Updated government factsheet (can't spot the change though) Updated government factsheet (can't spot the change though) - Page 4
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  1. #31

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    Quote Originally Posted by BABABlackSheep View Post
    You've seen those machines that come along grab a tree trunk and rattle the fruit off a tree. They get 95% of the fruit then move on. They are still much more efficient than employing lots of people hand-picking 100% of the fruit.

    Lesson, don't get rattled..stick around. Even if they think you are juicy, do they really want to climb that tree for a piece of cheap fruit, when you still might not be ripe for the taking
    And to that that analogy further, the tree-shaker does not care if some fruit gets damaged in the fall. They just squeeze it and extract what they can.

  2. #32

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    Quote Originally Posted by JohntheBike View Post
    agreed. But then it would be sensible to identify all the possible scenarios and determine what action is needed for each. As I see it, here are the scenarios -

    1. the client doesn't renew your contract at all after Feb/Mar 2020
    2. the client undertakes an SDS and
    a. declares the contract outside
    b. declares the contract inside
    3. the client doesn't undertake an SDS and
    a. employs you on PAYE
    b. employs you on an FTC
    c. insists you join an umbrella

    Each person's financial situation will clearly be unique and their approach to any of these scenarios will be driven by that situation.






    5.
    You could go one further and rank them in terms of risk but who has time for that!

    Like others have said, you're more at risk if you have gone from outside to inside with the same client. UNLESS you can rationally provide evidence as to why this change was made, perhaps with a change in contract wording or different job responsibilities from the previous project / engagement, but that would look very suspicious.

  3. #33

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    Quote Originally Posted by JohntheBike View Post
    agreed. But then it would be sensible to identify all the possible scenarios and determine what action is needed for each. As I see it, here are the scenarios -

    1. the client doesn't renew your contract at all after Feb/Mar 2020
    2. the client undertakes an SDS and
    a. declares the contract outside
    b. declares the contract inside
    3. the client doesn't undertake an SDS and
    a. employs you on PAYE
    b. employs you on an FTC
    c. insists you join an umbrella
    d. and you carry on as normal, outside IR35 - so long as you are confident of your status

    Each person's financial situation will clearly be unique and their approach to any of these scenarios will be driven by that situation.

    I would add 3.d. as above

  4. #34

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    Quote Originally Posted by ChimpMaster View Post
    I would add 3.d. as above
    yes, but unlikely I suspect.

  5. #35

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    Quote Originally Posted by CompoundOverload View Post
    You could go one further and rank them in terms of risk but who has time for that!

    Like others have said, you're more at risk if you have gone from outside to inside with the same client. UNLESS you can rationally provide evidence as to why this change was made, perhaps with a change in contract wording or different job responsibilities from the previous project / engagement, but that would look very suspicious.
    you're more at risk if you have gone from outside to inside with the same client
    yes, but so is the client. They would expose themselves to a claim for employment benefits in the ET. I guess anyone exposed to an HMRC investigation as a result of this scenario, might want to take this approach.

  6. #36

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    Quote Originally Posted by JohntheBike View Post
    yes, but so is the client. They would expose themselves to a claim for employment benefits in the ET. I guess anyone exposed to an HMRC investigation as a result of this scenario, might want to take this approach.
    Yes, but in order to do so, you'll need deep pockets.

    I'm surprised there isn't a bolt on to the IR35 insurance offered in that if you lose the case, you go after the client for employment benefits.

    However, just because you're deemed inside as a contractor this does not automatically give you right to employment benefits. If I recall there was some wording in the HMRC guidance regarding this.

  7. #37

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    https://assets.publishing.service.go..._factsheet.pdf

    I don't think anyone has quoted this sheet in this thread, it seems to further clarify the not retrospective approach. You could read this as by leaving your current client you are giving up a get out of jail free card by not staying for a while post April and going inside IR35. I'd be happy with that if I trusted it.

    Depending on your own personal circumstances the terms of your contract may change. It is also possible that you will pay additional income tax and NICs if you had not previously been applying the off-payroll rules (IR35) correctly. However, HMRC will not use information resulting from these changes to open a new enquiry into earlier years unless there is reason to suspect fraud or criminal behaviour.

    I've only just grasped this. So if you are deemed IR35 caught then there is absolutely no point sending that money to your Ltd. So if you are doing a series a contracts and some are caught and some not, you will need a Ltd Co open, but for some contracts it's no use ( same for umbrellas ). Or have I lost the plot !?

    How the changes may affect you
    These changes may affect how you pay the tax and National Insurance contributions that are due.
    If you are affected, the organisation you are providing your services to will determine your employment status for tax purposes from 6 April 2020. Your hirer will give you a ‘Status Determination Statement’, which will set out the determination your hirer has made and the reasons behind this. You may be asked to provide the hirer with some information to help them make their determination.
    If they determine that you are employed for tax purposes, they (or the agency they have hired you through) will pay the necessary tax and National Insurance before they pay you.
    If they determine that you are self-employed for tax purposes, you will remain responsible for meeting your tax obligations.
    Last edited by rootsnall; 15th January 2020 at 16:59.

