New PCG IR35 Questionnaire

[malvolio]

I left the PCG after the debacle with the OTS Forum

S'funny. Don't recall your contribution. I do recall someone getting banned for forum abuse though. Still the S99 article was quite amusing; always good to have a chuckle first thing in the morning.

[BoredBloke]

Has your business been unable to recover payment for work done during the last 24 months in excess of 10% of annual turnover?

I thought I'd posted this but can't find it. That question is such a stupid question - I work through agencues like most, becuase our industry is configured that way. I have worked direct to a number of end clients but like most contractors it tends to be done via agencies. One thing common to both agency work and direct work is both are businesses and in all cases we don't have a crystal ball to predict who can or cannot pay my invoices. So if I'm unlucky enough to work for an agency that goes under taking more than 10% of my turnover with it, I'm in some way seen as being a more valid business. What a crock of tulip! Part of the role of a director is to minimise the risk to your business.

Has your business invested over £1,200 on advertising, excluding entertainment in the last 12 months?

Another pointless question - I don't have to pay to adverise my business. I can gain enough work to keep it ticking over without having to pay for extra advertising. Ok so I'll have to have a website I don't need and pay for the odd bit of advertising that I don't need. The local pub fotbal team might need a new kit with my company name on. Again, extra wasted cost.

Does your business have a business plan with cash flow forecast, that is regularly updated, and a business bank account which is separate from your personal account and identified as a business bank account by the bank?

Mine doesn't have a business plan, but it can have one. My plan is to increase turnover without increasing costs. I don't want my business to grow and why should it to simply be seen as being a valid business. My mate is a plumber. He works on his own and for the past 10 years has not taken on anybody. His bisiness stuggled when he took somebody on before that because the lad wasn't that good and wasn't generating the funds needed to justify his position. He let him go because it was effecting his business and because he was making less profit.

[northernladuk]

I am going to be devils advocate here because I believe this post is missing the point of what HMRC are trying to do here. That doesn't mean I agree with HMRC, more to try and clear it up so we can do the right thing. Food for thought...

I thought I'd posted this but can't find it. That question is such a stupid question - I work through agencues like most, becuase our industry is configured that way. I have worked direct to a number of end clients but like most contractors it tends to be done via agencies. One thing common to both agency work and direct work is both are businesses and in all cases we don't have a crystal ball to predict who can or cannot pay my invoices. So if I'm unlucky enough to work for an agency that goes under taking more than 10% of my turnover with it, I'm in some way seen as being a more valid business. What a crock of tulip! Part of the role of a director is to minimise the risk to your business.

I don't think they are saying you must but in business it isn't uncommon to have to fight for payment. Just because we don't do it doesn't mean it happens and is a constant risk. Remember HMRC are trying to see if we are open to the same risks a proper business does. The fact we are not a proper business in a huge percentage of situations means we don't face this. We are on the defensive here and trying to justify that these comments don't apply to us only strengthens HMRC's argument we are not businesses in our own right. I can't put my thoughts across properly but hope that makes some sense. Obviously this will come up further in this post.. I agree it might not happen alot of businesses but the fact we understand it as a risk is a good one and not just dismiss it because it doesn't affect us.

Another pointless question - I don't have to pay to adverise my business. I can gain enough work to keep it ticking over without having to pay for extra advertising. Ok so I'll have to have a website I don't need and pay for the odd bit of advertising that I don't need. The local pub fotbal team might need a new kit with my company name on. Again, extra wasted cost.

A business is there to grow so isn't unreasonable to assume advertising is essential todo that. Again arguing we don't need it is again admitting we are not running a business that aims to grow and run like a business. The counter argument that a one man setup with no advertising or desire to grow is not a true business.

Mine doesn't have a business plan, but it can have one. My plan is to increase turnover without increasing costs. I don't want my business to grow and why should it to simply be seen as being a valid business. My mate is a plumber. He works on his own and for the past 10 years has not taken on anybody. His bisiness stuggled when he took somebody on before that because the lad wasn't that good and wasn't generating the funds needed to justify his position. He let him go because it was effecting his business and because he was making less profit.

