HMRC - Onshore_employment_intermediaries_-_false_self_employment.pdf

[Contreras]

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.

Thanks GB9. Some pretty damning commentary there. For those who have been arguing that the proposed legislation will not impact on Ltd Co. contractors, or IR35, please read and digest.

Be afraid.

[tarbera]

So your calling the CyclingProgrammer an idiot.?

Thanks GB9. Some pretty damning commentary there. For those who have been arguing that the proposed legislation will not impact on Ltd Co. contractors, or IR35, please read and digest.

Be afraid.

indeed be afraid be afraid !!!!

[GB9]

Judging by the article in cuk today, industty 'experts' have finally caught on to the section 44-47 issue.

[Zero Liability]

Judging by the article in cuk today, industty 'experts' have finally caught on to the section 44-47 issue.

It seems it's pretty contradictory, too.

I have to say, some of the people who are representing the anti-IR35 viewpoint seem eager to give HMRC a manual on how to enforce it better, rather than abolish it, although the PCG guy, Bryce, gave some good evidence against it and I agree with Ramsden it should be scrapped entirely. IR35 and NIC along with it.

It's unlikely anyone outside of those who directly benefit from IR35 would have much to say in its favour.

[Zero Liability]

Just curious on one aspect - say this comes to pass, and you declare yourself outside IR35 whereas WP would put you within it, and this is down to MoO/D&C/ROS not being reflective of the contract/the contract being poorly written etc. Would the agency and other intermediaries then be stuck with the bill for it? Also, if the upper and lower tier contracts don't align or the contract is in effect a "sham", why can't the agency be pursued for a fraudulent contract? I agree with the logic of putting the burden firmly on them, if IR35 must exist.

[simondolan]

The proposed legislation is very badly drafted, but then, it is a draft and will be amended I'm sure. However, I believe the situation as it exists now means that PSC's will continue in the same fashion, and provided they are not under the supervision and control of the end user, then nothing changes - same as now with IR35.

[jamesbrown]

The proposed legislation is very badly drafted, but then, it is a draft and will be amended I'm sure. However, I believe the situation as it exists now means that PSC's will continue in the same fashion, and provided they are not under the supervision and control of the end user, then nothing changes - same as now with IR35.

It's worth pointing out that this refers to contractors working through an agency. I know this may be the majority on CUK. In any case, IR35 applies as usual.

[Zero Liability]

It's worth pointing out that this refers to contractors working through an agency. I know this may be the majority on CUK. In any case, IR35 applies as usual.

Maybe but who would foot the bill in that case? The proposed change seems to put the burden on the agency/other third parties if they are aware of D&C being exercised on the contractor, irrespective of ROS, and tbh, if they cannot be bothered to ensure the working arrangements are such that they reflect the contracts they put out, why should they not bear the burden? Particularly since they are aware of both the upper and lower tier contracts and are in a better position to assess this risk than the contractor, who may have done due diligence but not be aware of the actual conflict between the two sets of contract.

Some agencies put in clauses stating the contractor's tax affairs are their own problem, so I wonder what this change will do to such clauses. I doubt it'd spare them of any liability in the matter, as although the contractor may be responsible for determining if they're in or out of IR35 (again, based on the contract the agency issues and if possible, a CoA) and running their tax affairs correctly, this will seem to hit the agencies/other third parties regardless of what they put in the contract.

[jamesbrown]

Maybe but who would foot the bill in that case? The proposed change seems to put the burden on the agency/other third parties if they are aware of D&C being exercised on the contractor, irrespective of ROS, and tbh, if they cannot be bothered to ensure the working arrangements are such that they reflect the contracts they put out, why should they not bear the burden? Particularly since they are aware of both the upper and lower tier contracts and are in a better position to assess this risk than the contractor, who may have done due diligence but not be aware of the actual conflict between the two sets of contract.

Some agencies put in clauses stating the contractor's tax affairs are their own problem, so I wonder what this change will do to such clauses. I doubt it'd spare them of any liability in the matter, as although the contractor may be responsible for determining if they're in or out of IR35 (again, based on the contract the agency issues and if possible, a CoA) and running their tax affairs correctly, this will seem to hit the agencies/other third parties regardless of what they put in the contract.

IR35 will apply as usual to those working directly. For those working through an agency, I don't know exactly what the interaction will be between IR35 and the updated agency legislation, except that it implies a degree of redundancy. In cases where the contractor is not "subject to (or to the right of) supervision, direction or control by any person", the contract and working practices should be outside of IR35, since lack of D&C is a sufficient condition. In the absence of meeting that condition, the agency would be required to operate PAYE. However, I cannot see an agency policing that, i.e. PAYE would presumably become the default, in the absence of some workaround we're not yet aware of. So, it must be one of those two (probably the latter, by default) and there wouldn't be a scenario where an agency contractor operated a contract as inside IR35 with a deemed payment on 95% of the contract income.

Let's not lose sight of what this is though, namely a draft that is replete with potential unintended consequences. Given what HMRC have said, it should be business as usual (i.e. IR35 as usual) for legitimate contractors - agency or otherwise - but we'll see.

[Zero Liability]

Agreed. I am just confused as to what the interaction will be if they do intend this legislation to catch agencies dealing with PSCs. Also, surely lack of MoO should factor in as well, as an alternative to demonstrating lack of D&C? I can understand their problem with ROS clauses that are complete shams, and can see why in those instances they would pursue the agency for the payments, but the proposed (and poorly drafted) legislation seems to apply much more broadly than this, whereas IMO a genuine ROS (reflected in both upper and lower tier contracts) remains a very good contra-indicator of employment. However, the draft is poorly written and contradictory in parts, so I guess we'll have to wait and see.