"IR35 could well be dead in a few months" ?

[Forbes Young]

I exchanged another email with CC. In short, they are suggesting that it is now in everyone's interests to show that workers were not under D&C. So where previously HMRC might interview a client to try and show that D&C existed, agencies and clients are no longer want to play ball with this, particularly if its been reported that D&C was *not* a factor.

I think the implication that this will effectively kill IR35 is hyperbole. But they may have a point.

My thoughts on this are that if IR35 was going to be "replaced" or scrapped, there would have been reports galore and headlines all over the place. The additional reporting required by the Agencies from July seems to be to try and stop flagrant abuse to the PAYE system, as opposed to genuine contractors operating through their own ltd companies outside of IR35 and taking dividends. It may lead to more IR35 investigations in my view but not replace IR35 itself.
Graeme Bennett ACMA MBA

[Zero Liability]

I can see why they think this may endanger IR35 (oh dear), or rather make agencies more cautious, which will be to the benefit of contractors. I suspect HMRC has other plans in store, however, in the form of the FLCs, about which so far little has been said, but there is plenty of time for it to resurface come next government. Even if they make their targeting a little more fine-tuned off the back of this reporting, they are still severely resource-constrained and I cannot see the inquiries rising much, given their abysmal cost-efficiency, particularly as they increase. I wouldn't be surprised if they continued targeting on the basis of how much yield they can capture, since they really haven't got the capacity for much more than this.

Also, back to the main topic, the below suggests that the amount of reporting agencies will have to do will depend on the number of engagements the contractor enters into during the reporting period:

Agency Legislation Will Stifle Self-Employment - Contractor Weekly

From 6 April 2014, agencies must be able to prove to HMRC why the worker wasn’t treated as an employee. They will have to work with their client and the worker to get suitable evidence to demonstrate this.

From 6 July 2015 onwards, agencies will have to send HMRC reports that contain details of all workers and their payments for those they consider to be genuinely self-employed, with penalties applying where reports are late, incomplete or incorrect.

Each report will contain:

• the start and end dates of the reporting period
• the worker’s personal details
• the engagement and payment details

If a worker has more than one engagement in a reporting period, then the agency must provide details about each engagement, including:

• how a worker was engaged to do the work – through a partnership, limited liability partnership, self-employed, limited company, another party that operated PAYE;
• start date of each engagement;
• end date of each engagement (if there is one);
• number of hours worked during the reporting period;
• total amount paid to the worker;
• the full name or trading name of whoever received the payments – if this was a limited company, the company registration number must be provided; and
• if the payment included VAT.

Sounds like the amount of info they solicit if there's more than one engagement in the period increases significantly. This was also on CW today:

http://contractorweekly.com/contract...on-trumps-ir35

Obviously they're not referring, though, to the argument that TCP got out of CC via his email exchange.

[TheCyclingProgrammer]

Just bumping this again after seeing news about these new reporting requirements in the latest employer bulletin from HMRC as it got me wondering...if we (as limited company contractors) sub-contract any work when working for a client, does that mean that we now have to report that, or is it specifically to do with "supplying workers"?

It seems crazy that any business that sub-contracts to another, that they would have to report information about all sub-contractors to HMRC so surely it can't cover that?

[TheFaQQer]

Just bumping this again after seeing news about these new reporting requirements in the latest employer bulletin from HMRC as it got me wondering...if we (as limited company contractors) sub-contract any work when working for a client, does that mean that we now have to report that, or is it specifically to do with "supplying workers"?

Yes, you would need to collect the information and report it to HMRC.

[TheCyclingProgrammer]

Yes, you would need to collect the information and report it to HMRC.

Hmm, I'm not completely convinced. Here's the Gov.uk page:

https://www.gov.uk/government/public...e-changes-mean

It looks like the key thing is that you are an "intermediary" who "supplies workers".

I certainly agree that if I sub-contract somebody and supply them to my client to work for them, then I would have to, as per this:

If a PSC supplies more than 1 worker, including any subcontracted workers, it will be acting as an intermediary and will have to send reports for each reporting period.

But if I sub-contract some portion of work to another supplier, who has no direct contact with the end client, then I'm not supplying them to anybody am I?. They are working for me and nobody else.

What if the supplier I sub-contract to isn't Joe Bloggs Freelancer or Joe Bloggs PSC Ltd, but ACME Giant Software Corp?

I'll ask my accountant and see what he thinks.

[LisaContractorUmbrella]

One-person limited companies, or personal service companies (PSCs), that only supply a client with 1 worker don’t have to send reports to HMRC.

If the worker is supplied through an intermediary they will be included in the return of the intermediary that has the contract with the end client.

If a PSC supplies more than 1 worker, including any subcontracted workers, it will be acting as an intermediary and will have to send reports for each reporting period.

I think TF is right in what he said

[TheCyclingProgrammer]

If a PSC supplies more than 1 worker, including any subcontracted workers, it will be acting as an intermediary and will have to send reports for each reporting period.

But what is the definition of "supplying a worker"? The guidance isn't clear at all.

If I'm contracted to develop an iPhone app for a client and I need some design work doing, and I sub-contract that design work (without the client even being aware) do I need to report that? What about if I sub-contract to a big design agency? Do I need to report that? What if Big Design Agency Inc. uses more than one of its employees to work on my brief. Do I need to report and obtain information about each person who worked on the project? That's ludicrous. Its so unclear.

[jamesbrown]

It seems crazy that any business that sub-contracts to another, that they would have to report information about all sub-contractors to HMRC so surely it can't cover that?

It does seem crazy, but it's true, and it will apply in the case of YourCo (the intermediary) providing a substitute or subcontracting; see examples 1 and 2 and the text on PSCs:

https://www.gov.uk/government/public...vice-companies

For example, YourCo might assume the position of Intermediary 2 in an agency arrangement in Example 1 or Intermediary 1 when supplying direct in either example.

[TheCyclingProgrammer]

It does seem crazy, but it's true, and it will apply in the case of YourCo (the intermediary) providing a substitute or subcontracting; see examples 1 and 2 and the text on PSCs:

So if I ask Big Design Co to design me some graphics for a project, and three of their employees do some work on it, do I need to report each employee or just Big Design Co?

What about my client? I'm currently doing a contract for a design/development agency on a project for one of their clients. They aren't "supplying" me to their client, I'm just part of the in-house team for the project. Does my client now have to report about me/MyCo in their payroll returns? Not my problem I know, but still. What idiot at HMRC thought this scheme up?

[LisaContractorUmbrella]

But what is the definition of "supplying a worker"? The guidance isn't clear at all.

If I'm contracted to develop an iPhone app for a client and I need some design work doing, and I sub-contract that design work (without the client even being aware) do I need to report that? What about if I sub-contract to a big design agency? Do I need to report that? What if Big Design Agency Inc. uses more than one of its employees to work on my brief. Do I need to report and obtain information about each person who worked on the project? That's ludicrous. Its so unclear.

I believe that the reporting requirement will only kick in where there's an agency between the PSC and the end client; I am not sure that a PSC contracting direct with an end client and then sub-contracting part of the role would then be considered an intermediary although re-reading the guidance I am not sure. I'll see if I can find out.