Taxed but not benefiting

[JohntheBike]

This, I think, is a very interesting question and gets right at the heart of this question. Can they be brought, either by challenge in a tribunal, or by change of legislation or government policy, to consider the same elements? And, can and will an ET consider an inside determination, and the reasoning behind it? The fact that the ET must determine by looking at the working relationship 'in the round' certainly seems to argue that there is room for them to consider the determination and its reasoning.

I did publish a link, which I've lost now, to an article which indicated that the judiciary were pressing HMG to align the two courts. However, if there is a desire and will by the judiciary for this, it is clearly under their control to do so. They only have to ensure that judgements in both the FTT and ET correspond to each other.

[BlueSharp]

This, I think, is a very interesting question and gets right at the heart of this question. Can they be brought, either by challenge in a tribunal, or by change of legislation or government policy, to consider the same elements? And, can and will an ET consider an inside determination, and the reasoning behind it? The fact that the ET must determine by looking at the working relationship 'in the round' certainly seems to argue that there is room for them to consider the determination and its reasoning.

A ruling that says an inside determination, therefore acceptance that MOO is present will be treated by an ET as an unwritten contract of employment and will put this matter to bed. What would be interesting is if the the ET declare MOO is not present and that the IR35 determination is wrong.

[JohntheBike]

A ruling that says an inside determination, therefore acceptance that MOO is present will be treated by an ET as an unwritten contract of employment and will put this matter to bed. What would be interesting is if the the ET declare MOO is not present and that the IR35 determination is wrong.

this might happen with the Alcock case, where HMRC have failed to stop the CEST evidence being considered by the ET. Dirty tricks again.

correction - this should help prove the reverse of an inside determination

[webberg]

I've not forgotten this thread and will catch up soon.

Unfortunately had a series of quite distressing client interviews yesterday which got to me more than I expected. Rather took the enthusiasm for responding away.

[JohntheBike]

I've not forgotten this thread and will catch up soon.

Unfortunately had a series of quite distressing client interviews yesterday which got to me more than I expected. Rather took the enthusiasm for responding away.

my sympathies. I guess a lot more of us will experience something similar.

[PTP]

webberg Post Tax law says that if you work via an intermediary but the terms of that work would, without the intermediary, be within what the Courts and Tribunals have decided is an employment, then you pay tax EQUIVALENT to that of an employee, courtesy of the rules in Chapters 7 thru 10 of ITEPA.

Given how precise Webberg has been about use of the term "Case", I'll point out that I think "Equivalent" isn't the right word......it's certainly not what HMRC are saying or implying in guidance issued today: April 2020 changes to off-payroll working for clients - GOV.UK

If you’re also the fee-payer and the off-payroll working rules apply, you will need to deduct and pay tax and National Insurance contributions to HMRC.

So even HMRC admit, we wouldn't be paying the EQUIVALENT of employment taxes.............we would actually be paying employment taxes.

So just like WordIsBond's post 20/08/2019 19:54.........

WordIsBond The technical distinction between 'taxed as an employee' and 'taxed the same amount as an employee because your "engager" has decided that you would have been taxed as an employee if you didn't have a company' may be of interest to a tax tribunal, but may be of less interest to an ET.

The big gap that Webberg thinks is there is between the "apparent two statuses", I don't believe there is.

Also HMRC in that guidance make no distinction between an employment status for tax purposes and an employment status for other purposes. You've just got one employment status.

[JohntheBike]

Given how precise Webberg has been about use of the term "Case", I'll point out that I think "Equivalent" isn't the right word......it's certainly not what HMRC are saying or implying in guidance issued today: April 2020 changes to off-payroll working for clients - GOV.UK




So even HMRC admit, we wouldn't be paying the EQUIVALENT of employment taxes.............we would actually be paying employment taxes.

So just like WordIsBond's post 20/08/2019 19:54.........

The big gap that Webberg thinks is there is between the "apparent two statuses", I don't believe there is.

Also HMRC in that guidance make no distinction between an employment status for tax purposes and and employed for other purposes.

You've just got one employment status

.

agreed.

in the ET, employment status is decided first before any further steps are undertaken. So if an individual is claiming unfair dismissal for example, the ET will first decide if they were engaged on a contract of service, i.e. employed, before determining what compensation, if any, to award.

Likewise, the FTT will do the same. The FTT will first determine the employment status of the individual before determining what taxes, if any, are due.

So, unless the FTT and the ET look at different issues to determine employment status, and there is no evidence so far to think that they will, the employment status determined in one court should hold for the other court.

However, this principle hasn't yet been established in case law. I guess it may very well be so established in the Alcock case, which is before the ET now and judgement is expected early in September. Others brought before the ET after April 2020 may also consolidate the issue.

[BlueSharp]

Given how precise Webberg has been about use of the term "Case", I'll point out that I think "Equivalent" isn't the right word......it's certainly not what HMRC are saying or implying in guidance issued today: April 2020 changes to off-payroll working for clients - GOV.UK




So even HMRC admit, we wouldn't be paying the EQUIVALENT of employment taxes.............we would actually be paying employment taxes.

So just like WordIsBond's post 20/08/2019 19:54.........

The big gap that Webberg thinks is there is between the "apparent two statuses", I don't believe there is.

Also HMRC in that guidance make no distinction between an employment status for tax purposes and an employment status for other purposes. You've just got one employment status.

It gets better than that, from HMRC's words:

What you need to do as a client
You will be responsible for deciding the employment status of workers. You’ll need to:

decide the employment status of a worker - you must do this for every contract you agree with an agency or worker
pass your determination and the reasons for the determination to the worker and the person or organisation you contract with
make sure you keep detailed records of your employment status determinations, including the reasons for the determination and fees paid
have processes in place to deal with any disputes that arise from your determination
If you’re also the fee-payer and the off-payroll working rules apply, you will need to deduct and pay tax and National Insurance contributions to HMRC.

Not employment status for tax reasons just simply employment status.

From what I can see a client has a couple of options, Outside IR35\Contractor, PAYE (Has it's own resourcing issues for the incumbent), Declare outside ir35 but only take on via an Umbrella (Most conservative), Declare they are an employee but provide no Employee Benefit.

[JohntheBike]

It gets better than that, from HMRC's words:

Not employment status for tax reasons just simply employment status

.

and I hope this is the Achilles Heel of the proposals. Unless the organisation making the determination uses a structure other than the standard client-agency-contractor situation, then they are likely to fall foul of the legislation.

[malvolio]

It says "Employment status of the worker", not "of the employee". Workers and employees are different beasts, and since the employees' status is pretty clear anyway, rights as an employee have no part in the discussion since workers aren't entitled to them.

As has been said many times, the FTT and the ET use the same criteria, but they are applied to entirely different cases. There is no legal requirement, much less case law, to combine the two which work on entirely separate laws anyway. And personally I doubt there ever will be.