Again a true business would aim to grow and have a strategy of how to do so, targetting certain industries and delivering specific solutions is still a plan. To just turn up and fill in a FTE spot doesn't need a plan agreed but then yet again it demostrating to HMRC we are not thinking or planning like one. What you describe is an operating strategy not a plan but I do believe that even identifying this puts you ahead of the 100's of contractors that don't have a clue and just turn up and invoice. The problem is demostrating the difference between you and these hidden permie contractors that are causing the problem.

I am sure some people are pretty wound up by now but understanding what a proper business does and what HMRC want is the first step to meeting them and staying safe. The very fact we cry foul and believe we don't need these things is proving we are not businesses.

Just for clarity I don't personally believe these questions in themselves are the answer and I believe HMRC need to understand we are an industry fulfilling a very important need and that doesn't always mean we have to meet very generic guides on what a business is. Until then we need to understand where these come from and why if we are going to argue and mitigate them...

Flame away.....

[Lewis]

So, my ltd has two income streams:

1) Me contracting
2) My wife running a related plan B as an employee.

Plan B does very well on the tests (we currently have a non-payer we are chasing, we are spending on marketing/advertising, we are trying to agressively grow etc..).

But Plan B brings in much less than 25% of contract. So would HMRC consider the contract and Plan B separately? My guess is they would.

However, it looks to me that as soon as the Plan B brings in > 25% of turnover we get +35 points, become a 'true' business and the contract is sudenly safe ... yet nothing about the contract has changed!

Anybody got any thoughts how HMRC might approach a scenario like this?

[Clare@InTouch]

So, my ltd has two income streams:

1) Me contracting
2) My wife running a related plan B as an employee.

Plan B does very well on the tests (we currently have a non-payer we are chasing, we are spending on marketing/advertising, we are trying to agressively grow etc..).

But Plan B brings in much less than 25% of contract. So would HMRC consider the contract and Plan B separately? My guess is they would.

However, it looks to me that as soon as the Plan B brings in > 25% of turnover we get +35 points, become a 'true' business and the contract is sudenly safe ... yet nothing about the contract has changed!

Anybody got any thoughts how HMRC might approach a scenario like this?

If the two sides of the company are totally separable I think HMRC would concentrate solely on 'your' side, ignoring the Plan B. If it was you alone running both sides it may be different.

[BoredBloke]

I am going to be devils advocate here because I believe this post is missing the point of what HMRC are trying to do here. That doesn't mean I agree with HMRC, more to try and clear it up so we can do the right thing. Food for thought...



I don't think they are saying you must but in business it isn't uncommon to have to fight for payment. Just because we don't do it doesn't mean it happens and is a constant risk. Remember HMRC are trying to see if we are open to the same risks a proper business does. The fact we are not a proper business in a huge percentage of situations means we don't face this. We are on the defensive here and trying to justify that these comments don't apply to us only strengthens HMRC's argument we are not businesses in our own right. I can't put my thoughts across properly but hope that makes some sense. Obviously this will come up further in this post.. I agree it might not happen alot of businesses but the fact we understand it as a risk is a good one and not just dismiss it because it doesn't affect us.



A business is there to grow so isn't unreasonable to assume advertising is essential todo that. Again arguing we don't need it is again admitting we are not running a business that aims to grow and run like a business. The counter argument that a one man setup with no advertising or desire to grow is not a true business.



Again a true business would aim to grow and have a strategy of how to do so, targetting certain industries and delivering specific solutions is still a plan. To just turn up and fill in a FTE spot doesn't need a plan agreed but then yet again it demostrating to HMRC we are not thinking or planning like one. What you describe is an operating strategy not a plan but I do believe that even identifying this puts you ahead of the 100's of contractors that don't have a clue and just turn up and invoice. The problem is demostrating the difference between you and these hidden permie contractors that are causing the problem.

I am sure some people are pretty wound up by now but understanding what a proper business does and what HMRC want is the first step to meeting them and staying safe. The very fact we cry foul and believe we don't need these things is proving we are not businesses.

Just for clarity I don't personally believe these questions in themselves are the answer and I believe HMRC need to understand we are an industry fulfilling a very important need and that doesn't always mean we have to meet very generic guides on what a business is. Until then we need to understand where these come from and why if we are going to argue and mitigate them...

