Dave Chaplin's anti IR35 campaign

[JohntheBike]

I wish Mr Chaplin the best of luck.

But I agree I think the changes are inevitable - I hope I am wrong. Already several banks have rolled over.

Maybe some companiesw will take up QDOS insurance?

yes, it looks that way.

[Invisiblehand]

I wish Mr Chaplin the best of luck.

As do I.

[webberg]

I've not read all of the thread but enough to get a flavour. For what it's worth the following are a collection of thoughts around this matter.

First, I applaud Dave and Contractor Calculator for creating and pressing a campaign in this area. (He had an article published in Taxation this week to support. No link as it's behind a paywall). I know from my own experience that this is a thankless task in which trying to align the interests of individuals to a common goal in this space is difficult. It's made more so by the fact that there are many organisations and individuals out there who, for reasons of their own, have an agenda that does not always coincide with the best interests of contractors. Some of those who make a living in this space but are not contractors also seem to be aggressively hostile to these sort of campaigns - again for reasons that escape me.

Second, the reform of IR35 is, in my opinion, inevitable. HMG/HMT/HMRC do not care a fig about what it will do to UK Plc. All they care about is a rise in tax receipts. The individual harm and commercial damage that is the flip side of a "maximise revenue" policy from the above, is hidden from Parliament or obfuscated or ignored. This is a policy that has little or no supporting evidence justifying it but which WILL collect more tax, more quickly and at less cost. That is the be all and end all of the introduction of the reform.

Third, the reform will lead to (again in my opinion) two major changes in the sector, one good and one bad.

The good is that a lot of the nonsense and myths that have grown up around the industry will be brutally exposed and will inevitably disappear. These include matters such as the reliance upon a PSC or a contract to "prove" that you are outside IR35; games with arithmetic in illustrations; a focus on the job being done to determine status, rather than a contract which may or may not be accurate; transparency from agencies and intermediaries as to costs; more certainty that an outside IR35 job is really that.

The bad is that with the end client being responsible for assessment and the agency accountable for tax in the event the decision is wrong, there is an imperative upon those parties to collude and this will be at the cost of individuals who will find all sorts of indemnities and guarantees being demanded. It also brings complexity and that is a recipe for the unscrupulous to start selling tax avoidance again. Each time a new tax law is introduced there is a period in which the disruption permits tax schemes to prosper and we know that HMRC has been and is inept at finding them and taking effective action in any reasonable time.

Fourth, my hope is that the reform will lead to more transparency as to what is on offer from umbrellas, agencies, accountants, advisers and other hangers on. I count myself in those categories. It should be now but is more important for the future that any contractor signing up to a job knows exactly what they have, not just for the job (inside/outside) but also the risks of a later enquiry, later claim from end client/agency that they "got it wrong".

Fifth, the firms offering IR35 services will be narrowed to just those who have credibility, expertise and strategy. Insuring IR35 risk has been an actuaries dream so far. The chance of a status enquiry for the years from 2000 to perhaps 2015 have been very low, backed by the fact that HMRC loses most of the cases it puts up. (How many enquiries result in a settlement pre tribunal, I don't know). Now though HMRC has access to information previously unavailable and a trigger date (April 2017) in which identifying those who were contractors pre that date and employee after, has become easier and on a huge scale. The risk of IR 35 status enquiry has multiplied massively. The advent of the reform in April 2020 will create another exponential increase in risk.

I would hope and expect that those offering IR35 advice and services, including insurance (either for costs of enquiry or the tax that might be due or both), are acutely aware of this and will be pricing their products to reflect it. I fear however that we will see the rise of firms who have not done their sums but who will take a fee and make some token defence measures before folding.

Those firms good at their job will survive but will be more expensive. Going for the cheapest options here will be a false economy.

Lastly, for now, we will see the rise of new ways of working. Mention has been made above of some of them. Delivery of services and not individuals: milestone contracts; SOW contracts; agencies reinventing themselves as service providers. Some of these will work, some will not. It is however certain that all will attract HMRC attention.

There are also more "exotic" variations to be found waiting in the wings. Again some will work better than others.

What is certain here is that all parties, contractors, agencies, end clients, recruiters, umbrellas, advisers, will be required to up their game. No longer will hiding in a herd be enough protection and the weak will be identified and left behind.

[malvolio]

Well said, and I totally agree with the above.

[ladymuck]

...
lots of sensible stuff
...

That all makes excellent sense. I was talking to someone recently about the changes and reiterated that my view has always been that IR35 wouldn't be a problem if:
(a) clients were honest - mainly with themselves - about what type(s) of resources they need to meet their BAU and project objectives;
(b) clients engage honestly with the workforce selecting appropriate contracts for appropriate resource types;
(c) the freelancing/independent workforce are honest - mainly with themselves - about whether they truly are working as a business on their own account or should be engaged in a different manner.

[webberg]

And there you have the equation in a few words.

It's about being honest with yourself and all the other parties in the chain, including HMRC.

This should not be about "sides" and should not be seen as contractors vs HMRC.

Whilst HMRC's role(s) in the historic enquiries and reform of IR35 is hardly a glittering display of probity, common sense and transparency, equally end clients, agencies, intermediaries and contractors are not exactly blameless. I would add here many advisers who have allowed their objectivity to be compromised.

[RobScott]

And there you have the equation in a few words.

It's about being honest with yourself and all the other parties in the chain, including HMRC.

This should not be about "sides" and should not be seen as contractors vs HMRC.

Whilst HMRC's role(s) in the historic enquiries and reform of IR35 is hardly a glittering display of probity, common sense and transparency, equally end clients, agencies, intermediaries and contractors are not exactly blameless. I would add here many advisers who have allowed their objectivity to be compromised.

http://financeandtax.decisions.tribu...65/TC07202.pdf

GEORGE MANTIDES LTD Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS

Will this be a precedent ? if applied to IT contractors, most of them will fall INSIDE IR35!

[NCOTBAC]

I don't see why it would? Care to elaborate?

[webberg]

http://financeandtax.decisions.tribu...65/TC07202.pdf

GEORGE MANTIDES LTD Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY’S Respondents
REVENUE & CUSTOMS

Will this be a precedent ? if applied to IT contractors, most of them will fall INSIDE IR35!

IR35 cases are appearing more and mre often.

One will not set a precedent. A consistent series of wins for HMRC will.

IR35 is very fact specific and applying one case across many situations is very difficult.

[cojak]

And of the 2 contracts reviewed in that case, one was found inside and one outside.

So as a case in itself it's nothing special.