  8. #38

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    Quote Originally Posted by CompoundOverload View Post
    However, just because you're deemed inside as a contractor this does not automatically give you right to employment benefits. If I recall there was some wording in the HMRC guidance regarding this.
    You're right, although it has nothing to do with HMRC, who have no jurisdiction in employment status.

    But since the tests for employment are being used in the status determination and the client is the one making that determination, they're explicitly confirming that the working practices and company-worker relationship passes those employment tests.

    If the worker then chooses to take that status determination to an employment tribunal, there are two possible outcomes:

    1. The tribunal judges them to be an employee, in which case no IR35 tax is due to HMRC (all PAYE payments must be net of tax) - so, for an existing long engagement, the worker can demand all taxes paid on their gross contractor income back, with interest - and the worker can then also claim backdated employee rights and benefits from the company. The company is then also liable for unpaid PAYE taxes, plus interest plus possibly penalties, if HMRC decides to pursue that.
    2. The tribunal judges them not to be an employee, in which case the worker can approach the client, then HMRC if necessary, to agree their outside IR35 status, and claim back the difference between the taxes paid and what should have been due; the implicit threat to HMRC is that the worker will take them to the tax tribunal armed with a ET judgement saying that their relationship with the client is clearly not one of employment

    Either way, the worker wins as far as I can see. With the first option, the client stands to take a big hit and I'm surprised more clients haven't woken up to this yet. The clever ones are those who've just said they won't use ltd company contractors after April and so they don't need to do a status determination, hence no magic piece of paper the contractor can use at an ET. But that still doesn't insulate them completely, it just makes things a little harder for the contractor who's p*ssed off that he's been given the elbow.

    However, all it takes is a few disgruntled contractors to go down this route with major clients and I reckon the fireworks will start to go off in HMRC and the Treasury.
    Last edited by Snooky; 16th January 2020 at 08:24.

  9. #39

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    Quote Originally Posted by rootsnall View Post
    https://assets.publishing.service.go..._factsheet.pdf

    I don't think anyone has quoted this sheet in this thread, it seems to further clarify the not retrospective approach. You could read this as by leaving your current client you are giving up a get out of jail free card by not staying for a while post April and going inside IR35. I'd be happy with that if I trusted it.

    Depending on your own personal circumstances the terms of your contract may change. It is also possible that you will pay additional income tax and NICs if you had not previously been applying the off-payroll rules (IR35) correctly. However, HMRC will not use information resulting from these changes to open a new enquiry into earlier years unless there is reason to suspect fraud or criminal behaviour.
    If only you could wholeheartedly rely on that.

    This part is worrying unless there is reason to suspect fraud or criminal behavior

    What constitutes this, have they given examples?

  10. #40

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    Quote Originally Posted by Snooky View Post
    You're right, although it has nothing to do with HMRC, who have no jurisdiction in employment status.

    But since the tests for employment are being used in the status determination and the client is the one making that determination, they're explicitly confirming that the working practices and company-worker relationship passes those employment tests.

    If the worker then chooses to take that status determination to an employment tribunal, there are two possible outcomes:

    1. The tribunal judges them to be an employee, in which case no IR35 tax is due to HMRC (all PAYE payments must be net of tax) - so, for an existing long engagement, the worker can demand all taxes paid on their gross contractor income back, with interest - and the worker can then also claim backdated employee rights and benefits from the company
    2. The tribunal judges them not to be an employee, in which case the worker can approach the client, then HMRC if necessary, to agree their outside IR35 status, and claim back the difference between the taxes paid and what should have been due; the implicit threat to HMRC is that the worker will take them to the tax tribunal armed with a ET judgement saying that their relationship with the client is clearly not one of employment

    Either way, the worker wins as far as I can see. With the first option, the client stands to take a big hit and I'm surprised more clients haven't woken up to this yet. The clever ones are those who've just said they won't use ltd company contractors after April and so they don't need to do a status determination, hence no magic piece of paper the contractor can use at an ET. But that still doesn't insulate them completely, it just makes things a little harder for the contractor who's p*ssed off that he's been given the elbow.

    However, all it takes is a few disgruntled contractors to go down this route with major clients and I reckon the fireworks will start to go off in HMRC and the Treasury.
    But since the tests for employment are being used in the status determination and the client is the one making that determination, they're explicitly confirming that the working practices and company-worker relationship passes those employment tests.
    exactly

    Either way, the worker wins as far as I can see.
    exactly again, which is all I've said for the last 20 years. But some representative organisations chose to hide their heads in the send regarding this.

    and your analysis about the recovery of tax is also correct and if this scenario were to transpire, then HMRC would go after the client for the reclaimed tax. So again, as you say, it's interesting to note that some clients don't seem to have woken up to this threat.

    However, all it takes is a few disgruntled contractors to go down this route with major clients and I reckon the fireworks will start to go off in HMRC and the Treasury
    let's hope so.

    I'm glad that others are thinking the same way as I am. However, those that might be contemplating such actions should keep their powder dry for the moment and see what transpires.

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