RBS, contractors and IR35

[JohntheBike]

Let's say RBS put all contractors 'inside' from April 1st and a number just suck it up carrying out same role. Does that give HMRC licence to investigate and claw back all the NICs etc they haven't been paying for how long they've been outside ir35 with RBS with in that role?

HMRC doesn't need any licence or respect for the law to do anything it wants to do.

[SussexSeagull]

absolutely, we'll have a better idea after the 11th of July when HMG replies to the consultation.

Even then the devil will be in the implementation and enforcement.

[northernladuk]

Let's say RBS put all contractors 'inside' from April 1st and a number just suck it up carrying out same role. Does that give HMRC licence to investigate and claw back all the NICs etc they haven't been paying for how long they've been outside ir35 with RBS with in that role?

No it doesn't. They can do that right now if they want to. If they want to try prove the role was inside all along they will have to open an investigation under the old rules and win in court just as they have to do now. Past history shows they aren't very good at winning. The change from outside to inside raises a flag that the role you were doing 'might' be inside all along but in no way is it proof it is.

There was a lot of fear about this when the Public Sector changes hit but many people still switched (many with a rate uplift to soften the blow) and nothing has happened to date.

Understand IR35, make sure you've done due diligence at the beginning of the gig and continue to make sure you are outside then you are ahead of the game. Shouldn't be any issues if your role is deemed inside later.

[SussexSeagull]

I don't think clients will seek to put a lot of BoS contractors "inside" IR35 per se (partly for the reasons alluded to above, because it doesn't eliminate the risk of miss-classification either way). Rather, they will seek to push them to umbrellas or FTCs or some other temp type employment contract.

On face value this would seem the most straightforward way of doing it. Problem is with the reduction in take home money it is going to limit the talent available to them.

[webberg]

There was a lot of fear about this when the Public Sector changes hit but many people still switched (many with a rate uplift to soften the blow) and nothing has happened to date.

.

HMM.

We are seeing HMRC making enquiries now which start with "in 16/17 you were a contractor but in 17/18 you were classed as an employee. Please explain what differences there were between the roles in those years"

Often the answer is none.

I would therefore say that things are happening and there is every indication of acceleration in that process.

[BrilloPad]

HMRC doesn't need any licence or respect for the law to do anything it wants to do.

There is the odd court win. You need deep pockets and many years. And a lot of luck.

[webberg]

On face value this would seem the most straightforward way of doing it. Problem is with the reduction in take home money it is going to limit the talent available to them.

I suspect you are correct and that the end clients will be doing something simple and honest, because that generates a risk they can understand and deal with.

Where life will become interesting is when an intermediary or a promoter says to a contractor, "here's something that looks like an umbrella or otherwise full PAYE operation - to the fee payer and/or end client - but underneath it's doing something else".

That "something else" might range from our old friends "loans" to a range of schemes involving shares/options/strips etc.

Whilst HMRC consider that the modern legislation on disguised remuneration is watertight, it almost certainly is not.

We will also see the rise of what I call "Group Service Companies" which are basically groups of contractors working on similar projects and/or the same client. I know that these have a number of practical and legal difficulties, but none of them are insoluble and if the difference between take home rates is enough, they will be used.

[northernladuk]

HMM.

We are seeing HMRC making enquiries now which start with "in 16/17 you were a contractor but in 17/18 you were classed as an employee. Please explain what differences there were between the roles in those years"

Often the answer is none.

I would therefore say that things are happening and there is every indication of acceleration in that process.

We need to see the evidence of this. ComplianceLady hinted at this in a post I should have picked up on. If this were the case we should know about it and I would have thought it would have been more news worthy.

If it is true then they can ask, you prove it's outside at the time, point out the client has changed the contract/working practices now so the role has changed and they can go whistle. They still have to prove the previous gig was outside. Once the facts are presented they should go away. They've made such a poor job of most of the cases they've taken most people can't see that as a threat. They only split wins they have are down to some really poor mistakes that are very well documented so your average contractor on a sub, lets say, 2 year gig should be in no worse position if their role changed to inside.

If these enquiries have gone to that set of people that have been 2,4 or 5 years in a Public Sector gig and they switched inside and they carried on then HMRC can fill their boots. Keep busy with that lot and leave the rest of us alone. We've always said some people are clearly inside and will be found out. I don't think that sets any precedence for the majority of us.

As I say though, until we see some some stats from QDOS or the like and the response and outcome of these questions I'm still skeptical.

[WordIsBond]

I think JTB has been hacked.

No, it's just that he was interacting with me and so blown away by the brilliance and force of my arguments. Usually he's interacting with, er, someone else.

[WordIsBond]

Rather, they will seek to push them to umbrellas or FTCs or some other temp type employment contract.

It eliminates both risks for them, right? And we'll find out if contractors are going to be willing to hold out for enough compensation to make up for the hit. In my view, unlikely.