UTT gives HMRC another spanking.

[DaveB]

The CEST tool guidance says this:



That means HMRC could say they could take you on the inside contract, but created the outside arrangement to avoid tax.

There is no way around that I am afraid.

They can say it but they would have to prove it in court. Provided the contract terms and conditions match the working arrangements they will struggle to do that. Results from the tax tribunals are a clear indication of that. HMRC have consistency lost 90+% of the cases they bring, despite the fact that they supposedly only bring the ones they think they can win.

In any event the only real change will be that the liability post reform will sit with the client not the contractor so the incentive is there for them to get it right. The actual law remains the same and the burden of proof required to defend, or to prosecute for HMRC, remains the same.

[elsergiovolador]

They can say it but they would have to prove it in court. Provided the contract terms and conditions match the working arrangements they will struggle to do that. Results from the tax tribunals are a clear indication of that. HMRC have consistency lost 90+% of the cases they bring, despite the fact that they supposedly only bring the ones they think they can win.

In any event the only real change will be that the liability post reform will sit with the client not the contractor so the incentive is there for them to get it right. The actual law remains the same and the burden of proof required to defend, or to prosecute for HMRC, remains the same.

Do you think the client will have time and money for years long battles in court, potentially for each contractor, even if they are likely going to win?

[DaveB]

Do you think the client will have time and money for years long battles in court, potentially for each contractor, even if they are likely going to win?

Once the insurance market gears up then yes, I think they will.

Anyone providing IR35 investigation insurance for contractors now is going to look to move that business over to the clients. At least a couple of the providers had plans in place until the changes got postponed.

The corporate attitude to risk is almost always "We need to do this, it carries a risk, how can we insure against it?" Once they have that insurance they will carry on as they see fit.

There have been some notable areas where blanket bans were brought in, primarily in banking, but one they realise they are going to struggle to get the right skills market forces will drive them to change their position.

It won't happen overnight, but it will happen in the same way it has happened in the public sector. Public sector bodies have effectively self insured as a business cost as they don't actually care that much, it's all the governments money anyway and bodies like the Home Office have the clout to push back against HMRC when they have to.

[elsergiovolador]

Once the insurance market gears up then yes, I think they will.

Anyone providing IR35 investigation insurance for contractors now is going to look to move that business over to the clients. At least a couple of the providers had plans in place until the changes got postponed.

The corporate attitude to risk is almost always "We need to do this, it carries a risk, how can we insure against it?" Once they have that insurance they will carry on as they see fit.

There have been some notable areas where blanket bans were brought in, primarily in banking, but one they realise they are going to struggle to get the right skills market forces will drive them to change their position.

It won't happen overnight, but it will happen in the same way it has happened in the public sector. Public sector bodies have effectively self insured as a business cost as they don't actually care that much, it's all the governments money anyway and bodies like the Home Office have the clout to push back against HMRC when they have to.

Isn't the cost of creating IR35 proof contracts, finding proper and proven insurance company (just because company claims they can insure, doesn't mean they will not have a fine print effectively making it useless) plus additional stress, going to nullify the cost difference?
When banking changes their working practices after declaring their roles inside, to be outside again isn't HMRC going to think they do it solely to help avoid tax?
Ultimately the view appears to be that if the role can be done by a staff member, then it cannot be outside.
Have a look at guidances and cases studies that have been released recently. Possibility to genuinely have someone "outside" is very limited.

[simes]

The CEST tool guidance says this:

Note that HMRC will not stand by results achieved through contrived arrangements that have been deliberately created
or designed to get a particular outcome. They would see this as deliberate non-compliance, and you risk financial
penalties.

That means HMRC could say they could take you on the inside contract, but created the outside arrangement to avoid tax.

There is no way around that I am afraid.

Yes. 'We will stand by it until we find some reason to not' Sounded similar to the other similar sounding promise from the HMRC that said, 'We won't investigate back dated cases, unless we suspect we can.'

So currently we have Jesse who's sure there have never been nor will there be a likelihood of PSC bans, and an HMRC that is getting itself spanked with a CEST tool that They say is fit for purpose even though the courts have been telling them, and will continue to tell them otherwise.

If there was an emoji for Head in Sand... Or Hopelessness.

[elsergiovolador]

What is staggering is that people believe this legislation is to make contractors pay taxes like employees and dismiss "no rights employment" that is being created as a side effect of this legislation as a non-sense.
They firmly believe contractors pay no tax and they work just like employees - the HMRC propaganda has completely soaked in without any resistance.

It will be fun to watch when most permies loving this reform will get brolly contract to sign in April

[AnthonyQuinn]

BS.......

getting the right skills isn't easy. Any contractor, with niche skills and plenty of experience, and a track record of adding value, will still continue to operate outside IR35.
As for the risks.... It depends.... If you're just another bum on seat they're not going to wear it. If however, you are one person, doing one critical 'job' then they'll accept the risk
The don't want the risk of being shafted for a hundred contractors, they'll cope for one or two.

Niche skills are niche for a reason. While there is not much supply there's not much demand either. If there was a lot of demand then it wouldn't be niche, it would be mainstream.

There will be no contracts for a while. Get over it. You will then accept whatever is offered. Its not as if clients are going to be flush with the mother of all recessions looming.

[elsergiovolador]

My prediction is that the final HMRC appeal is going to be accepted, otherwise HMRC will have to pay tax back to all those people wrongly assessed with the tool.

[Lance]

My prediction is that the final HMRC appeal is going to be accepted, otherwise HMRC will have to pay tax back to all those people wrongly assessed with the tool.

HAHAHAHAHAHAHA.......

why on earth would they have do that?
It's not like it's overpaid tax. It's tax paid voluntarily based on a a flawed assessment tool. HMRC will simply say that the tool isn't supposed to replace actual tax knowledge. It's simply a tool to assist.

[elsergiovolador]

HAHAHAHAHAHAHA.......

why on earth would they have do that?
It's not like it's overpaid tax. It's tax paid voluntarily based on a a flawed assessment tool. HMRC will simply say that the tool isn't supposed to replace actual tax knowledge. It's simply a tool to assist.

That sounds like a fraud to me to make people pay incorrect tax.