IR35 - Back to first principles....

[teapot418]

The problem there is that we need a part and parcel tat hat would actually work.

Sadly moo and substation are things hmrc want gone as they have been abused in the past by people who are part and parcel

I suppose I was thinking that MOO could indicate that you were part and parcel, as opposed to lack of it indicating that you weren't - so from HMRC's point of view they get a benefit, without the absence of MOO automatically putting you outside.

[eek]

I suppose I was thinking that MOO could indicate that you were part and parcel, as opposed to lack of it indicating that you weren't - so from HMRC's point of view they get a benefit, without the absence of MOO automatically putting you outside.

Moo works as a partial valid test for part and parcel - company believe there is a mutual obligation, PAYE. I don't think it adds much though as the companies we need to capture are those who do everything to pretend their part and parcel workers (care assistants say) are not employees.

[Zero Liability]

The thing with P&P is that it's just yet another highly subjective criterion. I think the ability to relate a role to a specific project, in conjunction with some minimum cut off point for when one can be engaged via a ltd, looks more promising and amenable to relatively more objective criteria and limits the scope where an employer can encourage a Fri-Mon scenario.

[eek]

The thing with P&P is that it's just yet another highly subjective criterion. I think the ability to relate a role to a specific project, in conjunction with some minimum cut off point for when one can be engaged via a 3rd party (ltd / umbrella), looks more promising and amenable to relatively more objective criteria and limits the scope where an employer can encourage a Fri-Mon scenario.

ftfy... but more to emphasis how much Lisa is potentionally attacking her own vested interest for a greater good...

[Contreras]

That is basically at the heart of the proposal Lisa and I (among others) will be suggesting for the T&S consultation. Anyone paid less than national living wage * x is not covered by expenses (and ideally has to be paid PAYE)...

Then we have the IR35 discussion document where we can probably directly suggest if people who are not paid national living wage * x should be subject to the legislation (and therefore will have to be paid via PAYE)...

Yes the idea probably upsets a lot of people both here and elsewhere but since we started suggesting this as an option no one has come up with anything better... However its not enough for the IR35 discussion document as case study 1 is a lawyer paid well above the average wage...

Add to that a case study of the aspiring self-employed cleaner who incorporates to ltd with ambitions of growing the business. They may initially be on low rates, perhaps even sub-NMW, but why should they be penalised for this personal choice?

Applying different rules based upon a pay threshold is flawed in principle IMHO, sorry to bash the idea.

But shouldn't those workers be permanent employees? I guess that HMG/HMRC need to do something to make that happen.

Yes quite. And all the trimmings that go with it (sick pay, etc.). A right wing gov are not going to champion that cause though are they?

IR35 back to first principles is about "disguised employment". In effect employment without statutory rights (and a consequential loss of tax).

Clients are prepared to pay more to compensate for this and the convenience of being able to bin someone easily.

Now if clients are to become IR35 gatekeepers - to ensure the correct tax is collected from their disguised employees - then at the very least they need their cages rattling wrt the risk of defending an employment tribunal in certain cases. Anything less will be too bloody one-sided IMHO.

I think the fact that many of 'us' contractors seem to embrace the lack of statutory rights so willingly is one reason the IR35 debate becomes so tortured. It shouldn't blind us to arguments that could ultimately lead to not being treated (and taxed) as an employee.

[SimonMac]

(haven't read the whole thread, so excuse if this has already been raised and dismissed)

I think the sensible approach is a move towards abolishing NI, and incoporating that into income tax, however this will never happen as people don't see NI as a tax, and no one wants to be seen to raise a new tax, even if it's merely replacing an existing one.

The problem is that we contractors want to be treated individually, we are a special case but HMRC can't be seen to give us an exception, or create a series of tax law which benefits us without a clear definition of what we are, even the PSC definition was mired with confusion as in the scheme of things we are still a small body of people.

[eek]

(haven't read the whole thread, so excuse if this has already been raised and dismissed)

I think the sensible approach is a move towards abolishing NI, and incoporating that into income tax, however this will never happen as people don't see NI as a tax, and no one wants to be seen to raise a new tax, even if it's merely replacing an existing one.

