Government to consult on tax avoidance in the private sector

[simes]

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.

I am not sure I suggested CEST as being easy or difficult to use. And the HMRC can stand by what they like while they continue to lose IR35 cases.

But, one is told that the contract has to reflect the working conditions. If an investigation is undertaken, then how would the agent know what the reality of the conditions are? That would come down to the client being dragged into a case. Anyway, time will tell.

Pray tell your experiences of substitution being quite straight forward. Maybe (I say maybe) your experience is in the small digital coding house, but in my experience of large blue chips, it, logons and cards, takes weeks. And in some cases is dependent on Employee Numbers having been assigned. A temp sub would, I fear, hit a brick wall in this regard.

[SuperLooper]

Am I right in thinking that the proposed changes would not (and could not) affect those of us whose clients are overseas with no UK presence?

[HugeWhale]

Am I right in thinking that the proposed changes would not (and could not) affect those of us whose clients are overseas with no UK presence?

I don't see the logic. A UK company trading with, say, a US-based company which delivered services out of the US would be expected to abide by US laws. Likewise, any company trading with the UK would be obliged to abide by the laws of the UK.

[HugeWhale]

^^^^

Just opinion by the way.

[madame SasGuru]

+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.

That's because I suspect the more technical bits of work will be offloaded towards consultancies rather than individuals.

While big companies will have bigger budgets and more staff, they will also have a lot more at stake - HMRC will be looking at an individual and then aiming to add the other 50-1000 contractors at the company to the final bill. So why save £200 a day + admin costs when you can just offload the whole project to a consultancy for a fixed fee. So in a rose tinted world you and Maslins may be correct but I suspect the reality is that TCS and other outsources will win.

[poorautojobber]

I thinking anyone who thinks it's going to be any better in the private sector to public is kidding themselves. Plan for worst be happy if you get any better.
Just from a HMRC Manning perspective those people would be better spent on dealing with Brexit than chasing 'cheating contractors'. If that means they incorrectly tax you I don't think they really care that much remember 'maximise revenue' is the new God at HMRC towers.

[jamesbrown]

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.)

I'd like to see your life expectancy and quality of life without these universities that have "no clue" about the "real world".

Contractors OTOH

[SueEllen]

That's because I suspect the more technical bits of work will be offloaded towards consultancies rather than individuals.

While big companies will have bigger budgets and more staff, they will also have a lot more at stake - HMRC will be looking at an individual and then aiming to add the other 50-1000 contractors at the company to the final bill. So why save £200 a day + admin costs when you can just offload the whole project to a consultancy for a fixed fee. So in a rose tinted world you and Maslins may be correct but I suspect the reality is that TCS and other outsources will win.

And the consultancies will do what they have always done - load their project with contractors, if they don't have the in-house skills, who are outside IR35.

HMRC still won't get their tax.

[Maslins]

While big companies will have bigger budgets and more staff, they will also have a lot more at stake - HMRC will be looking at an individual and then aiming to add the other 50-1000 contractors at the company to the final bill. So why save £200 a day + admin costs when you can just offload the whole project to a consultancy for a fixed fee. So in a rose tinted world you and Maslins may be correct but I suspect the reality is that TCS and other outsources will win.

Perhaps...but why don't big companies use those big consultancies for everything now? Presumably because whilst individual contractors may be a bit more hassle (500 contracts and 500 invoices/month instead of 1), it'll be significantly cheaper for them.

When it comes to corporate tax, the big corps are evidently prepared to sail fairly close to the wind. Presumably at least partly because they're confident their lawyers are better than HMRC's and/or they check the legal small print very carefully to ensure they stay just the right side of the law. So they're happy to take a bit of a risk there to save some money. Why would it be any different for the situation we're talking about?

[madame SasGuru]

Perhaps...but why don't big companies use those big consultancies for everything now? Presumably because whilst individual contractors may be a bit more hassle (500 contracts and 500 invoices/month instead of 1), it'll be significantly cheaper for them.

When it comes to corporate tax, the big corps are evidently prepared to sail fairly close to the wind. Presumably at least partly because they're confident their lawyers are better than HMRC's and/or they check the legal small print very carefully to ensure they stay just the right side of the law. So they're happy to take a bit of a risk there to save some money. Why would it be any different for the situation we're talking about?

They will trust the tax accountant in head office using reassuringly expensive advice from a big 4 accountancy firm and tax lawyers a lot more than a junior manager in the Reading sub-office trying to save a few quid... Especially when the risk is that the junior manager screws up and starts treating the contractor in a way that looks like an employee - and that risk is multiplied by 200 random managers through the company..

As others said, prepare for the worst as while it will (probably) be better than that don't assume things will remain how they currently are.