IR35 status disagreement process: off-payroll explainer for April 2021 IR35 status disagreement process: off-payroll explainer for April 2021
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  1. #1

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    Default IR35 status disagreement process: off-payroll explainer for April 2021

    Taking from the front page, and the three-parter articles to help someone through all that we look forward to (either now or) in April 2021:

    In the second part, it is discussed how to disagree with the SDS in a qualified manner. This is all very well but;

    a) Does one disagree Before being assigned? Because if one does, wouldn't one just be liable to being ditched in favour of someone who doesn't kick up a fuss? In which case, all this is nullified.

    b) Can one start a role having agreed with the Inside SDS, and then, following a practical understanding of the working conditions, open up a disagreement process to claw back?

    c) Is it not likely that once you've agreed with the Inside SDS, that you will Also be forced to sign something preventing you from later opening a disagreement process?

    The reason for all these questions, and I do apologise to all those waiting to leap on me if these questions have all been asked and answered a thousand times, is that, in prior times, the HMRC opened cases based on time having been passed and which would thus be able to assess both the contract's words and the working conditions. And to ensure that both married up.

    At the time at which we are supposed to sign our lives away, there will not be any working conditions to assess against a contract's words.

    So while these articles are laudable, can one see a practicality in our future?

  2. #2

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    I believe this is a dead process and probably could work if the signed contract was vague and didn't have several key points.

    If your contract tells you where you need to work and what hours, that you need to do the work personally, no right of substitution (or severely limited) and few other bits, it will not matter whether you are a real business or not. Unless the client is going to change the contract then there is no way they could change the status determination. Another thing is that a change to "outside" brings in potentially huge liability as if the client made a mistake, they will have to pay all PAYE taxes regardless if you paid them already. Given that HMRC half of the time couldn't figure out the status themselves (look at lost cases), the clients ultimately will have contracts that prevent any disputes from happening.

    The process has been created to sweet talk the MPs, to make them find excuses in their heads why this is "good" and won't affect real businesses.

  3. #3

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    Quote Originally Posted by elsergiovolador View Post
    I believe this is a dead process and probably could work if the signed contract was vague and didn't have several key points.

    If your contract tells you where you need to work and what hours, that you need to do the work personally, no right of substitution (or severely limited) and few other bits, it will not matter whether you are a real business or not. Unless the client is going to change the contract then there is no way they could change the status determination.
    Correct, but again, back in the day, a contract could have a RoS, but the reality, once working conditions had been already experienced, would then be queried by the HMRC in court. By this very definition, if the HMRC needed to see a marrying of contract to conditions, how can this possibly be permitted by this railroading of SDS which may then be underpinned by your saying you will never query. For example, as soon as the client tries to furlough me over Xmas, this negates the MoO and opens the enquiry for me.

    Quote Originally Posted by elsergiovolador View Post
    Another thing is that a change to "outside" brings in potentially huge liability as if the client made a mistake, they will have to pay all PAYE taxes regardless if you paid them already. Given that HMRC half of the time couldn't figure out the status themselves (look at lost cases), the clients ultimately will have contracts that prevent any disputes from happening.
    Is this right? If all the taxes have already been paid by the contractor, doesn't the opening of an enquiry and the successful resolution thereof just mean that all the mis-paid taxes and NI come back to the contractor? I 'believe' you may be mistaking the process from the opposite way round which is Outside to Inside and the back taxes are thereafter pulled from the client...?

    Quote Originally Posted by elsergiovolador View Post
    The process has been created to sweet talk the MPs, to make them find excuses in their heads why this is "good" and won't affect real businesses.

  4. #4

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    Quote Originally Posted by simes View Post
    Is this right? If all the taxes have already been paid by the contractor, doesn't the opening of an enquiry and the successful resolution thereof just mean that all the mis-paid taxes and NI come back to the contractor? I 'believe' you may be mistaking the process from the opposite way round which is Outside to Inside and the back taxes are thereafter pulled from the client...?
    Not exactly, I think. For the taxes that were overpaid by the contractor (EeNI and PAYE), I expect so. However, the contractor is not responsible for ErNI or the Apprenticeship Levy. These are the responsibilities of the fee payer and you would not be seeing them again because, in theory, you never paid them (in reality, we know you probably did).

