Very worrying - the expenses thing

[mudskipper]

about the same number that are likely to confirm in writing that they relinquish the right to supervise, direct and control.

That is, roughly zero.

Assuming penalties for misreporting, the risk averse approach is to declare SDC whatever the definition.

It could in theory lead to rate increases to compensate, but IMHO clients won't care about that (even if it's considered) the thing that matters is the ability to bin someone easily.

IPSE are producing a client information pack - I'll chase up for an ETA.

[LisaContractorUmbrella]

I agree about the dangers of an alternative - an alternative approach to adminstration (e.g BETs done properly) is one thing, and alternative to IR35 (FLC) is unlikely to be good news IMO (other opinions are available!) and I fear creates a danger of implicitly agreeing that contractors should be treated differently.

Completely agree - HMG need to recognise contractors as an entity separate from employees or temps. They are not employees getting special treatment - they are business people working flexibly for the benefit of the economy as a whole.

[jamesbrown]

We may now then have an accord

I'm not sure there can be an alternative - HMRC/HMG feel that some contractors are not in business on their own account but are disguised employees - any test is always going to be based on the ever shifting sands of employment law which means it's going to be hard to define and impossible to police.

There shouldn't be an alternative, but if HMG is strongly minded to implement what's in the discussion document (at least the part about clients pre-judging status), then it appears we'll need a compelling alternative. I also can't really think of one.

I almost never buy into the hyperbole about the end of contracting (I've been around long enough), but this administrative change has the potential to dramatically alter (shrink) the landscape. It would materially impact the business model for many industries that rely on contractors (clients, accountants, umbrellas, IR35 specialists etc.). There are a few bloody-minded contractors that will carry on regardless, but they'll either accept the punitive taxation and red tape (you can forget about the "level playing field") or work direct in more specialist areas where SDC is difficult to apply in principle and permanent staff aren't a viable option (picture an expert in their field, probably working from their own premises). Sadly, if the latter is where HMG (as opposed to HMRC) view the balance between avoidance and a flexible workforce, the writing is on the wall. No formulation of an FLC would be palatable to HMG in that context because it would be contrary to the supposedly "level" playing field of treating PSC turnover as employment income.

[TykeMerc]

IPSE are producing a client information pack - I'll chase up for an ETA.

That's likely to influence the clients how? IPSE may claim a mandate to represent contractors, but they don't have it and the majority of their members are just buying cheap insurance.

The clients will be idiots if they don't take the risk averse route of defaulting to the implied HMRC line and their legal and accountancy advisors will tell their HR departments the approach to take. They simply won't risk being tarred with a tax avoidance brush if a contractor working for them is subject to investigation and the press get involved.

[mudskipper]

That's likely to influence the clients how? IPSE may claim a mandate to represent contractors, but they don't have it and the majority of their members are just buying cheap insurance.

The clients will be idiots if they don't take the risk averse route of defaulting to the implied HMRC line and their legal and accountancy advisors will tell their HR departments the approach to take. They simply won't risk being tarred with a tax avoidance brush if a contractor working for them is subject to investigation and the press get involved.

Well I'd hope that some clients will respond to the consultation and express their concerns and say it's a stoopid idea. I certainly intend to make mine aware.

Edit: to clarify, my understanding is that the pack will point out to clients the impact this will have on them in engaging resources in the hope that they will respond saying it's a bad idea, but I could be wrong! I agree that, at the point this comes in, they will take the risk adverse route.

[TykeMerc]

Well I'd hope that some clients will respond to the consultation and express their concerns and say it's a stoopid idea. I certainly intend to make mine aware.

Edit: to clarify, my understanding is that the pack will point out to clients the impact this will have on them in engaging resources in the hope that they will respond saying it's a bad idea, but I could be wrong! I agree that, at the point this comes in, they will take the risk adverse route.