The problem is that we contractors want to be treated individually, we are a special case but HMRC can't be seen to give us an exception, or create a series of tax law which benefits us without a clear definition of what we are, even the PSC definition was mired with confusion as in the scheme of things we are still a small body of people.

I don't want to be treated as special and thats one reason why I believe the FLC is nonsensical and utterly insane (because the IPSE believe all their members are special and should be treated as such).

HMRC's current stance is everyone paid via PAYE with the decision for SDorC made by the end client. That will result in a default viewpoint of you are being paid by PAYE as its utterly impossible to argue a client doesn't have the right to one of SDorC (why take the risk). So we need to create some simple tests that allow an end client to bring in a contractor to complete a specific task / project to have certainty that their decision won't come back to haunt them.

[malvolio]

I don't want to be treated as special and thats one reason why I believe the FLC is nonsensical and utterly insane (because the IPSE believe all their members are special and should be treated as such).

HMRC's current stance is everyone paid via PAYE with the decision for SDorC made by the end client. That will result in a default viewpoint of you are being paid by PAYE as its utterly impossible to argue a client doesn't have the right to one of SDorC (why take the risk). So we need to create some simple tests that allow an end client to bring in a contractor to complete a specific task / project to have certainty that their decision won't come back to haunt them.

You could read that as saying you don't want a specific set of objective criteria set up to distinguish between genuine business and pseudo-employee but instead want a specific set of objective criteria set up to distinguish between business and pseudo-employee except in your case you want it defined by the end client. After all, they are the ones defining the contract terms.

Also you would still miss a fair proportion of contractors. I do high level business architecture and consultancy where I'm telling the client what needs to happen. Normally I will be well outside the SDandC boundary but not an SDorC one, and my work is not easily framed in terms of discrete deliverables (unless you count "make it better" as a deliverable). Equally, workers at the other end of the spectrum, such as agile delivery and testing teams and technical support would be out of scope, when in reality clients rely on that temporary resource for all sorts of reasons without them being pseudo employees or even subject to P&P. We mustn't lose sight of what the overall objective here really is; to preserve the status of the people who deliver the flexible workforce.

So a good idea in principle but it needs a bit of work, I feel...

[eek]

You could read that as saying you don't want a specific set of objective criteria set up to distinguish between genuine business and pseudo-employee but instead want a specific set of objective criteria set up to distinguish between business and pseudo-employee except in your case you want it defined by the end client. After all, they are the ones defining the contract terms.

Also you would still miss a fair proportion of contractors. I do high level business architecture and consultancy where I'm telling the client what needs to happen. Normally I will be well outside the SDandC boundary but not an SDorC one, and my work is not easily framed in terms of discrete deliverables (unless you count "make it better" as a deliverable). Equally, workers at the other end of the spectrum, such as agile delivery and testing teams and technical support would be out of scope, when in reality clients rely on that temporary resource for all sorts of reasons without them being pseudo employees or even subject to P&P. We mustn't lose sight of what the overall objective here really is; to preserve the status of the people who deliver the flexible workforce.

So a good idea in principle but it needs a bit of work, I feel...

There has never been an SDandC test, that's the problem. Its always been not subject to SDorC and HMRC are looking to change that to subject to SDorC....

And yes anything suggested will need work but if end clients have to determine status (and that is what HMRC says they want) they will need tests that allow them to confident in their decision that the person is inside / outside and paperwork that can just be filed away knowing that they can argue their point...

[malvolio]

There has never been an SDandC test, that's the problem

Ermm, sorry? The original RMC decision was based on all three needing to be present to determine an employee relationship, not any one of the three, and that hasn't changed.

[EDIT] Sorry, I see what you mean.... However framing a three-cornered test is a lot harder than an any-one-of-three test.

Its always been not subject to SDorC and HMRC are looking to change that to subject to SDorC....

And yes anything suggested will need work but if end clients have to determine status (and that is what HMRC says they want) they will need tests that allow them to confident in their decision that the person is inside / outside and paperwork that can just be filed away knowing that they can argue their point...

And I suggest those tests really need to be outside the determination of the client and not dependent on the contractual requirements of the work, else you are doing nothing to counter abuse of the system. YMMV...