IR35 deductions - breach of contract IR35 deductions - breach of contract
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    Default IR35 deductions - breach of contract

    Surely, based on existing standard contracts, the agency will ordinarily be in breach of contract by making these deductions instead of paying gross?

    Most agency>PSC contracts state a rate, say £500+vat per day, so agency is under a contractual obligation to pay £600 to that PSC, full stop. Although they have the statutory obligation to deduct the tax and ee's NICS, this is incompatible with the contractual obligation here so the PSC could separately sue them for that same amount, right? What am I missing here?

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    Quote Originally Posted by borisk66 View Post
    Surely, based on existing standard contracts, the agency will ordinarily be in breach of contract by making these deductions instead of paying gross?

    Most agency>PSC contracts state a rate, say £500+vat per day, so agency is under a contractual obligation to pay £600 to that PSC, full stop. Although they have the statutory obligation to deduct the tax and ee's NICS, this is incompatible with the contractual obligation here so the PSC could separately sue them for that same amount, right? What am I missing here?
    You’re missing the change of legislation.

    99.99% of the contractor population is now forced to go PAYE or Umbrella.

    Where have you been for the last 3 years (or even 6 months)??
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    Default But where a contract is ongoing...

    I think there are plenty of PSCs that will continue. But where a contract is ongoing from 6th April with the new IR35 changes, and the fee-payer (hirer or agency) is then obliged to make these deductions from the gross payment, surely they will be in breach of contract?

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    Quote Originally Posted by borisk66 View Post
    Surely, based on existing standard contracts, the agency will ordinarily be in breach of contract by making these deductions instead of paying gross?

    Most agency>PSC contracts state a rate, say £500+vat per day, so agency is under a contractual obligation to pay £600 to that PSC, full stop. Although they have the statutory obligation to deduct the tax and ee's NICS, this is incompatible with the contractual obligation here so the PSC could separately sue them for that same amount, right? What am I missing here?
    Expect your contract to be terminated and a new one with the new payment terms to be provided for you to sign or walk away from.
    "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

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    Quote Originally Posted by DaveB View Post
    Expect your contract to be terminated and a new one with the new payment terms to be provided for you to sign or walk away from.
    yes, but there is still the issue of deductions in April 2020 for work done in March under the existing contract. Posters here claim that most outfits in the public sector ensured that payments for work done in March were made before the 6th of April. I can't see that the sector was that efficient. There must have been some who were subject to this. I'd be contemplating a small claims court action.

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    Quote Originally Posted by JohntheBike View Post
    yes, but there is still the issue of deductions in April 2020 for work done in March under the existing contract. Posters here claim that most outfits in the public sector ensured that payments for work done in March were made before the 6th of April. I can't see that the sector was that efficient. There must have been some who were subject to this. I'd be contemplating a small claims court action.
    Agency's are very efficient when the only other option is unimaginable pain and a large bill that they themselves have to foot.
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    Quote Originally Posted by eek View Post
    Agency's are very efficient when the only other option is unimaginable pain and a large bill that they themselves have to foot.
    so do we know of anyone in the public sector who fell foul of this issue, i.e. had monies paid into their LTD CO. in April for work done in March and had PAYE deducted? I'd guess that before they'd be able to do that, the agency would have to know the NI no. of the contractor and I guess this could be a lever to ensure the agency pays before the 6th of April.

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    Quote Originally Posted by JohntheBike View Post
    so do we know of anyone in the public sector who fell foul of this issue, i.e. had monies paid into their LTD CO. in April for work done in March and had PAYE deducted? I'd guess that before they'd be able to do that, the agency would have to know the NI no. of the contractor and I guess this could be a lever to ensure the agency pays before the 6th of April.
    No because agencies did everything they could to avoid such situations occurring - for fear of unimaginable pain and and a large bill that they themselves would have to foot
    Last edited by eek; 22nd January 2020 at 13:54.
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    The current hot topic at industry events is indeed the timing. There is NO WAY an agency will run the risk of having to pay ERNIC on top.

    I heard an interesting example yesterday - if the end client deems the contract outside but the agency knows it's false, the agency has to appeal. If the agency does and the client says 'oh yes quite correct' the time between the first decision and the appeal decision the agency is liable for any difference in tax that should have been paid (as long as client took reasonable care).

    There are so many ways agencies could be on the hook so they simply will not risk it.

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    Quote Originally Posted by eek View Post
    No because agencies did everything they could to avoid such situations occurring - for fear of unimaginable pain and and a large bill that they themselves would have to foot
    ok, thanks. So I guess its worth asking nearer the time what provisions are being made if contracts are up until the end of March, as mine is.

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