Flame away.....

I don't agree on the growth thing. There are planty of businesses that exist and do not grow. Not because they can't but because their owners don't want the hassle/risk of doing so. How many back street garages are there that stay in place as a 1 man band. The one I use has a good reputation. The owner has been doing what he does forever - but he's not interested in setting up a chain of garages or opening up a site the size of your typical Kwik Fit. He's happy with the amount of work his business provides him and the level of the income that it generates. There are litterally thousands of businesses that are not looking to grow! I have no interest in taking somebody one, finding work for him, having the hassle of training and all the other rubbish I'd be expected to do. I'm happy for my business to tick over generating what it goes

In terms of the risk - as I said, it's a symptom of our industry that means most projects appear via agencies. A company the size of GSK is not going to want to deal with invoices from thousands on contractors when it can outsource this to a handful of agencies. From thier perspective its a no brainer. If you try cold calling one of these big companies you'll be directed to whatever agencies they have on their PSL. One of the supposed benefits of using an agency is the factoring service they provide - Yes this reduces the risk, but it's not uncommon for agencies to go under. A mate of mine lost £30k when an agency collapsed. It's not risk free using an ageny although it can reduce it significantly. But just because I have not had an invoice paid or because I work in a way that mitigates my risk somewhat has no bearing on if my business is a business or not.

I'm not going to flame you - I know where you are comming from on this and I agree with some of what you say, but to me it's an over simplistic view of business that all companies must strive for growth at all times. This simply is not the case.

My problem with the list the IR have produced is its all or nothing. have I lost 10% of my income, No so 0 points there!! Is there a risk that I could...most certainly, but still no points there!

[malvolio]

AFAIC the tests merely demonstrate that HMRC remain convinced that a business is something that makes and sells things. The whole model of the knowledge economy and a workforce of highly-skilled and independent experts is so far beyond their Janet and John vision of the economy that they have ignored it completely when trying to define a business.

[scooby]

Agreed, a business aims to create profit, it doesn't have to grow to do this. A business earning £60k per year is as much as business as one earning £1m, as long as they are both acting as a business - Providing services a customer needs in a business fashion

We are all taking a risk by operating as we do, providing interim or specialised skills and resource.

Lets not get above ourselves here, as much as we would all love to be IBM or Fujitsu etc, we're not. Some people want to operate in a way that suits their life style, and that may be just providing the interim cover. Others may want to grow their business to offer products and services.

I want to grow my business and offerings, but trying to get my head around how to offer products that are useful when all i am is a PM consultant is not easy. HMRC wouldnt give a rats arse about the effort i put in to create my business and grow it, or the fact i may not be able to. They care about the tax I pay and rightly so. If they can slant things to suit their thinking they will. I have to accept this and there things in place to prevent this as much as possible, which no doubt most of us do as well (contracts, working conditions etc).

If HMRC want to make us their pet hate, they will. This will serve to drive the non-serious Ltd Co's away and the remainder will carry on as normal. This will result in a rise in tax for HMRC, so on paper they have accomplished what they set out to achieve.

[northernladuk]

Stuff

Don't have a problem with this and some good points

I'm not going to flame you - I know where you are comming from on this and I agree with some of what you say, but to me it's an over simplistic view of business that all companies must strive for growth at all times. This simply is not the case.

yep

My problem with the list the IR have produced is its all or nothing. have I lost 10% of my income, No so 0 points there!! Is there a risk that I could...most certainly, but still no points there!

Agreed, and who says a small business with 2 to maybe 4,5 or more people needs to hire a business premises in this day and age.... and so on.

Still, I think it is important to understand what they are trying to do to be able to put forward arguments against.

Interestersing stuff thanks.

[dx4100]

AFAIC the tests merely demonstrate that HMRC remain convinced that a business is something that makes and sells things. The whole model of the knowledge economy and a workforce of highly-skilled and independent experts is so far beyond their Janet and John vision of the economy that they have ignored it completely when trying to define a business.

Agreed...

And its the knowledge economy which will help drive this country out of the tulip. So I just find it amazing how the government don't want to support it more.