HMRC - Onshore_employment_intermediaries_-_false_self_employment.pdf

[TheCyclingProgrammer]

What about 44-47 of ITEPA meaning it will really be end up as the newly defined PSC, when they think about it

I think they will have a harder time trying to make this stick against personal service companies because a genuine RoS is already established in case law as putting you outside IR35.

[Turfer]

Read the Legislation

Anybody that thinks this legislation doesn't apply to a PSC should think again, you need to look at the legislation, in reality it says absolutely nothing about the individual being self-employed.

Here are the only tests the courts will apply to the average contractor:

1) Are you personally involved in the provision of services to a client? (obviously the answer will be yes)

2) Is there a contract between an agency and the client? (obviously the answer will be yes)

3) Do you receive remuneration in consequence of providing those services that does not constitute employment income? (I can see an argument that a dividend is received as consequence of being a shareholder in a company, but will the courts accept that argument and would you want to be the one arguing it?)

Assuming they believe a dividend arises as a consequence of providing the services (and I can definitely see that argument) you are now within the scope of the legislation, unless you are

"not subject to supervision, direction or control by any person"

Under this legislation rights of substitution count for nothing, even if they are genuine and exercised. There is nothing in the legislation that says this only applies to people who are self-employed. They have stripped the parts of the old legislation that helped keep a PSC out of its scope and most of the IR35 friendly contract clauses will be of no use at all.

For an idea who will be outside the scope of this legislation (in HMRC's view) take a look at Annex B Example 2 of the consultation, you can ignore the fact that they are self-employed that is simply an example of somebody receiving income that isn't PAYE.

The big question for contractors should be how the agencies will respond because they are the ones that run the risk of a tax charge. The old version of this legislation is why agencies wouldn't work directly with the self-employed and the PSC became the norm. Remember that if the agencies were confident there was no supervision direction or control then they would be happy to work with someone that was self-employed and I have yet to find hear of any agency that will.

Yet again the consultation document is big on talk about employment rights, but it doesn't change the fact that any supervision, direction and control will be sufficient to trigger the tax charge, but not the employment rights.

I see a future in which agencies write in during the consultation to complain that they are on the hook for income tax/NICs. In that future the government won't back down and the risk averse agencies won't want to work with a PSC because of the tax/NICs risk for them. However I foresee the agency continuing to issue contracts that don't result in employment under case law leaving individuals with all the income tax/NICs to pay, but none of the benefits of employment protection.

You need to hope for a very big U-turn.

[TheCyclingProgrammer]

So much scaremongering in the above post I don't even know where to begin...

The consultation is pretty clear that the typical PSC will not be affected by these changes as they are not within the scope of the agency legislation (which applies to a contract between an intermediary and an individual). It's also clear that IR35 will continue to be the most relevant legislation for PSCs.

[MPwannadecentincome]

So much scaremongering in the above post I don't even know where to begin...

The consultation is pretty clear that the typical PSC will not be affected by these changes as they are not within the scope of the agency legislation (which applies to a contract between an intermediary and an individual). It's also clear that IR35 will continue to be the most relevant legislation for PSCs.

Scaremongering or not - the PCG are clearly concerned!

And the reference to computer programmers - unintended slip of true intentions, or....?

[TheCyclingProgrammer]

Scaremongering or not - the PCG are clearly concerned!

And the reference to computer programmers - unintended slip of true intentions, or....?

I can certainly see how the changes would make agencies very reluctant to take on independent freelancers (that operate as self employed) which is what the PCG seem rightly concerned about.

To be honest I'm not really sure what the PCG mean when they say "freelancer". Do they mean self employed individuals (which is how I think of a freelancer) or those operating through PSCs or both?

But how is that any different from the current situation where agencies are already reluctant to engage someone unless they go through an intermediary?

[Zero Liability]

TBH, it simply looks like they're trying to bring partnerships (separately to this) and the self-employed (not contractors) acting through agencies under the same rules as those which apply to contractors through IR35.

[MPwannadecentincome]

To be honest I'm not really sure what the PCG mean when they say "freelancer". Do they mean self employed individuals (which is how I think of a freelancer) or those operating through PSCs or both?

Given that PCG represents both then I think they are seeking to protect both

[No2politics]

Does this mean if you contract direct you are ok? Or is the intermediary your limited company?

Sometimes I wonder whether all this ******* hassle is worth it.

[SueEllen]

Does this mean if you contract direct you are ok? Or is the intermediary your limited company?

Sometimes I wonder whether all this ******* hassle is worth it.

No it means the government of the day uses the law to target who they like.

Governments have done this with a lot of laws in the past.

[TheCyclingProgrammer]

Does this mean if you contract direct you are ok? Or is the intermediary your limited company?

Sometimes I wonder whether all this ******* hassle is worth it.

If you contract direct then I can't see how this would affect you in the slightest. You'd still obviously have to consider IR35.