Public sector contracting

[centurian]

Seems like the NHS are following through as well

NHS cracks down on tax avoidance - Health News - Health & Families - The Independent

They use the term 'managers' in the article, but it's basically the same thing hitting other departments - somehow they think you have to be a manager if you are on 220 pd

[DaveB]

Just to add to the confusion at least one section of the Cabinet Office are now telling contractors it wont apply to them, only to those "employed" in official Civil Service management posts, what used to be seen as Grade 7 or above, and that the while thing will be reviewed in 6 months time anyway.

[speling bee]

Just to add to the confusion at least one section of the Cabinet Office are now telling contractors it wont apply to them, only to those "employed" in official Civil Service management posts, what used to be seen as Grade 7 or above, and that the while thing will be reviewed in 6 months time anyway.

And isn't this how it all started? Stopping office holders and similar from claiming business status.

[Anonymous2012]

Public sector contracting

I do cyber security. The UK Government does not pay enough, you are better off in the private sector where they pay more. In cyber Security you can charge £465 per day, plus travel and accommodation expenses.I do not even have a CISSP or Computer Science University Degree.You do not need one.All that matters is that you have the experience on the Network you are working on.In fact I am 66 and have got more work then I can handle.Mostly referral.I can run circles around the younger one's in IT with degree's and cert's.They are always e-mailing wanting to know this and that.

The tax I let a Chartered Accountant worry about it.Whether you are a limited company which I am not, you are way better off to let a Professional Accountant deal with it.I would prefer to put all my efforts into the job on hand.If the HR or Payroll contact you tell them to deal with your accountant and solicitor,yes I have one of those too.

In the private sector if they see you have worked for the Government they will not even look at your CV or resume.

The UK Government Networks in the UK and Worldwide are mostly old Legacy Networks,often with-no up to date patches or newer software.The current Julian Assange Anonymous protest attacks on the UK Government Networks cannot withstand the DOS attacks, where as in the private sector the Networks can as they have newer software that can almost kill the attacks.

I would not even worry about the tax as we all have to pay it.If you work for the gov quit and go work in the private sector where in the long run you will be better off.

Tax:let the accountant worry about it

[speling bee]

Here it comes

http://www.cabinetoffice.gov.uk/site...Appointees.pdf

Step Three – engaged through a personal service company
Where the worker is engaged through their own limited company (a personal service
company) and not withdrawing all their income from the department under PAYE (as set out
in step two) they will need to provide evidence of one of the following:
a) The worker should be able to show that their service company is low risk for IR35
according to HMRC‟s “business entity” tests described in HMRC guidance published
May 2012 http://www.hmrc.gov.uk/ir35/guidance.pdf . This means that they are a low
risk of HMRC checking whether they need to operate the IR35 legislation described
in step three. The worker will be able to provide this at the 6 month point. Provided
the terms of the engagement remain the same, the service company will remain low
risk for the duration of the contract.
b) If the worker is medium or high risk according to HMRC‟s “business entity” tests but
feels that they are outside the scope of IR35, then they will need to provide
assurance in a different way – for example, following a contract review by HMRC‟s
independent IR35 helpline. The worker will be able to provide evidence of a contract
review to say that they are outside the scope of the IR35 legislation at the 6 month
point. If the terms of the contract remain the same, the assessment of the service
company will not change for the duration of the contract.
c) If the contract is within the scope of IR35, the worker can provide evidence that they
are operating the IR35 legislation on the payments received from the Department.
This can be evidenced by the worker providing a “deemed calculation”. This is a
calculation that requires the worker to consider all the income for the year from a
particular contract that is within IR35, make a „deemed payment‟ to HMRC for
employer NICs and pay employee NICs and PAYE on the remainder of the income.
The deemed payment calculation can be accessed online at
http://www.hmrc.gov.uk/ir35/ir35.xlt. The legislation only requires the individual to
make this payment at the end of the tax year, so it will not be possible to provide
assurance until this point – the individual will need to indicate that they are intending
to do this when assurance is sought and commit to meeting this requirement at an
agreed later date.
If the department is not satisfied with the evidence they receive they may send details to
their CRM or customer coordinator in HMRC to be considered alongside other intelligence to support HMRC‟s work to tackle non-compliance. Taxpayer confidentiality means that HMRC
will not be able to share the results of any follow-up action with the department.

So looks like a contract review will cut it.

Or sub-contracting for a 20 point slam dunk on the business entity tests. Maybe.

Edit: Just to add:

Scope of this PPN

7. The contents of this PPN apply to all Central Government Departments including their
Executive Agencies and Non Departmental Public Bodies. Similar guidance will be provided to
NHS organisations, and Academy Schools guidance will be updated to reflect the
recommendations of the review.

