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

[TheCyclingProgrammer]

Then maybe that's something Lisa could raise in a response if she's happy to do so.

WDYT Lisa? Is HMRC missing something with this "agency" point or are we?

[jamesbrown]

Then maybe that's something Lisa could raise in a response if she's happy to do so.

WDYT Lisa? Is HMRC missing something with this "agency" point or are we?

If you look at the original legislation, agency is defined in 2.--(1):

"“agency” has the meaning given in section 44 of ITEPA;"

Namely, this:

"the services are supplied by or through a third person (“the agency”) under the terms of an agency contract".

I would read this as a common language use of the term agency, rather than an employment agency, more narrowly defined.

[TheCyclingProgrammer]

OK, so to summarise, if Lisa is happy to send another email, it would make sense I guess to ask:

* The HMRC response largely referred to "personal service companies" but I want them to clarify that potentially any business who sub-contracts could be caught by these new reporting requirements, whether its a one man "PSC" or a large consultancy who sometimes uses sub-contractors for client projects.

* The legislation states that only "specified employment intermediaries" need to report to HMRC and a specified intermediary is one that "is an agency". What is the definition of agency in this context and where is that definition stated?

[eek]

OK, so to summarise, if Lisa is happy to send another email, it would make sense I guess to ask:

* The HMRC response largely referred to "personal service companies" but I want them to clarify that potentially any business who sub-contracts could be caught by these new reporting requirements, whether its a one man "PSC" or a large consultancy who sometimes uses sub-contractors for client projects.

* Can you confirm what is the legal definition as would be accepted by a court of law as to what is meant by a "personal service company"...

* The legislation states that only "specified employment intermediaries" need to report to HMRC and a specified intermediary is one that "is an agency". What is the definition of agency in this context and where is that definition stated?

I've updated the above as I'm getting utterly fed up with HMRC talking about the concept of a PSC when there is no legal definition of one and HMRC seem to be purposefully avoiding defining what one actually is.

The thing is that I know what a PSC company is. Many people have them as it allows them to route the money their receive through them. I however run a business and outsource various pieces of work through it...

[jamesbrown]

Certainly, it's worth asking for clarity, but (FWIW) I have some thoughts.

* The HMRC response largely referred to "personal service companies" but I want them to clarify that potentially any business who sub-contracts could be caught by these new reporting requirements, whether its a one man "PSC" or a large consultancy who sometimes uses sub-contractors for client projects.

Yes, I think it applies to any company that is a specified employment intermediary for the purposes of the legislation, regardless of size or other features. To determine whether a report must be filed, the specified intermediary would need to seek some information from the subcontractor. This would either be: 1) "all work was conducted by employees subject to PAYE"; 2) here's the sensitive info. you require about each worker supplied; or 3) bugger off. In the case of (1), I believe there is no reporting requirement. In the case of (2), there is a reporting requirement (unless there is a specified intermediary further up the chain). In the case of (2), how is the information provided when there is an intermediary further up the chain; I guess it's just propagated downwards(?) In the case of (3), what happens?

* The legislation states that only "specified employment intermediaries" need to report to HMRC and a specified intermediary is one that "is an agency". What is the definition of agency in this context and where is that definition stated?

Don't we know that from the above (since this is amending the earlier legislation where agency is defined)? In other words, section 44 of ITEPA.

[TheCyclingProgrammer]

Don't we know that from the above (since this is amending the earlier legislation where agency is defined)? In other words, section 44 of ITEPA.

The only problem is that s44 doesn't seem to give an explicit definition of "agency" that I can see; I'd like to hear it from the horses mouth.

[TheCyclingProgrammer]

Another question to add to the list:

How has HMRC considered the potential impacts of these new reporting requirements on any small business who uses sub-contracted resources. Their consultation appeared to be very focussed on employment agencies; yet HMRC appear to want it to apply to any small business.

[TheCyclingProgrammer]

• So yes, if you but in someone else to provide the services to the client (ie carry out the work the client contracted to have done) then you are going to have to compelete a return telling us about the people the company pays to provide services.

FWIW, I've been communicating regularly with my own accountant regarding this and he has seen the latest response Lisa received from HMRC. My accountant's view is that the above statement would still indicate that reporting is only necessary if the sub-contracted party is working directly for the end client in my place (i.e. a substitute or working directly alongside me) rather than being contracted to do a very specific piece of work.

In other words, his view is very much inline with my own thoughts: If ClientCo contracted MyCo to design a website and as part of that project, I sub-contracted FreelanceDesignBod to design a logo for the website, that would not need reporting. OTOH if I sub-contracted OtherWebDesignBod to actively work alongside me as part of a two man team on the project, with MyCo acting as project lead or as a complete substitute as I was taken ill, that would need reporting.

The issue is of course that this is all a matter of interpretation so there is still a huge element of doubt in my mind.

Perhaps it would be helpful to talk in terms of concrete rather than abstract examples when speaking with HMRC about this?

[LisaContractorUmbrella]

Then maybe that's something Lisa could raise in a response if she's happy to do so.

WDYT Lisa? Is HMRC missing something with this "agency" point or are we?

Yep more than happy to. IMHO this is an example of HMRC doing joined up thinking (I know, I know). Agencies and PSC's who subcontract, as has now been confirmed, will have to report on all umbrella employees and all PSC contractors, including what's paid gross. If you align this with the RTI system and other existing reporting requirements it will enable HMRC to join the dots so to speak. They will know what's being paid out and then what's being brought in through taxation - any gaps will be, theoretically, reasonably easy to spot and therefore tax avoidance, in whatever form, will be easy to spot making HMRC's life easier and politicians happier. Could be wrong but that's how it all reads to me.

[LisaContractorUmbrella]

Following sent - will let you know as soon as I have a response:

"“The HMRC response largely referred to "personal service companies" but I want them to clarify that potentially any business who sub-contracts could be caught by these new reporting requirements, whether its a one man "PSC" or a large consultancy who sometimes uses sub-contractors for client projects.

* The legislation states that only "specified employment intermediaries" need to report to HMRC and a specified intermediary is one that "is an agency". What is the definition of agency in this context and where is that definition stated?”

“The only problem is that s44 doesn't seem to give an explicit definition of "agency" that I can see; I'd like to hear it from the horses mouth”.

“How has HMRC considered the potential impacts of these new reporting requirements on any small business who uses sub-contracted resources. Their consultation appeared to be very focussed on employment agencies; yet HMRC appear to want it to apply to any small business”.

“My accountant's view is that the above statement would still indicate that reporting is only necessary if the sub-contracted party is working directly for the end client in my place (i.e. a substitute or working directly alongside me) rather than being contracted to do a very specific piece of work.

In other words, his view is very much inline with my own thoughts: If ClientCo contracted MyCo to design a website and as part of that project, I sub-contracted FreelanceDesignBod to design a logo for the website, that would not need reporting. OTOH if I sub-contracted OtherWebDesignBod to actively work alongside me as part of a two man team on the project, with MyCo acting as project lead or as a complete substitute as I was taken ill, that would need reporting.

The issue is of course that this is all a matter of interpretation so there is still a huge element of doubt in my mind.”