Inside IR35 tax Liability

[Keanu2020]

such as whether the client really issued a timely SDS .

I have tracked down and have a copy of the orginal SDS, it was done three months before I started by their perm staff. I have no reason to doubt anything they have said to me, their VERY by the book there as well (i've worked at a few different Depts. as well as a benchmark).

I will update once i've spoken to legal next week.

[eek]

I have tracked down and have a copy of the orginal SDS, it was done three months before I started by their perm staff. I have no reason to doubt anything they have said to me, their VERY by the book there as well (i've worked at a few different Depts. as well as a benchmark).

I will update once i've spoken to legal next week.

Oh I very much think the issue is sat at one agency or the other and had nothing at all to do with the public sector client.

the issue here is that I suspect you are the very first person to have encountered this mess and absolutely no-one has a clue what needs to be done to fix it. The worrying thing is that you are a pre April 2021 example (and post 2021 there is a very large change that takes this small hole and makes it 1000 times worse and I want to fix that asap before it hurts others).

wht I can say is that it seems the current design falls over on the edges and it really does need a 3rd party tracking SDS determinations to see who knows what and when). The irony is that literally every single case will be a similar “edge” case where a £x0,000 bill is attached to absolutely sod all evidence on whether x performed a particular task or even received an email.

[Keanu2020]

And it’s the last part that I’m off to investigate on Monday and then raise with a certain senior minister that I have the direct contact details for ( he’s also my neighbouring MP for Richmondshire).

as for the rest I do believe the OP has a call organised with WTT and they already have the details in this thread - I avoided suggesting merkel and egos because we don’t know who the other parts of the chain have used (and WTT are way less likely to be involved). Being blunt all I was after was someone suitably qualified to say “Nope, try again and get the chequebook out”

but the issue here seems to be that if the SDS has been failed to be passed on it seems ( according to the HMRC’s manual as quoted) that the deemed payment part of the tax bill (I.e. employee NI and income tax) can end up back with the contractor and I want go through that with someone at HMRC line by line and preferably get their actual manual rather than the trusting what we are hearing here. And if that does end up being the case it will be raised rather quickly to be double checked.

now there is a strong possibility that this is simply a misunderstanding of the rules but it also wouldn’t surprise me if there is a niche case they actually haven’t thought of that needs to be tweaked.

we will then have a secondary issue of finding out which agency is to blame or whether the issue is with the public sector end client that simply failed to pass on the information - and that’s going to be a pain because the bills are such that outright lying could save you £x0,000.

The issue seems slightly wider, it is not just SDS failed to be passed on, but if the status is changed to. Certainly, when I spoke with HMRC about how the rules applied, it seemed to be one and the same (i.e. End Client got initial determination wrong and post a later HMRC review it is changed, the contractor still has to pay part of the tax due to the PAYE coding). I posed an example to HMRC on the call I had of a company taking an aggressive line in the market to secure talent by advertising roles outside knowing that later on if they got it wrong contractor would have to pick up part of the bill. Their view was that won’t happen and the 20% tax payable coupled with NIC’s makes it unattractive to do that. Not sure I share their view.

And i agree on your final point as well, they will be shifting the blame and no qualms about how.

[jamesbrown]

And it’s the last part that I’m off to investigate on Monday and then raise with a certain senior minister that I have the direct contact details for ( he’s also my neighbouring MP for Richmondshire).

Well, I'd be interested to hear what you find out. I assume you have a contact there that actually understands Chapter 10 ITEPA and its interaction with the PAYE/NIC legislation, because they are few and far between.

Once the facts are established (i.e., whether it was a failure to pass on the SDS or a failure to operate PAYE correctly and what steps were taken), I think the crux might be the circumstances under which a PAYE/primary NIC debt can be recovered from the worker. It is clear that secondary NIC and AI cannot be recovered. Unless an employer fails to take reasonable care or does not act in good faith (i.e., a mistake, not a conspiracy), and assuming there are not contractual terms that prevent it, then a PAYE error, once fixed, can create a debt that is recoverable from the worker. I assume this is what the agency is attempting to argue, that they can simply correct PAYE/RTI and the correction flows down to the worker. However, Chapter 10 seems pretty clear about where the liability should fall.

Even so, that is only the first part of the story, I suppose. The second part is related to restitution according to the contractual terms (i.e., whether there are terms related to recovery of tax monies owed and whether they might succeed) and whether, alternately, the OP has a private law claim against the Fee Payer. It will be interesting to see where this goes.

[jamesbrown]

I have tracked down and have a copy of the orginal SDS, it was done three months before I started by their perm staff. I have no reason to doubt anything they have said to me, their VERY by the book there as well (i've worked at a few different Depts. as well as a benchmark).

I will update once i've spoken to legal next week.

I see. As an aside, it's arguable whether they took reasonable care with the SDS if they did not prepare the SDS with you as the worker in mind, but that is probably a sideshow here - the bigger mistake was made by the agency (what agency and what mistake is to be clarified).

[eek]

I see. As an aside, it's arguable whether they took reasonable care with the SDS if they did not prepare the SDS with you as the worker in mind, but that is probably a sideshow here - the bigger mistake was made by the agency (what agency and what mistake is to be clarified).

Don’t forget this is pre April so it was public sector under the post April 2017 rules (determination prior to work starting) HMRC’s more recent money grabs has then probably put the fear of HMRC into the department.

as for what agency and how I think that’s current;y of secondary importance. The first one has to be to ensure that just sending an rti statement using a BR code isn’t enough, we need to ensure whoever does that should be paying the tax bill that goes with it.

[jamesbrown]

Don’t forget this is pre April so it was public sector under the post April 2017 rules (determination prior to work starting) HMRC’s more recent money grabs has then probably put the fear of HMRC into the department.

Has that been established? It sounds to me like the problem is ongoing, so I think this is post April too unless the OP would like to clarify.

[Keanu2020]

All of the months effected were pre-Apr 2021. Once discovered I moved inside through an umbrella but agreed an increased rate with the End Client to do this. I would never have taken the role inside at the original rate on offer.

Also, when I spoke to HMRC, they said the fee payer should have just done an FPS adjustment for last year rather than voluntary disclosure. Not sure if makes any difference.

I also think the role is outside based on how it actually operates on the ground. But that would seem to be a losing fight to even try to win so didn't bother when this all came to light.

[Keanu2020]

The first one has to be to ensure that just sending an rti statement using a BR code isn’t enough, we need to ensure whoever does that should be paying the tax bill that goes with it.

100%, becuase as it stands right now, that seems to be how to resolve based on what I have been told.

[Keanu2020]

Should also add, as far as I know, there is no NIC being sought from me, just the personal tax at higher rates. Still comes to 50% of the total though. There are a bunch of secondary things as well, its last tax year so hard to go back and change anything as tax position was already planned so this uncontrolled 'extra' has bigger impact, no options around pensions or anything else, and was never planning to take these funds out of ltd they were for investing so was never going to be a PAYE tax bill, could go on, but get the idea.