False self employment

[LisaContractorUmbrella]

Good news, but...

This doesn't now address HMG's intended objective. If issuing dividends is the decider the ex-employer who's got his staff to come back as Ltd Cos simply has to ensure they pay dividends, doesn't he?

Nope - section 7 ITEPA which is the legislation that's been amended is separate from section 8 (IR35) - the Agencies Legislation (section 7) will not apply if income comes from divs but IR35 will still need to be considered and all the same old rules will still apply

[malvolio]

Yeah, I got that - but the objective AIUI was to prevent employers driving their workers - especially lower paid ones like fruit pickers and social workers - to incorporate to save the employers' various overheads and liabilities.

[TheCyclingProgrammer]

Yeah, I got that - but the objective AIUI was to prevent employers driving their workers - especially lower paid ones like fruit pickers and social workers - to incorporate to save the employers' various overheads and liabilities.

I thought the typical scenario is that low paid workers were being made to register as self employed rather than incorporate. The new legislation tackles the former scenario whereas IR35 already exists to tackle the latter.

[LisaContractorUmbrella]

Yeah, I got that - but the objective AIUI was to prevent employers driving their workers - especially lower paid ones like fruit pickers and social workers - to incorporate to save the employers' various overheads and liabilities.

Oh sorry - no, this was brought in to try and stop agencies forcing what would normally be employees - shelf stackers, cleaners and the suchlike from being forced to register as sole traders - no Eer's NIC's and the workers don't make enough from class 2 and class 4 to cover pensions and stuff.

[malvolio]

Oh sorry - no, this was brought in to try and stop agencies forcing what would normally be employees - shelf stackers, cleaners and the suchlike from being forced to register as sole traders - no Eer's NIC's and the workers don't make enough from class 2 and class 4 to cover pensions and stuff.

Fair enough. Although someone will work out the difference between SE and Ltd and the impact on the new rules though...

[MicrosoftBob]

Yeah, I got that - but the objective AIUI was to prevent employers driving their workers - especially lower paid ones like fruit pickers and social workers - to incorporate to save the employers' various overheads and liabilities.

That was the excuse, it's always been about national insurance, if it was really about protecting workers why do the deemed employers never get hit financially ?

[LisaContractorUmbrella]

That was the excuse, it's always been about national insurance, if it was really about protecting workers why do the deemed employers never get hit financially ?

With these changes the agency could be hit as HMRC are using debt transfer

[Zero Liability]

Don't pretend you're happy.

But thanks for the update.

Wouldn't it have adversely impacted umbrellas as well, though? There would be no need for them if large portions of the contracting market had agencies who had to run PAYE (assuming the legislation did apply as widely as some people hypothesised it would), although I suppose the agency could always outsource it to them/engage in a preferred supplier relationship.

[LisaContractorUmbrella]

Wouldn't it have adversely impacted umbrellas as well, though? There would be no need for them if large portions of the contracting market had agencies who had to run PAYE (assuming the legislation did apply as widely as some people hypothesised it would), although I suppose the agency could always outsource it to them/engage in a preferred supplier relationship.

It shouldn't really have had an impact on umbrellas as the legislation stated that the obligation for PAYE would only pass to the agencies if the worker wasn't already being paid through PAYE which of course they are when they're employed by a brolly

[Andy Hallett]

Thanks for taking the time to post Lisa, your view is consistent with our reading of the regulations and guidelines. Good news for the professional contracting industry in general.