HMRC - Onshore_employment_intermediaries_-_false_self_employment.pdf

[No2politics]

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.

Thanks

[eek]

panicky gibberish

The thing to remember here is that none of this is new. Agencies are not supposed to be able to provide freelance self employed people, they are supposed to provide people under PAYE (either paid directly by the agency or paid by the end company). After this initial rule arrived personal service companies were introduced to put the necessary barrier between agencies and workers on well paid contracts.

The current issue is that agencies have found a way of employing low paid people again on a self employed basis. That DOES need to be corrected which has to be done by changing the rights of substitution rules... See here for the original problem and then apply that rule to a desperate worker in a shop...

The question now is how do you keep flexibility for well paid freelance workers in a way that other agencies cannot abuse it to pay people little or nothing... I really cannot see how you do that without some people being hit in the crossfire.

[tarbera]

Can't you ???

. I really cannot see how you do that without some people being hit in the crossfire.

Well paid contractors perhaps.? low hanging fruit for the revenue

[SantaClaus]

Anyone could see this coming. HMRC won't be happy until everyone is under PAYE.

[Turfer]

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.

You need to note the fact that they are removing the requirement for the intermediary to have a contract with the individual.

I see you are making the rudimentary mistake of reading the consultation document as though it were the legislation. What matters is the draft legislation and it is far wider than the consultation document would have you believe. You will note that the consultation document does make it obvious that a PSC can be caught, but they are downplaying it.

Agencies aren't going to take the risk on this, unless there are substantial changes to that draft.

Remember statements were made in parliament that the income shifting rules weren't intended to deal with family companies, but HMRC took the Arctic Systems case all the way to the House of Lords.

[malvolio]

You need to note the fact that they are removing the requirement for the intermediary to have a contract with the individual.

I see you are making the rudimentary mistake of reading the consultation document as though it were the legislation. What matters is the draft legislation and it is far wider than the consultation document would have you believe. You will note that the consultation document does make it obvious that a PSC can be caught, but they are downplaying it.

Agencies aren't going to take the risk on this, unless there are substantial changes to that draft.

Remember statements were made in parliament that the income shifting rules weren't intended to deal with family companies, but HMRC took the Arctic Systems case all the way to the House of Lords.

Actually PCG took it to the Lords, HMRC were happy to stop with the original judgement and only appealed each time PCG proved them wrong.


However, not the point. The big difference between IR35 creation and this exercise is the number of involved and highly aware people contributing to he consultation. The risk to us in the proposal has been made clear to HMRC and they have responded that we are out of scope. If the draft legislation - which is also up for review when it's prepared - fails to make the distinction between us and the genuine(and entirely sensible) target, there will be hell to pay, starting with a Judicial review. HMRC are no longer immune to being challenged by people with big sticks before stuff hits the statute books

[LisaContractorUmbrella]

This is KPMG's opinion: "The draft legislation is structured in such a way as to include workers involved in the provision of composite services, as intended by Government. However, KPMG is concerned that the wording of the legislation is too broadly drafted. Currently, the definition of an ‘agency contract’ does not permit services being provided through a personal service company (PSC) from being brought within the agency rules, as an agency contract requires a worker to be a party to the contract. These PSC arrangements are considered separately under Chapter 8 of Part 2 of ITEPA (application of provisions to workers under arrangements made by intermediaries) (the ‘IR35’ legislation). As drafted, we consider that in certain instances PSC arrangements may also be caught under the new rules, resulting in the agency having an obligation to operate PAYE on payments receivable by the worker ‘in consequence of’ providing the services. Such payments may not have been received directly from the end user; they may for example be dividends paid to the worker by the PSC. In addition, the new legislation also extends to cases where a worker is ‘personally involved in the provision of services’ and in consequence of this the client pays the worker for the services. This goes beyond the existing ‘personal service’ requirement.
When this is coupled with the “manner in which the worker provides the services [not being] subject to (or to the right of) supervision, direction or control by any person” it appears to introduce a more demanding test to avoid the impact of these rules than exists under the current agency rules"

Link to full document: http://www.kpmg.com/UK/en/IssuesAndI...ill-2013v2.pdf

[Ticktock]

Currently, the definition of an ‘agency contract’ does not permit services being provided through a personal service company (PSC) from being brought within the agency rules, as an agency contract requires a worker to be a party to the contract.

My contracts don't required the worker to be a party to the contract, they require a Director of the company to be a party to the contract.

You may say "But that's the same person". I'd say, yes, that may be the case, however the contract I'm signing is between the agency and Myco Ltd, which I am signing as a director, not between the Agency and the worker.

[Turfer]

My contracts don't required the worker to be a party to the contract, they require a Director of the company to be a party to the contract.

You may say "But that's the same person". I'd say, yes, that may be the case, however the contract I'm signing is between the agency and Myco Ltd, which I am signing as a director, not between the Agency and the worker.

And that is the argument why you aren't caught under the "current" rules, but come April 2014 that isn't going to be an argument that is open to you because they are scrapping the "agency contract" requirement in the existing legislation which currently refers to the contract between the agency and the worker.

[GB9]

This is the Egos viewpoint.

I don't think it directly hits the IR35 argument, I just think it will become nigh on impossible to get an agency contract that passes IR35.