Another edit: to add:

* - Where there is no ‘direct’ contract between the Worker and the Contracting Authority, the
Contracting Authority will need to ensure that these provisions are contained in the ‘Header’
Contract/Framework agreement and that the ‘supplier’ is legally obliged to flow these terms
down to the Worker with whom it contracts. One way to do this would be to include the
provision as an annexe to the ‘Header’ Contract/Framework Agreement and confirm that it
must be included in any terms between the ‘supplier’ and the worker. There will also need to
be information provisions in the Header contract to ensure that the information supplied by
the worker can be provided directly to government departments to carry out any necessary
assurance, and make the decision to terminate if necessary (through the correct contractual
route).

[centurian]

So looks like a contract review will cut it.

It certainly will - however, note the sentence immediately prior to the one you highlighted

following a contract review by HMRC‟s independent IR35 helpline.

This is the kicker - will any independent contract review suffice, or does it have to be HMRC's service. The paragraph could be interpreted either way.

Generally this is encouraging - I think many public sector ClientCo's may be pursuaded that a QDOS review is sufficient. But I expect there to be some inconsistencies in how it is applied with some taking a harder line.

[speling bee]

It certainly will - however, note the sentence immediately prior to the one you highlighted



This is the kicker - will any independent contract review suffice, or does it have to be HMRC's service. The paragraph could be interpreted either way.

Generally this is encouraging - I think many public sector ClientCo's may be pursuaded that a QDOS review is sufficient. But I expect there to be some inconsistencies in how it is applied with some taking a harder line.

It does say 'for example' before 'following a contract review by HMRC‟s independent IR35 helpline.'

But we will see how it is implemented as you say.

[bobspud]

The facts of the matter have finally hit home at my clients site today. All the senior managers spent the afternoon reviewing a list of the contract staff and traffic lighting them based on criticality to the programme vs the chance of them leaving.

Two of the key senior figures have handed their notice in to the agency in as many weeks and a further six contractors have indicated that they will not be renewing their contract regardless of the terms or situation.

They have finally figured out that the only guys staying would be the ones that they would not wish to renew...

I had a brief conversation with my client on the way out the door to discuss the situation he asked if I would really leave. I told him that I would not be in on friday as I had an interview in London and did that sufficiently answer the question... I have a very good relationship with him and he agreed that the day trip was a sensible plan as an interim step. He knows what I need to hear from the end client to stay and he is all for making them put the words on a headed piece of paper and making the Chief Executive Sign it. I am not interested in putting my business at risk to be a lab rat for yet more badly thought out policy.

I see two or three situations unfolding next week.

1) They will back down and agree that my contract and position is indeed outside IR35 along with several other guys but not the whole site. (sorry if you happen to be in a first / second line support role)
2) They will play safe and tell us all that we will be considered as caught regardless of the facts
3) They will do 2 with the added position of increasing my day rate to compensate for the additional taxation

Only option one will work for me. My guess is that I will be taking a new job for 3 or 4 months until they have worked the issues out for themselves.

[speling bee]

The facts of the matter have finally hit home at my clients site today. All the senior managers spent the afternoon reviewing a list of the contract staff and traffic lighting them based on criticality to the programme vs the chance of them leaving.

Two of the key senior figures have handed their notice in to the agency in as many weeks and a further six contractors have indicated that they will not be renewing their contract regardless of the terms or situation.

They have finally figured out that the only guys staying would be the ones that they would not wish to renew...

I had a brief conversation with my client on the way out the door to discuss the situation he asked if I would really leave. I told him that I would not be in on friday as I had an interview in London and did that sufficiently answer the question... I have a very good relationship with him and he agreed that the day trip was a sensible plan as an interim step. He knows what I need to hear from the end client to stay and he is all for making them put the words on a headed piece of paper and making the Chief Executive Sign it. I am not interested in putting my business at risk to be a lab rat for yet more badly thought out policy.

I see two or three situations unfolding next week.

1) They will back down and agree that my contract and position is indeed outside IR35 along with several other guys but not the whole site. (sorry if you happen to be in a first / second line support role)
2) They will play safe and tell us all that we will be considered as caught regardless of the facts
3) They will do 2 with the added position of increasing my day rate to compensate for the additional taxation

Only option one will work for me. My guess is that I will be taking a new job for 3 or 4 months until they have worked the issues out for themselves.

Interesting, thanks. If you really are critical, then isn't the answer to put in place a contract that really is firmly ouside IR35 - unfettered substitution for example and no personal service (their protection is that they can instantly terminate contract).

Am awaiting a similar conversation, but am on a 6 monther currently. Expecting a 3 month renewal at the end...

[d000hg]

And again with respect, your mistake is in thinking paying the right tax means proving one is outside IR35. That, is not the object. The object is to make sure (eventually, imo) that all one man PSC's pay full tax and NI on contract earnings.

The fact you work from your own office, may be the only one who knows what's what or has a contract framework etc is, immaterial in the scheme of things.

This isnt an exercise is 'proving' you are inside \ outside IR35 or pay the right amount of tax like IBM etc, etc.

It is a plain unadulterated attack on one man PSC's to make them pay full tax and NI. The sooner people realise this, the better.

Making one-man PSCs pay PAYE and employee NI would be just fine really. I mean I prefer to pay less but I can't really find a good reason that I should pay a smaller proportion of my income than a permie.