Government to consult on tax avoidance in the private sector

[Lance]

1. CEST is easy to use and HMRC will stand by its result. The liability is with the agency not the client or contractor, so it's in the clients interest to use the tool. If a client puts everyone inside then their contractors in many cases will walk out. This happened to HMRC themselves and so they changed their mind!

2. Substitution is actually quite straightforward, even in situations requiring security badges and logins.

More importantly, you don't need to actually use a substitute. You need the client to state that they'd accept a suitably qualified substitute if the contractor wanted to use that clause.
HMRC may consider the clause a sham, but the law does NOT, and a client giving evidence is what the law is interested in.

[LondonManc]

More importantly, you don't need to actually use a substitute. You need the client to state that they'd accept a suitably qualified substitute if the contractor wanted to use that clause.
HMRC may consider the clause a sham, but the law does NOT, and a client giving evidence is what the law is interested in.

Shows you how crazy it is that HMRC think their opinion trumps actual fact.

[jamesbrown]

Shows you how crazy it is that HMRC think their opinion trumps actual fact.

It doesn't, and they don't (really), but it doesn't need to. It simply needs to trump process, which is the whole point of these administrative changes (which change nothing about the hypothetical contract).

[poorautojobber]

I think big clients will run for the hills and put everyone inside then we end up with some weird ppi style mess. Contract calculator seem to be about to offer something for people in the public sector.
That leaves consultancies who based their business model around contractors they have to get it right or they go pop.
The simple solution to me has been discussed before every contract is reviewed and insured.

HMRC is trying to scare companies away from contractors because it reduces their admin and supposedly will increase the tax take they get. Either way it looks like they win!

[LondonManc]

I think big clients will run for the hills and put everyone inside then we end up with some weird ppi style mess. Contract calculator seem to be about to offer something for people in the public sector.
That leaves consultancies who based their business model around contractors they have to get it right or they go pop.
The simple solution to me has been discussed before every contract is reviewed and insured.

HMRC is trying to scare companies away from contractors because it reduces their admin and supposedly will increase the tax take they get. Either way it looks like they win!

HMRC are like universities - not a clue about how the real world works away from textbooks and 50 year-old financial models unfit for the modern age. Closing down contracting will result in a massive decrease in tax take for them (including the knock-on spend that contractors make on dining out, housing, shopping, etc.)

[swamp]

I think big clients will run for the hills and put everyone inside then we end up with some weird ppi style mess. Contract calculator seem to be about to offer something for people in the public sector.
That leaves consultancies who based their business model around contractors they have to get it right or they go pop.
The simple solution to me has been discussed before every contract is reviewed and insured.

HMRC is trying to scare companies away from contractors because it reduces their admin and supposedly will increase the tax take they get. Either way it looks like they win!

I heard much of this came from the Cabinet Office. They promised to raise the 'missing' £400m from the public sector. Quite predictably they have just opened Pandora's box, and haven't raised the money.

The new public sector rules will *not* be extended to private sector as they currently stand because the Treasury stands to 'lose' even more money.

[GreenMirror]

I would be interested to see what IPSE and QDOS have to say on this.

[Maslins]

I think big clients will run for the hills and put everyone inside then we end up with some weird ppi style mess. Contract calculator seem to be about to offer something for people in the public sector.

Personally I disagree. I think big clients will discuss with their legal teams and insurers in advance. They'll then end up with two tiers of contractors:
1) those they're happy are outside IR35.
2) those they think are inside IR35.
They'll have different contracts depending upon which tier the individual concerned is in, and will also no doubt have a list of "do"s and "don't"s from the legal/insurance bods to ensure working practices are in line with contracts.

Maybe I'll be proved wrong, but I doubt the clients would just insist everyone is inside...not much in it for them to do so.

Those in (1) can carry on as before, with the added benefit for the contractors themselves that they no longer have the fear of an IR35 related enquiry landing on their desk years down the line (as it would land on their client's desk). Win for them.

Those in (2) may be a bit grumpy, but if they're in this bracket, the likelihood is they probably were inside IR35 before and just weren't declaring it. They'll financially be a bit worse off, and/or may give up their companies to become permies/umbrella workers.

The end client can therefore demonstrate they've done some work on it, and "pushed" some contractors either inside IR35 or to umbrellas/permies.

This in turn will hopefully satisfy HMRC, as they'll have more tax from those in (2) above. If HMRC aren't happy, they'll know they've got a fairly tough nut to crack if they want to challenge the big client on those contractors where the client has at least supposedly done their research on and deemed outside. Remember big client will have big teams of lawyers and deep pockets that most individual contractors don't. Also remember the end client now has the same goal of the contractor of things being outside IR35...whereas up to now the end client is indifferent, so might sometimes say something during an investigation that was a real kicker for the contractor's side.

Maybe I've got rose tinted glasses on, but I kinda think it'll be a win for most of those concerned.

[Lance]

bang on Maslins.

That's exactly how it will work if just pushed from PS to private.
In fact I can see PS rolling some of it back as well as they find they need to understand the rules to get best value from their contractors (we all want that).

Maybe I got my rose goggles from the same shop, but I don't think so.

[LondonManc]

+1 but sasguru didn't like it when I hinted at it last week.

Simple fact is that the likes of PMO staff and junior analysts have had a decent outside IR35 innings and it's time to accept their fate.