and the worker's company, and that company is unlikely to have the funds, even if the agency could make an indemnity clause stick. The agency will see this as a real and nontransferable risk, and a very big risk if they are serving large clients with a large number of contractors that are doing the same or similar things (because these will be the cases that are compliance-checked first). Sensible agencies will seek to stretch out any grey cases into more black-and-white cases and ensure that outside contractors are truly outside (but this will be a much smaller number).

[radish2008]

I think one thing we are not taking into account is resistance from business. My current client employees 7k contractors in the UK - I think they might kick up a fuss if public sector IR35 rules were forced on them. IF every bank and large employer did the same then the gov would back down. That sort of noise fell of deaf ears in the public sector but the private sector is different.

plus IPSE is more pointless now than it has ever been. It failed in it's primary function and should hang up it's boots. IR35 safe clauses have been in IPSE contracts forever as well, even when it was the PCG.

[jamesbrown]

I think one thing we are not taking into account is resistance from business. My current client employees 7k contractors in the UK - I think they might kick up a fuss if public sector IR35 rules were forced on them. IF every bank and large employer did the same then the gov would back down. That sort of noise fell of deaf ears in the public sector but the private sector is different.

HMG does have the memory of a gnat, but I'm assuming that even they are aware of what happened w/ the original plans for IR35 in 1999, i.e. exactly as you describe above, and they are prepared to face it down this time.