The proposed off-payroll rules would amend Chapter 8 of the Income Tax (Earnings and Pensions) Act 2003 with effect from 6th April 2020. Within Chapter 8, Section 49 states “Engagements to which this Chapter applies (1) This Chapter applies where — (a) an individual (“the worker”) personally performs, or is under an obligation personally to perform, services for another person] (“the client”)”.
I assume that, where the legislation states "personally performs", this doesn't mean a human person as opposed to for example a cat or dog, but means a specific person as opposed to a company. Therefore the legislation, even after the proposed amendments, does not appear to apply where a company (as opposed to an individual worker) performs services for another person. If the contract for the performance of services does not name or specify an individual worker and instead names only the company that will perform the services (as is common for example with a plumbing company or a photocopier maintenance company), then would the engagement not always fall outside the scope of the legislation?
Some people perceive that a scenario where a supplying company uses unspecified consultants to perform the services creates a risk for the client, but this is not the case. Clients, particularly banks, will have screening procedures before any of the supplying company’s consultants can gain access to the client’s buildings or systems. There is often a lead time of around one month for such screening, which conveniently matches the typical notice period for termination of the services. Therefore a client in practice can retain control over who accesses its buildings and systems, even if the contract does not name any individuals. Right of substitution becomes a moot point because there is no named worker to substitute.
Therefore why are end-clients not moving towards hiring named companies instead of hiring named individuals? This would get around all the problems of IR35.
I assume that, where the legislation states "personally performs", this doesn't mean a human person as opposed to for example a cat or dog, but means a specific person as opposed to a company. Therefore the legislation, even after the proposed amendments, does not appear to apply where a company (as opposed to an individual worker) performs services for another person. If the contract for the performance of services does not name or specify an individual worker and instead names only the company that will perform the services (as is common for example with a plumbing company or a photocopier maintenance company), then would the engagement not always fall outside the scope of the legislation?
Some people perceive that a scenario where a supplying company uses unspecified consultants to perform the services creates a risk for the client, but this is not the case. Clients, particularly banks, will have screening procedures before any of the supplying company’s consultants can gain access to the client’s buildings or systems. There is often a lead time of around one month for such screening, which conveniently matches the typical notice period for termination of the services. Therefore a client in practice can retain control over who accesses its buildings and systems, even if the contract does not name any individuals. Right of substitution becomes a moot point because there is no named worker to substitute.
Therefore why are end-clients not moving towards hiring named companies instead of hiring named individuals? This would get around all the problems of IR35.
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