What are your clients doing with IR35 reform?

[cojak]

I don't want to make a new thread but how will subcontracting or agencies work in this. And I get it, this is stupid question I should know the answer too already but whatever...

A person has a contract with a small company. The small company provides teams of consultants to big companies. The person is one of these consultants. The person works with lots of these big companies, but always through the small company and only ever has contracts with the small company.

As the contracts are with a small company, it sounds like so far they will not fall under the new requirements to determine IR35 status. So no change? It is still responsibility of the person?

The small company still has the onus of the new IR35 legislation, the same as agencies.

[genius]

Why did I read in a few places that the new upfront determining of IR status only applied to medium / large companies (50 staff + etc)

[cojak]

I’ve investigated further and you are correct.

The horse’s mouth is here Rules for off-payroll working from April 2020 - GOV.UK

And the official definition of a small company is 50 employees or fewer.

My mistake.

[cojak]

Although I wonder about the word ‘likely’...

[genius]

You should already know the answer to that so, whatever.

If you are trying to invent a solution to get around it then don't bother. Many were suggested and all failed when the changes his the Public Sector.

Don't get carried away letting the tax tail wag the dog. Is it even remotely realistic a small company can do that.

Not trying to invent anything, this is a valid scenario I'm sure quite a few people fall under?

[genius]

Although I wonder about the word ‘likely’...

Speaking of likely, when are we likely to know for sure what the new regs are going to be? Any chance Boris is going to cancel the whole thing?

[headsy]

Speaking of likely, when are we likely to know for sure what the new regs are going to be? Any chance Boris is going to cancel the whole thing?

Any budget coming up in October would be last chance saloon I reckon.

There's lots of contractors who work for a client of mine who are just going to retire end of march if there's an inside determination. Wonder how many of the 170k will do that.

[northernladuk]

Not trying to invent anything, this is a valid scenario I'm sure quite a few people fall under?

I very much doubt there are many contractors in this scenario and there won't be much wiggle room for abuse. A company with 49 employees and 20 contractors is going to come under a lot of scrutiny.
Remember they'll only be exempt from the off payroll rules. Not Ir35. The contractors working for this set up will still have to make their own determination and a gig like this has got to be an Ir35 risk in its own right.

As is any company formed with a few employees (if any) and mainly contractors just to be a micro consultancy to avoid the legislation.

[genius]

I very much doubt there are many contractors in this scenario and there won't be much wiggle room for abuse. A company with 49 employees and 20 contractors is going to come under a lot of scrutiny.
Remember they'll only be exempt from the off payroll rules. Not Ir35. The contractors working for this set up will still have to make their own determination and a gig like this has got to be an Ir35 risk in its own right.

As is any company formed with a few employees (if any) and mainly contractors just to be a micro consultancy to avoid the legislation.

Is it not really the same as any agency / consultancy firm, only smaller scale? Instead of supplying 300 contractors to companies, it supplies say 10 or 20. As I say I don't think it's that unusual, but maybe it is. But the point is in that scenario, the IR35 decision will remain with the individual. And maybe it will be of particular interest to them if the individual continues to declare themselves outside (and why wouldn't they?) from next year.

I don't really see why it's a heightened IR35 risk in its own right though.

[jamesbrown]

The draft legislation was published on 11 July as Finance Bill 2019-20:

Finance Bill 2019-20 - GOV.UK

This will form Finance Act 2020. It won't start its progress through Parliament until the new session, probably in November (but who knows given the current state of things). There will be several opportunities for technical changes, but they are typically minor. The whole thing could still get pulled, but it is highly unlikely IMHO.

For a rough idea of the timetable, see the passage of Finance Act 2019:

Bill stages — Finance Act 2019 — UK Parliament

The small company provision is set according to the definition of a small company in the Companies Act 2006. The size test applies to the end client, not an agency for example. There are anti-avoidance provisions, so attempts to circumvent this definition are likely to fail (e.g., otherwise small companies that are part of a large group will not qualify). The exemption is complex and, for that reason alone, it probably won't be around for longer than 1-2 years.