HMRC decision tool: doubts about the selected answers, results, implications, ...

[jamesbrown]

And he was making about making recommendations where/to whom? ie, could this ESS tool still change the result when answering the same questions at some point in the next few weeks?

Nah, this is the Taylor review, due over the summer. It has nothing to do with the ESS directly or, indeed, HMG policy in the immediate future, but they've been pushing this as the precursor to any broad reform.

Do you guys know what they mean by 'Other expenses – including significant travel and subsistence expenses', what could that be?

Exactly what it says, i.e. any T&S not related to commuting, such as occasional travel to client to sites (if it's "significant") and that isn't billed to the client. I can't really see this applying to many contractors. I have overseas clients, so I guess that might be a concrete example. However, I'd answer no to this because I bill my clients for long-distance T&S (being in the private sector, I wouldn't use the ESS at all though because it's bunkum).

[mickael28]

Exactly what it says, i.e. any T&S not related to commuting, such as occasional travel to client to sites (if it's "significant") and that isn't billed to the client. I can't really see this applying to many contractors. I have overseas clients, so I guess that might be a concrete example. However, I'd answer no to this because I bill my clients for long-distance T&S (being in the private sector, I wouldn't use the ESS at all though because it's bunkum).

Good example, I couldn't think of anything that could be so significant that one could answer yes to that question, however, that's what our PS client choose (yes, to that question) and I think that that's the reason why our ESS results returned outside, if I change that answer to No, then the result is that I am inside when keeping the rest of the questions intact to how client see the contract... I'll have to ask them next week what made them tick that box and see.

[malvolio]

Looking at his history, I'm not optimistic that Taylor will move us any further forward. He is rather more likely to be suggesting more employee benefits for self-employed workers than recognise that we are a separate group and warrant separate treatment.

[jamesbrown]

Good example, I couldn't think of anything that could be so significant that one could answer yes to that question, however, that's what our PS client choose (yes, to that question) and I think that that's the reason why our ESS results returned outside, if I change that answer to No, then the result is that I am inside when keeping the rest of the questions intact to how client see the contract... I'll have to ask them next week what made them tick that box and see.

Yeah, I think you need to ask them (for your own peace of mind; of course, there's probably an argument to not bother, because the liability rests with them, but you don't want them backtracking after they realise their mistake). As I said, this question is given an inordinate weighting, but the guidance is strongly directed away from a typical contractor. For example, I WFH and spend a significant amount on workstations for number crunching, but this is excluded unless it's tied to a specific client. The whole thing is a load of pants w/r to case law and I wouldn't, therefore, trust it either way.

[jamesbrown]

Looking at his history, I'm not optimistic that Taylor will move us any further forward. He is rather more likely to be suggesting more employee benefits for self-employed workers than recognise that we are a separate group and warrant separate treatment.

Agreed, he was pushing that line too. IMHO Taylor is a New Liebour shill that doesn't comprehend self-employment as a legitimate choice, but one of: 1) a tax dodge operated by highly paid contractors; or 2) something foisted upon the proletariat who really just want employment rights. The idea that someone could choose flexibility over (largely worthless) employment rights is anathema to Taylor. Thus, if the self-employed now have a pension entitlement, they must welcomed back into the comfort blanket of proper employment, where they should've been all along.

[Mark2009]

Are you interpreting the results correctly? If you 'fail' the substitution test, it moves on to SDC. Saying that you can be moved from task to task is a definite inside indicator on the tool. What are you answering to the other questions, and what does the final result screen actually say?

I took the test today and HMRC could not give me the answer If you have a good relationship with the agency you can send another another worker to take your place.

[mickael28]

Yeah, I think you need to ask them (for your own peace of mind; of course, there's probably an argument to not bother, because the liability rests with them, but you don't want them backtracking after they realise their mistake). As I said, this question is given an inordinate weighting, but the guidance is strongly directed away from a typical contractor. For example, I WFH and spend a significant amount on workstations for number crunching, but this is excluded unless it's tied to a specific client. The whole thing is a load of pants w/r to case law and I wouldn't, therefore, trust it either way.

That's how some people are thinking... I was thinking at the beginning to give my notice and look for another contract, which could imply being 2 months outside of work (so that's a substantial loss). Now that I am understanding that the liability is with them anyway, I think it might be a smartest move to start looking for a new role in parallel but accepting the extension anyway, so that if it takes me 2m to get a new role, I'm at least still invoicing them.

Do you see anything that could affect me adversely in the future if I go down this route (rather than just quitting if I don't fully understand their reasons, even though they think we are out)? I don't want to be missing something obvious that I cannot think of at the moment.

I was thinking before that maybe my previous contracts could be affected by what the client is answering in this tool, but it seems that even if previous contracts were similar they were with different clients and should be investigated individually anyway, so it seems it is not as bad as I was thinking originally...

[jamesbrown]

Do you see anything that could affect me adversely in the future if I go down this route (rather than just quitting if I don't fully understand their reasons, even though they think we are out)? I don't want to be missing something obvious that I cannot think of at the moment.

Well, it's certainly possible that a move from an outside position to an inside position on the same contract, without a change in WP, could increase the risk of investigation, and it's difficult to believe that HMRC would not use this information to assist in prioritising cases. However, your client is currently stating that you're outside.

It's certainly possible that IR35 status can change mid-contract (e.g. JLJ). As you say, they'd still need to demonstrate that the contract was inside at any particular time.

Bottom line, what you suggest sounds sensible to me, i.e. continue with the extension while looking for alternatives. Had your client called this inside, I would've suggested that you move immediately. Their logic may be flawed in assessing the contract as outside, but the liability ultimately rests with them.

[mickael28]

Well, it's certainly possible that a move from an outside position to an inside position on the same contract, without a change in WP, could increase the risk of investigation, and it's difficult to believe that HMRC would not use this information to assist in prioritising cases. However, your client is currently stating that you're outside.

It's certainly possible that IR35 status can change mid-contract (e.g. JLJ). As you say, they'd still need to demonstrate that the contract was inside at any particular time.

Bottom line, what you suggest sounds sensible to me, i.e. continue with the extension while looking for alternatives. Had your client called this inside, I would've suggested that you move immediately. Their logic may be flawed in assessing the contract as outside, but the liability ultimately rests with them.

Thanks for reading and all the help mate, much appreciated!, sometimes it's more difficult to think clearly when it affects you so closely...

[MonkeyWorld]

In terms of expenses incurred without being able to claim them back from the client, does company insurances count ? An employee doesn't have them and isn't forced to have them, but most contractors are, particularly where its explicitly stated in their contracts.