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    Quote Originally Posted by jamesbrown View Post
    Not exactly, I think. For the taxes that were overpaid by the contractor (EeNI and PAYE), I expect so. However, the contractor is not responsible for ErNI or the Apprenticeship Levy. These are the responsibilities of the fee payer and you would not be seeing them again because, in theory, you never paid them (in reality, we know you probably did).
    Oh and good luck getting the Employee NI back once that's paid it's gone unless the agency is going to pay for it out of their own money.

    As I said when I first saw the plan, the first thing any agency will do if you tried to argue that you were outside IR35 would be to replace you with someone else.
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    Quote Originally Posted by eek View Post
    Oh and good luck getting the Employee NI back once that's paid it's gone unless the agency is going to pay for it out of their own money.

    As I said when I first saw the plan, the first thing any agency will do if you tried to argue that you were outside IR35 would be to replace you with someone else.
    Quite.

    Perhaps the author of the three-parter really needs a reality check in this respect.

    When the questionnaires pop out in a year's time asking contractors what factors they like about the profession, Being in Control, will not be one of them.

    Being pushed down avenues by Clients that don't have a clue, (and let's face it, they really should not. Employee law, yes. Contractor law, no.), Paid less, No Benefits will all contribute to a manifest dissatisfaction.

    For my part, I am still not applying for Inside roles. Be they in the Private or Public sectors.

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    Quote Originally Posted by simes View Post
    Correct, but again, back in the day, a contract could have a RoS, but the reality, once working conditions had been already experienced, would then be queried by the HMRC in court. By this very definition, if the HMRC needed to see a marrying of contract to conditions, how can this possibly be permitted by this railroading of SDS which may then be underpinned by your saying you will never query. For example, as soon as the client tries to furlough me over Xmas, this negates the MoO and opens the enquiry for me.
    I am not sure if MoO is relevant when it comes to IR35, at least not in the eyes of HMRC, so you would have to be prepared for a court battle to prove them wrong. I think it will be very hard to prove that the work conditions put you outside of the scope and definitely costly.

    Is this right? If all the taxes have already been paid by the contractor, doesn't the opening of an enquiry and the successful resolution thereof just mean that all the mis-paid taxes and NI come back to the contractor? I 'believe' you may be mistaking the process from the opposite way round which is Outside to Inside and the back taxes are thereafter pulled from the client...?
    I am sure I read this on one of the HMRC pages that the client or fee payer will have to pay this tax regardless. There was no information about reconciliation, but I can imagine this could be very complex.

    I wrote about the situation when the client makes a mistake and declares someone outside when in fact it was inside.

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    Quote Originally Posted by elsergiovolador View Post
    I am not sure if MoO is relevant when it comes to IR35, at least not in the eyes of HMRC, so you would have to be prepared for a court battle to prove them wrong. I think it will be very hard to prove that the work conditions put you outside of the scope and definitely costly.



    I am sure I read this on one of the HMRC pages that the client or fee payer will have to pay this tax regardless. There was no information about reconciliation, but I can imagine this could be very complex.

    I wrote about the situation when the client makes a mistake and declares someone outside when in fact it was inside.
    MoO is an interesting one but I suspect HMRC would be able to argue that any inside IR35 contract is subject to MoO (at least on the engagers / client's side) and that would probably be enough for a court.
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    Quote Originally Posted by eek View Post
    Oh and good luck getting the Employee NI back once that's paid it's gone unless the agency is going to pay for it out of their own money.

    As I said when I first saw the plan, the first thing any agency will do if you tried to argue that you were outside IR35 would be to replace you with someone else.
    You're probably right. There are avenues to pursue directly w/ HMRC for overpaid EeNI, but you won't get it back from the fee payer.

  10. #10

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    Quote Originally Posted by eek View Post
    MoO is an interesting one but I suspect HMRC would be able to argue that any inside IR35 contract is subject to MoO (at least on the engagers / client's side) and that would probably be enough for a court.
    I think the most important or deciding bit if you will, is when the client wants you to provide the service personally or at least that's the view HMRC promotes. They would argue that it is then a personal service and disguised employment.

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