IR35 letters going out to GlaxoSmithKline contractors

[webberg]

What I am driving at with the above is that unless all contractors are engaged via the same agency and all parties within the chain are the same then I struggle to see how HMRC take this approach (or indeed a Tribunal).

then god help us all.

And much of what you say is true.

IR35 is a very personal thing and whilst I am of the school that puts contracts a long way down the list of important items to consider, it cannot be ignored. Neither can the extent to which a contract term is observed or breached.

Most large outfits like GSK will have a PSL upon which perhaps 3 or 4 or 5 agencies appear. Therefore in a large department with many contractors, there may be just 2 or 3 agencies involved. If you look at the contracts, I suggest that 90% or more of the content is identical between agencies.

So even by concentrating on the contract alone, we are talking about nuances rather than clear and obvious differences.

Also in many large departments, whilst some contractors may take a very literal approach to working to the contract terms, in reality I'm going to suggest that most fall into a pattern which is designed to be acceptable to the end client and in line with what everybody else does.

I cannot imagine that a contractor who steps out of line has too many contract renewals as they become too difficult to manage.

In this scenario, HMRC's claim that only 1 in 10 of present contractors is truly outside IR35, starts to make sense.

It is my view also that a Tribunal will be interested in setting precedent and not be concerned greatly about small differences in contract etc when the evidence is that 20 contractors in the same department operated the same way. Where that department is replicated in many firms and/or the skills required to run it are relatively commonplace, or can be organised only in certain ways, the job of proving an "outside" contract and having a case for Tribunal becomes more difficult.

Not impossible and I hope that the stories we see here of contractors doing their own thing most of the time can be proven.

[ShandyDrinker]

Also in many large departments, whilst some contractors may take a very literal approach to working to the contract terms, in reality I'm going to suggest that most fall into a pattern which is designed to be acceptable to the end client and in line with what everybody else does.

I cannot imagine that a contractor who steps out of line has too many contract renewals as they become too difficult to manage.

In this scenario, HMRC's claim that only 1 in 10 of present contractors is truly outside IR35, starts to make sense.

Sadly I have been a victim of the renewals comment and indeed when negotiating a contract too. Agencies and clients often just want you to "sign the contract as everyone else does, you're just being difficult".

It's sad though that clients cannot that working with contractors on a proper B2B basis will ultimately be mutually beneficial.

Although I digress slightly, if there are now targeted campaigns, I expect to see that we are going to see cries of skills shortages if companies do throw contractors under a bus.

[PTP]

Average earnings £70k?

Average tax paid outside IR35, perhaps 20% = £14k

Average tax due inside IR35, perhaps 35% = £24.5k

Say £10k pa difference.

Not all 1500 will be caught but HMRC policy says 1350 will.

That's £13.5m.

Not trying to check your figures. Instead, I just want to check my understanding:

I've sometimes read that the corporation tax that has been paid will get offset against the unpaid NI & Income Tax.
Here it is mentioned in a Larsen Howie article earlier this month
HMRC IR35 investigation: everything you need to know | Larsen Howie

Where you are found to be inside IR35, the limited company owes arrears of income tax, NICs, interest and penalty payments minus Corporation tax relief for the deemed payment.

Whereas sometimes I see no mention of CT relief in articles/conversations.


So do you or don't you get CT relief?

[jamesbrown]

So do you or don't you get CT relief?

Generally, yes, but it isn't straightforward if your returns are found to be wrong under investigation. For example, there are various timelines for investigation, depending on the type of the tax (NI, CT etc.) and what you've done wrong. However, when claiming CT relief from earlier years, you only get two years to claim it, so that will be long gone under investigation, generally speaking. But a "reasonable" settlement is always a possibility (as is an unreasonable one ) and the judge can be asked to form an opinion if there is disagreement. So it's grey.

[webberg]

Yep - what he said.

This calculation can get quite complicated.

[Liberator]

Yep - what he said.

This calculation can get quite complicated.

And even more complicated I presume for those contractors for whom their spouse has 50% of the shares of the company to take advantage of both their lower rate tax thresholds.

[northernladuk]

And even more complicated I presume for those contractors for whom their spouse has 50% of the shares of the company to take advantage of both their lower rate tax thresholds.

I thought they'd just work on gross values and charge the contractor as it's his/her worked income so wouldn't really make any difference the numbers.

Getting the money back off the wife is a different issue.

[Invisiblehand]

Does anyone know which advisers are representing the group?

[northernladuk]

Dave Chaplin is collecting names but there should be no group representation. If you've paid for it you've got representation, if you haven't, you don't.

It's going to set a potentially bad precedent if one group of contractors is represented and letters start going out to many different companies in the coming months who then won't get any help as the money has run out. This isn't a one off, it's potentially the start of something much bigger.

[BlueSharp]

Dave Chaplin is collecting names but there should be no group representation. If you've paid for it you've got representation, if you haven't, you don't.

It's going to set a potentially bad precedent if one group of contractors is represented and letters start going out to many different companies in the coming months who then won't get any help as the money has run out. This isn't a one off, it's potentially the start of something much bigger.

I'm expecting to see a letter go out to every one who has been off-payrole and reported on the Agency off-payroll regulations. There was a question if the the reporting regulations required the end clients details, however they do have the agencies details that made the report.