Tax - Inside or Outside

[Keanu2020]

The liability is with the fee payer, he's now responsible to collect the tax from the contractor. It works like PAYE. In PAYE if there is under payment it's still the employee who ultimately foots the bill. The whole point is that the contractor pays the right amount of tax.

Perm PAYE feels a bit different though. I take a perm job at 100K, you know the terms you signed up on and tax due. If tax is due, you know that.

Taking a role outside, with an SDS, and passing every check you can think of, that can then be changed x months later and see you end up with a tax bill feels a bit different. You also have no input on the determination or changes in position later either.

[Keanu2020]

I suspect it's only hypothetical until HMRC start calling end clients and scaring the living daylights out of them.

Sat other side of the fence, I’m also seeing behaviour that is, let’s say lose, to get people in. If sat the other side, you would get an outside contract with SDS from the start and think on safe ground. Its when the position changes upon HMRC knock on the door that is the concern.

My fear is a lot of people will get a bill, but we won’t see it for 12 to 24 months’ time when this plays out. People have an outside role, and read, like i did, that liability sits with fee payer. In reality it sits with them.

[Keanu2020]

Because it was always inside - say for instance the behaviour of the contractor was such that they needed supervision like an employee.

Or the initial SDS was a complete and utter lie to get someone in...

This -> Or the initial SDS was a complete and utter lie to get someone in...

[WTFH]

My fear is a lot of people will get a bill, but we won’t see it for 12 to 24 months’ time when this plays out. People have an outside role, and read, like i did, that liability sits with fee payer. In reality it sits with them.

If you have an outside role that is lasting over a year, many (possibly including HMRC) would question whether it's outside at all. The role is basically that of an employee.

[cojak]

This article is beginning to see a possible direction that this is going…

https://www.contractoruk.com/news/00...e_madness.html

Loan Charge anyone?

[eek]

This article is beginning to see a possible direction that this is going…

https://www.contractoruk.com/news/00...e_madness.html

Loan Charge anyone?

Nope

HMRC can't get the money off the contractor so it's not the loan charge. They will be chasing the fee payer (agency) and then after the agency the end client.

The issue is that HMRC have from April 2021 been telling the fee payer to chase the contractor for the money when the entire point is that the contractor shouldn't be held responsible nor asked to pay a penny.

Now nothing is going to happen here until a valid case comes along ( Keanu2020's is sadly not valid as that is a screw up from before April 2021) and someone pushes it all the way to an appropriate appeal court to set precedent.

But we then have a different issue as it will be like the Opt out of Agency regulations where no case has gone anywhere as one side or other backs down before a decision is made.

[Keanu2020]

If you have an outside role that is lasting over a year, many (possibly including HMRC) would question whether it's outside at all. The role is basically that of an employee.

I don’t necessarily disagree and was using as an example. That said, we all know plenty of people who are contracted up to the 2 yr. mark at client sites.

[Keanu2020]

Nope

HMRC can't get the money off the contractor so it's not the loan charge. They will be chasing the fee payer (agency) and then after the agency the end client.

The issue is that HMRC have from April 2021 been telling the fee payer to chase the contractor for the money when the entire point is that the contractor shouldn't be held responsible nor asked to pay a penny.

Now nothing is going to happen here until a valid case comes along ( Keanu2020's is sadly not valid as that is a screw up from before April 2021) and someone pushes it all the way to an appropriate appeal court to set precedent.

But we then have a different issue as it will be like the Opt out of Agency regulations where no case has gone anywhere as one side or other backs down before a decision is made.

I think I was hoping there was a way to get out ahead of it was all and clarify if the advice HMRC is giving is right.

[Keanu2020]

This article is beginning to see a possible direction that this is going…

https://www.contractoruk.com/news/00...e_madness.html

Loan Charge anyone?

I think there are some similarities with Loan Charge in that a large number of people think they are safe (having been issued with SDS) to later face a large tax bill (although the person chasing might change)

[eek]

I think I was hoping there was a way to get out ahead of it was all and clarify if the advice HMRC is giving is right.

When you understand the advice HMRC is given it makes sense.

What HMRC are saying is that the bill is the Fee Payer's problem. But they then try to soften the blow by suggesting the agency goes after the only other person they can chase to recover that money, which is the poor contractor / contractor's limited company.

Now personally I don't see it working but until we get the first cases where a contractor chases the agency for money inappropriately deducted money or where an agency chases the contractor for the money - we won't know what happens.

One problem I have with the article that Cojak quotes is that Caroline Walsh seems to be making a jump in logic that I cannot follow - at no point is HMRC going to be chasing the money - it's going to be agencies chasing people individually.

And being blunt I will be pitying both the agency and the contractor because it should be the end client paying up and the ideal solution would be for the agency to run a phoenix operation and leave the end client paying the price for their mistake.