EBT loan scheme to "no-longer-an-employee" loan scheme HEALTH WARNING

[Vallah]

However, Alan's other point - that agencies will not deal with self-employed workers - does cause me some concern. And I suspect that most EBT users are blissfully unaware of the impact of what is being sold as a trivial change of status.

Agencies can't be invoiced direct from self employed contractors, as they have to deduct tax and NI. Any scheme that negates the need for this (eg lots of existing gross pay providers) and there isn't a problem. It won't be the contractors issuing invoices themselves.

[NotAllThere]

<rant on>I have an axe to grind and genuine concern for contractors - the two are not mutually exclusive. I think these schemes are sold in such a way that contractors are not really aware of the risks involved. This is only to be expected as the people selling the schemes want to make money out of it, and are salesman - they're not going to really make a big deal out of the risks, and will represent themselves as the friend of contractors, trying to help. The scheme promotors set up the scheme to make money. The scheme promotors only risk is not being able to sell it to enough people.

It's all legal of course. It's not a scam, it's not fraud. Caveat Emptor most definitely applies, but I do find that the apologists for these schemes are rather disingenous.<rant off>

Agencies can't be invoiced direct from self employed contractors, as they have to deduct tax and NI. Any scheme that negates the need for this (eg lots of existing gross pay providers) and there isn't a problem. It won't be the contractors issuing invoices themselves. .

That is what I would have thought, but Alan said:

I had a phone call only this week about an Agency cancelling all its contracts with a promoter/one of its vehicles because the Agency found out the contractor was a Sole Trader/self employed and this Agency said it would not touch Sole Traders (anywhere in the supply chain) with a "barge pole".

Whether they need to worry about this or not is irrelevant. Agencies probably don't need to check our identities either. But doing so makes them feel safer. A blanket "No sole trader" rule, will also make them feel safer, and won't impact their profits.

And I suspect that most EBT users are blissfully unaware of the impact of what is being sold as a trivial change of status.

I think that's the main point. HMRC will examine the working relationship between the user and the client. If they deem that as one of employment - bang, you must pay up. Previously, AIUI, the user was an employee of the scheme provider, and so IR35 absolutely did not apply - any more than it would if the user were an employee of a large consultancy. I note on Geoff's company's website, there's no mention of IR35.

[DonkeyRhubarb]

I think that's the main point. HMRC will examine the working relationship between the user and the client. If they deem that as one of employment - bang, you must pay up. Previously, AIUI, the user was an employee of the scheme provider, and so IR35 absolutely did not apply - any more than it would if the user were an employee of a large consultancy. I note on Geoff's company's website, there's no mention of IR35.

I don't believe they will do that.

Why?

Because they would have to conduct several thousand individual investigations, which would clog up the Tribunal system for years.

They will be looking for a generic way to defeat the scheme which catches everyone in one fell swoop.

PS. this is also the reason (in hindsight) why IR35 itself was always going to be unenforceable because individual investigations are hugely resource intensive and they could only ever conduct a token number

PPS. with several thousand already in these schemes, HMRC are going to need to shut them down PDQ which probably means legislation

[geoff from contracta IOM]

I can honestly assure those concerned that any area of the scheme that has potential to cause a problem we have identified the area of risk and addressed it , we have been providing similar services for 12 years without challenge from HMRC further to a previous post about alan jones it for the exact reason that we don't know who reads the forum that we don't reveal the intricate details , if HMRC want to know exactly how it is structured they will at least have to do a bit of work to find out.

[Old Greg]

I can honestly assure those concerned that any area of the scheme that has potential to cause a problem we have identified the area of risk and addressed it , we have been providing similar services for 12 years without challenge from HMRC further to a previous post about alan jones it for the exact reason that we don't know who reads the forum that we don't reveal the intricate details , if HMRC want to know exactly how it is structured they will at least have to do a bit of work to find out.

Honestly? Do we have your word as an off-shore contractor independent loan payment trust facilitation service provider on this?