How do you know if your contract is public sector

[BoredBloke]

Indeed but it's nice to see a new influx of contractors who are seeing the problem earlier than April. They need to spread the word within their teams about the issues faced; similarly Andy needs to get the discussion up and running across agencies - there's money to be made for all of us if rates have to increase.

I can't see the rates being increased across the board. If you are a 400 a day contractor then you're going to need an increase of about 100 a day to ensue that you come out with the same as before. Then factor in the loss of any T&S expenses and the changes to flat rate vat and you're going to have a lot of contractors where it's just not a viable option.

[DaveB]

I can't see the rates being increased across the board. If you are a 400 a day contractor then you're going to need an increase of about 100 a day to ensue that you come out with the same as before. Then factor in the loss of any T&S expenses and the changes to flat rate vat and you're going to have a lot of contractors where it's just not a viable option.

More than that. Realistically you are looking at a 75-80% uplift on the day rate to account for the tax and loss of expenses. If you've already had income up to the threshold then anything paid under a PS contract is going to go straight into the upper rate tax band.

[jamesbrown]

Excuse my poor understanding, isn't it the responsibility of the public sector org to determine the status - or is that only when contracting direct to them?

Assuming the above was fine - consultancy delivering functionality not acting as an agency to put bums on seats, aren't there going to be gray areas?

Take somewhere like DVLA. SME win the gig to deliver functionality. SME need to recruit to deliver that functionality - work to be performed on client site. SME not bound by FoI. DVLA require any consultants / SME staff / contractors at SME on site to have active SC - wouldn't DVLA then be transferring / applying for the SC in that instance, thus would consider that SME to be acting as an agent due to that?

My head hurts, which I suspect was the rationale for the changes.

Sure, it's the responsibility of the PS client to determine status. That was clarified in the draft Finance Bill on 5 Dec.

I think you need to separate out the FOI part from the rest. The FOI is used to determine whether an organisation is within the scope of the rules. It isn't about the intermediary. In general, this is fairly clear, although some limited companies may be within scope (e.g. HS2 Ltd) because they are wholly owned by an FOI agency. Given that the end client is an FOI agency, the next and completely separate issue is how it applies to individual contractors, depending on how they deliver for the PS. This is where there's even more grey. For contractors that are part of a private sector company that is contracted to fully deliver a public function, as opposed to supplying labour for a PS client, the rules don't apply. However, this determination isn't made for your intermediary That would be nice. While somewhat grey, the best way to think about this will be as follows: if your client is a large company that delivers multiple public and private functions, as opposed to supplying labour to PS clients, and you work on the client site to help deliver a public function, you're probably fine. Otherwise, you're probably not.

[LondonManc]

Sure, it's the responsibility of the PS client to determine status. That was clarified in the draft Finance Bill on 5 Dec.

I think you need to separate out the FOI part from the rest. The FOI is used to determine whether an organisation is within the scope of the rules. It isn't about the intermediary. In general, this is fairly clear, although some limited companies may be within scope (e.g. HS2 Ltd) because they are wholly owned by an FOI agency. Given that the end client is an FOI agency, the next and completely separate issue is how it applies to individual contractors, depending on how they deliver for the PS. This is where there's even more grey. For contractors that are part of a private sector company that is contracted to fully deliver a public function, as opposed to supplying labour for a PS client, the rules don't apply. However, this determination isn't made for your intermediary That would be nice. While somewhat grey, the best way to think about this will be as follows: if your client is a large company that delivers multiple public and private functions, as opposed to supplying labour to PS clients, and you work on the client site to help deliver a public function, you're probably fine. Otherwise, you're probably not.

[perplexed]

Sure, it's the responsibility of the PS client to determine status. That was clarified in the draft Finance Bill on 5 Dec.

I think you need to separate out the FOI part from the rest. The FOI is used to determine whether an organisation is within the scope of the rules. It isn't about the intermediary. In general, this is fairly clear, although some limited companies may be within scope (e.g. HS2 Ltd) because they are wholly owned by an FOI agency. Given that the end client is an FOI agency, the next and completely separate issue is how it applies to individual contractors, depending on how they deliver for the PS. This is where there's even more grey. For contractors that are part of a private sector company that is contracted to fully deliver a public function, as opposed to supplying labour for a PS client, the rules don't apply. However, this determination isn't made for your intermediary That would be nice. While somewhat grey, the best way to think about this will be as follows: if your client is a large company that delivers multiple public and private functions, as opposed to supplying labour to PS clients, and you work on the client site to help deliver a public function, you're probably fine. Otherwise, you're probably not.