The clients will assume (more than likely with good reason) that even if 30% of contractors quit there will still be resource available to them. There are only so many permanent positions available so unless a fair number quit their line of work completely then there will be people willing to work with the imposed regime, it may suck, but some people won't have any choice.
Some of us will be able to adjust our rates up a bit, some will accept that the tax regime means that there will be less in the warchest and that the tax burden is obnoxious but bearable.

It would be nice to think that IPSE will be a force for good in this whole mess, but their past history of "success" and the overpowering stench of arrogance which arises from certain parts gives little confidence. If I honestly believed that IPSE could achieve anything then I'd put aside my loathing and join, but I feel they're responsible in part for the situation we're discussing as they claimed to have a seat at the tables of power.

[mudskipper]

The clients will assume (more than likely with good reason) that even if 30% of contractors quit there will still be resource available to them. There are only so many permanent positions available so unless a fair number quit their line of work completely then there will be people willing to work with the imposed regime, it may suck, but some people won't have any choice.
Some of us will be able to adjust our rates up a bit, some will accept that the tax regime means that there will be less in the warchest and that the tax burden is obnoxious but bearable.

It would be nice to think that IPSE will be a force for good in this whole mess, nut their past history of "success" and the overpowering stench of arrogance which arises from certain parts gives little confidence. If I honestly believed that IPSE could achieve anything then I'd put aside my loathing and join, but I feel they're responsible in part for the situation we're discussing as the claimed to have a seat at the tables of power.

Kate Cotterell was recommending that people tell their clients.

Revenue opens consultation to reform IR35 :: Contractor UK

"Bring the document to the attention of your agencies and especially your clients who may be asked to “take on more of a role in ensuring that the right amount of employment taxes are paid” (as the discussion document states on page 8)"

It may not do any good, but it's worth a shot.

[BolshieBastard]

I dont think it will matter if clients kick off about the burden placed on them or not, the government will just shift (retain?) the onus on contractors to prove they arent under the DC&S of the end client.

And this is going to be virtually impossible to prove as several people have already pointed out.

[GillsMan]

I dont think it will matter if clients kick off about the burden placed on them or not, the government will just shift (retain?) the onus on contractors to prove they arent under the DC&S of the end client.

And this is going to be virtually impossible to prove as several people have already pointed out.

So I've just read this article (How HMRC is revoking tax relief on contractor expenses :: Contractor UK) about the expenses and it poses an interesting question for me.

I formed MyCo Ltd 5 years ago when I started contracting. Nowadays, I employ 6 people (all consultants/developers/designers) to carry out work for us. We have many clients on the go at one time. One of our clients is based in Manchester. It's a client where I offer some specific strategic advice at quite a reasonable daily rate. And here's the thing: it goes through an agency. We have agreed a daily rate, and I bill on the days they need me. All remotely and it could be 0 days in a month, or it could be 20-22. Typically, it's around 5-10 days a month.

Client wants me to travel to Manchester soon. It'll be the first time I've met them funnily enough. So, HMRC are saying that merely by operating through an agency I can't claim the travel expenses? No-one could claim that I don't operate independently. We have our own office, proper staff, equipment, all that sort of stuff. MyCo Ltd is clearly a business in its own right.

Obviously I'm not that bothered about the price of a train ticket from London to Manchester, but is this really what HMRC are saying, or have a misread it?

Point being, it's perfectly reasonable to operate through an agency and have complete autonomy - no-one could accuse my business of being a sham, nor of me being a disguised employee.

[jamesbrown]

Client wants me to travel to Manchester soon. It'll be the first time I've met them funnily enough. So, HMRC are saying that merely by operating through an agency I can't claim the travel expenses? No-one could claim that I don't operate independently. We have our own office, proper staff, equipment, all that sort of stuff. MyCo Ltd is clearly a business in its own right.

Not sure, but the agency legislation doesn't apply in that case:

ESM2032 - Agency and temporary workers: agency legislation - provisions from 6 April 2014: when the agency legislation does not apply (6 April 2014 onwards)