Resource Solutions' short vid on post-IR35 reform options - thoughts? Resource Solutions' short vid on post-IR35 reform options - thoughts?
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    Default Resource Solutions' short vid on post-IR35 reform options - thoughts?

    A former colleague sent me this:

    Julie-Anne Brooks on LinkedIn: IR35 Sprint to the Finish - Is your business compliant?

    I was interested in how Resource Solutions are 'marketing' the options to end clients.

    Option 1 - 'the deemed model' - I don't really understand what they're talking about here. It happens that in my 7 years of contracting, I have always chosen to operate inside IR35 (I've always reconsidered this at outset of each contract, I'm well aware of the issues - I've just made different judgements about working practices than most contractors, in particular RoS). Anyway - this 'deemed model' in theory would be similar to what I've been doing, except it isn't. He's still implying the contractor would be paid net (and into TheirCo?) - which is... weird, and a hybrid, and I don't see any reason why anyone would do this. Worst of all worlds. I guess the only reason would be if any particular contractor usually - or sometimes - has contracts that fall outside IR35, meaning maintaining TheirCo is worthwhile even when there are also some outside IR35 contracts - but even so, wouldn't the outside ones be paid best direct to individual via PAYE / via Umbrella...? In other words, is this even a real option from a contractor perspective? And if not, why mention it to the clients?

    Option 2 - Temp PAYE - 'may be more suitable at the lower rate band' - well yes, we know what this is.

    Option 3 - Umbrella contractors - yes, we know all about this too.

    Option 4 - Statement of Work - the way he phrases this (regular use of 'genuinely') makes me think he gets this one to some extent i.e. that it's relatively rare that this will be a credible option based on how end clients have typically used contractors up until now. But anyway yes - an option nonetheless.

    Option 5 - convert to perm - fine, with all its pros and cons for both end client/ employer and contractor/ individual - but yes, an option.

    Option 6 - outside IR35 - loose use of language here as he refers to the 'contractors' being outside IR35 instead of the 'contract' or 'role'.

    Anyway - I get that this is aimed as a short 'intro and hook you in' to end clients but from a contractor perspective, is it just me or is Option 1 a nonsense?

    Commentary welcome! I may well be missing something! I've worked through Resource Solutions in the past but not up with where they are with IR35 reform - what are they touting? Doesn't sound like SoW model from the way he talked about it so brolly? temp? Convert to perm is fine but it'll bring a lot of money upfront and a lot less ongoing (for the agency).

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    I haven't watched it so more of a question but those aren't really options. They are different vehicles that will apply in different situations. Does the video make that clear or does it sound like the client can pick whichever of those they chose?
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    CBA to watch the video, but I am willing to spout off nonetheless

    You may be struggling with (1), but it's perfectly fine to run an inside contract via YourCo post April 2021 if the Fee Payer is willing to do that. It means that YourCo receives all income net of taxes (PAYE, both NIs and the Apprenticeship Levy, where applicable) - although, formally, the fee payer remits the ErNi and AL and that doesn't come from your fee, except it does, of course - and YourCo can then pay you an equivalent amount without any further tax liability. Yes, it is pretty pointless unless you also have outside contracts running, so I don't expect it will be common. For the average BoS contractor, they will either become FTC, umbrella or FTE in which case IR35 doesn't apply (all are types of employment).

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    The additional problem with (1) for the contracting chain above YourCo is that they won't want the hassle. It leaves them open to potential future litigation about wrongful assessment by the client and illegal deductions by the Fee Payer etc. Why bother when you can simply mandate no PSCs?

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    Quote Originally Posted by jamesbrown View Post
    The additional problem with (1) for the contracting chain above YourCo is that they won't want the hassle. It leaves them open to potential future litigation about wrongful assessment by the client and illegal deductions by the Fee Payer etc. Why bother when you can simply mandate no PSCs?
    It depends though - deemed payments are essential if the chain cannot 100% trust the umbrella S61O and the new changes to the employment regulations make that very clear.
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    Thanks, all

    It's worth noting the video is shorter than 2 minutes..!

    Bearing in mind the video is aimed at end clients: yes, it's talking about 'options'.

    in reality, some of them may be 'options' (i.e. in a given scenario there may be more than one way to handle things) but really it's just horses for course.

    And on 'option 1' - well, as I said - from a contractor perspective this is pointless unless you expect to receive at least some genuinely outside IR35 work. But even then it's odd. I've contemplated ending up in this situation myself since as a programme manager, some of the roles I do really are consultancy (particularly the less delivery-focused ones - upfront/ discovery phase, plus it's fairly common for me to happen upon - whilst in course of delivering something - problems and gaps I can help the organisation fix. Happening at the moment, actually. And that is the most 'clean and outside IR35' stuff I do).

    So, having been operating inside for 7 years, there's a chance I could end up better off with the regime change if I can get the odd role where the end client hasn't got a blanket PSC ban yet is sophisticated enough to not be making blanket inside assessments. However I'm not at all confident about the number of these roles that will exist (given the number of blanket PSC bans) - it's highly likely to be 'very few'. And there's just no reason to channel money needlessly through MyCo, as far as I can see. Hence my confusion.

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    Quote Originally Posted by eek View Post
    It depends though - deemed payments are essential if the chain cannot 100% trust the umbrella S61O and the new changes to the employment regulations make that very clear.
    If I were a client, I probably wouldn't faff with any of it, especially since s610 of Chapter 10 of the ITEPA needs to be amended to clarify that umbrellas aren't intermediaries.

    I would just mandate FTCs or FTEs, personally, and bypass the whole lot.

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    See my post above - Deemed payments are the default payment for inside IR35 work - everyone will hate them but it's the only way an agency can currently be 100% sure they aren't accidently not paying the appropriate amount of tax.

    For any contractor - the best approach is an umbrella firm and a good salary sacrifice SIPP pension...

    Oh and you should see the video we are working on to explain what the "Agency Umbrella Rate" is and how it works.
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    Quote Originally Posted by eek View Post
    For any contractor - the best approach is an umbrella firm and a good salary sacrifice SIPP pension...
    From a large client's POV, the best approach is to ditch contractors altogether and bring them on payroll and I expect many, many will.

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    Quote Originally Posted by jamesbrown View Post
    From a large client's POV, the best approach is to ditch contractors altogether and bring them on payroll and I expect many, many will.
    The Employment manual was changed last week to reflect the fact that fully compliant umbrellas are fine ESM10003 - Employment Status Manual - HMRC internal manual - GOV.UK

    That leaves open the question of how you can be sure your umbrella is fully compliant but there are ways and means of doing that - which we are nearly finishing off.

    Hint FCSA or Professional Passport membership isn't a valid method of checking compliance but I've been told ours will be more than sufficient.

    And putting people on payroll opens up a whole heap of other issues - the easiest way to scare HR is to say equal opportunities pay...
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