Well, avoiding PS like the plague at the moment.

I get numerous calls a day about one public sector org, where I used to work before. They've been advertising for contractors working direct, SME's there are getting the gig then trying to recruit contractors ( and mostly failing ). Been going on from August.

Had four calls today about another PS role, direct with the PS entity. Tempting as it's literally a 5 minute walk but holding my ground. Last agent asked why I was avoiding PS roles. gave my reasons, he tried to convince me it would be firmly outside IR35.

"They've not got any free permies to do the work, no SME involved to do the work so they've determined it's a contract role".

Didn't really convince me tbh.

[perplexed]

@LondonManc

It's interesting isn't it.

That can be interpreted numerous ways. For example, does it mean SME engaged to manage all IT related projects? Does it mean self contained "sub" projects, ie SME contracted to provide a reporting sub system which PS permies integrate into the PS orgs systems?

If us intellectuals are quibbling, think the answer is going to be PS are automatically going to say "all contractors are to be inside IR35". Until they realise that bit of work they envisaged contractors getting done for them is actually pretty damn vital oh and overdue, where the mantra will become "oh *****, all contractors are outside IR35 honest".

[jamesbrown]

Well, avoiding PS like the plague at the moment.

Good choice.

[jamesbrown]

@LondonManc

It's interesting isn't it.

That can be interpreted numerous ways. For example, does it mean SME engaged to manage all IT related projects? Does it mean self contained "sub" projects, ie SME contracted to provide a reporting sub system which PS permies integrate into the PS orgs systems?

If us intellectuals are quibbling, think the answer is going to be PS are automatically going to say "all contractors are to be inside IR35". Until they realise that bit of work they envisaged contractors getting done for them is actually pretty damn vital oh and overdue, where the mantra will become "oh *****, all contractors are outside IR35 honest".

Remember, it's the PS client that is responsible for determining whether the rules apply and then to make a judgement on status. So, ignoring all the theory for a moment, the only way to be "sure" is to ask the PS client (via your client if not direct). I guess the way they expect this to work, in practice, is to advertise explicitly whether a particular contract is inside/outside. In that case, a lot of this mind-bending complexity may disappear in time, at least for the contractor. But not in a way that leaves very much PS work outside of IR35.

[LondonManc]

@LondonManc

It's interesting isn't it.

That can be interpreted numerous ways. For example, does it mean SME engaged to manage all IT related projects? Does it mean self contained "sub" projects, ie SME contracted to provide a reporting sub system which PS permies integrate into the PS orgs systems?

If us intellectuals are quibbling, think the answer is going to be PS are automatically going to say "all contractors are to be inside IR35". Until they realise that bit of work they envisaged contractors getting done for them is actually pretty damn vital oh and overdue, where the mantra will become "oh *****, all contractors are outside IR35 honest".

The key thing to this is how much risk is involved in the appropriate person determining contracts are inside and outside IR35. It also means that someone in the chain actually has to take responsibility, potentially knowing that putting a contract inside will exclude people actually capable of doing the work. As a specialist, you should naturally be outside IMHO. If you're project office, then you're inside unless it's bleeding edge but potentially project office should be FTC anyway.

[perplexed]

The key thing to this is how much risk is involved in the appropriate person determining contracts are inside and outside IR35. It also means that someone in the chain actually has to take responsibility, potentially knowing that putting a contract inside will exclude people actually capable of doing the work. As a specialist, you should naturally be outside IMHO. If you're project office, then you're inside unless it's bleeding edge but potentially project office should be FTC anyway.

Public sector being naturally risk averse, I'd suggest the default position will be "inside". Unless PMs point out the brown runny stuff is going to hit the fan imminently unless they get contractors "outside IR35" in. Equally, those making the decisions are generally bean counters. Capability to do the work? Pah, being incapable will make people fit in perfectly!