Discussion document on IR35 published

[tractor]

....

I think we can put that to one side, as it will be determined by case law insofar as it involves employment status. As you say yourself, HMRC have a vested interest in casting the net wide, while increasing compliance, and these two things can probably only be reconciled through administration (i.e. indirectly, rather than new laws). Indeed, they note themselves that this is probably the angle to take w/r to a new role for policing by clients and agencies. Now, the only thing I'm unclear about is what the impacts of that might be. On the one hand, it could increase cooperation from clients and agents to properly understand employment status and to ensure that working practices are absent of any semblance of SD&C. On the other hand, large clients and agencies in some sectors may adopt a knee-jerk reaction.

It should not be put to one side. This is the whole issue from our perspective. If only they would clarify once and for all what criteria they believe is the differentiator, we would all know what is required to 'comply'

This can only end badly unless new case law is made. That requires going to court. I am not sure there is any appetite for that from any source.

The whole scenario is very similar to the Opt Out regs in that whilst there is provision to, the government will not get involved in enforcing it from our perspective, taking the view that it is entirely up to the client/agent whether they even deal with not opted out contractors and it is not illegal for them to refuse to.

If they pass the responsibility to clients/agents to enforce IR35, both are likely to insist on Umbrella/Inside IR35 working or will not deal with you.

There are implications under EU law in this regard but again, is there any appetite to challenge it? Who would you take to court; Client, agent or HMRC? If there is no challenge or an unsuccessful challenge, it's goodbye contractor, hello temp, zero hours contracts with no expenses. From even an employees point of view, the worst of all worlds.

[jamesbrown]

The T&S consultation document also refers to the 'engager' being severally liable but it's not clear whether the engager would be the agency or the client or possibly both

My guess would be everyone in the contract chain but, failing that, at least the employment agency and the PSC in an agency arrangement.

[northernladuk]

My guess would be everyone in the contract chain but, failing that, at least the employment agency and the PSC in an agency arrangement.

I'd say it's the client seems it's them would be dictating working practices. The agent is purely commercial. This wouldn't be too bad would it. At least the clients would be involved. If they stay oblivious to IR35 we will still be stuck with them treating us like employees and won't raise the rates to take in to account this and new divi tax etc.

[jamesbrown]

This can only end badly unless new case law is made. That requires going to court. I am not sure there is any appetite for that from any source.

The whole scenario is very similar to the Opt Out regs in that whilst there is provision to, the government will not get involved in enforcing it from our perspective, taking the view that it is entirely up to the client/agent whether they even deal with not opted out contractors and it is not illegal for them to refuse to.

If they pass the responsibility to clients/agents to enforce IR35, both are likely to insist on Umbrella/Inside IR35 working or will not deal with you.

There are implications under EU law in this regard but again, is there any appetite to challenge it? Who would you take to court; Client, agent or HMRC? If there is no challenge or an unsuccessful challenge, it's goodbye contractor, hello temp, zero hours contracts with no expenses. From even an employees point of view, the worst of all worlds.

I agree with you that there's a risk here (even a significant one), but I'd be genuinely surprised if the majority of agents and clients took a knee-jerk reaction to enforcement, because it would be the end of their business models w/r to contracting. It's analogous to Greece insofar as everyone could lose (including the Exchequer).

[jamesbrown]

I'd say it's the client seems it's them would be dictating working practices. The agent is purely commercial. This wouldn't be too bad would it. At least the clients would be involved. If they stay oblivious to IR35 we will still be stuck with them treating us like employees and won't raise the rates to take in to account this and new divi tax etc.

Yes, I mean financially liable (i.e. jointly and severally liable for the tax and penalties), but everyone in the contract chain would ultimately need to take notice (including the client if they weren't financially liable, assuming they wanted continued access to contractors).

[BolshieBastard]

Not necessarily. Remember, clients and agents want contractors for a reason (and it isn't tax, except at the very low end of the chain), so there will be a greater incentive to ensure that the working practices are squarely absent of SD&C (where possible, so admittedly some sectors may be impacted more than others). The alternative is they don't, and everyone loses (inc. the UK economy and hence the Exchequer in the longer term). Likely, they would make everyone in the chain (the client, agent and PSC) jointly and severally liable, so this would catch all types of relationships, not just agency contracts, but with PSCs themselves remaining the police in some cases (e.g. client overseas, no UK agency).

Except they dont. Far too many clients want a contractor then, treat the contractor as a permie. An independent business is the last thing they think of.

[jamesbrown]

Except they dont. Far too many clients want a contractor then, treat the contractor as a permie. An independent business is the last thing they think of.

Sure, this would definitely impact some contractors, most likely those that shouldn't be contractors anyway (i.e. clients who want temps), and possibly a significant chunk of those that should in some sectors (depending on how clients and agents react). But, make no mistake, this would radically impact the business models of many clients and, obviously, agents, so I don't think the worst case scenario is likely to happen in practice.

[BolshieBastard]

Sure, this would definitely impact some contractors, most likely those that shouldn't be contractors anyway (i.e. clients who want temps), and possibly a significant chunk of those that should in some sectors (depending on how clients and agents react). But, make no mistake, this would radically impact the business models of many clients and, obviously, agents, so I don't think the worst case scenario is likely to happen in practice.

Stop talking rubbish 'most likely those that shouldnt be contractors.' You havent a clue.

[jamesbrown]

Stop talking rubbish 'most likely those that shouldnt be contractors.' You havent a clue.

Like you, for example? I think you were whining recently about excessive D&C from some client or other...

[alphadog]

It's going to get to the stage where we get a one year contract and will end up earning less than a permie if he's not careful.

Off topic I know, but talking to a teacher friend of mine oop north over the weekend, he says that in his school the non-permo teachers get paid less (if they work full time) than the permos.

In his instance I guess it's more a factor of supply and demand rather than any particular change in regulations by the govt tho. I just really hope that the same result doesn't eventuate in our industries!