PCG article about War on public sector contractors

[Old Greg]

This is of great interest to me and to my business, as my niche is healthcare so I work exclusively on projects in the NHS, in various models, direct (occasionally) via pimps, as a consultancy 'associate', or through other third parties. Unsurprisingly, my contracts are all > 6 months once you include extensions and my rate is > £220 pd. My thoughts on this are:

- Bugger
- I can see how this applies to government (civil service organisations), but I wonder how they will force it on other areas of the public sector - e.g. NHS organisations
- As NHS is my area, there are parts of the NHS (arms length bodies) which are close to being civil service and where they receive grant-in-aid funding, I can see the government being able to enforce restrictions. But for other NHS bodies - trusts in England, and possibly the new Clinical Commissioning Groups, I cannot see how they can easily enforce this, especially with Foundation Trusts who have a great deal of freedom. In essence, what will they do , cut their funding? The gocernment does not directly fund them.
- The way they might enforce it is to change public sector procurement rules (which define how contracts go to OJEU, via frameworks / catalogues etc.), but that sounds complex, and I don't know whether it needs legislation.
- How will government bodies enforce it? They sign a contract with the EB stating that the worker named in the contract must be paid as inside IR35. The agency signs a mirrored contract with the Ltd. What if my Ltd then ignores that? How does the government body find out? When it does, will it get its funding docked four fold and then sue the agency for losses who will in turn sue the Ltd?
- What seems likely to me is that in addition to getting the Ltd to sign up to paying named eployee / Director inside IR35, is we will see contracts defining MOO, D&C and no RoS. Then we will just simply be caught, even if in reality D&C does not exist.
- How does this fit with competition law? Will the PCG pursue this avenue.

Anyway, no point wasting sleep over it. But maybe time to branch out.

[MyUserName]

I can sense people circuling this post already, waiting to sink their 'your not cut out for this' and 'your an idiot' fangs into it but is there a problem with calculating the approximate different between inside and outside IR35 take home and sticking it in the bank each month (or whenever). If you do that and live on the rest then after 6 years the different becomes yours and if HRCM kick your door down demanding money you can give it to them but being as you were not counting on it anyway there is no loss.

I am not taking into account fines - are they manadatory?

[Old Greg]

I can sense people circuling this post already, waiting to sink their 'your not cut out for this' and 'your an idiot' fangs into it but is there a problem with calculating the approximate different between inside and outside IR35 take home and sticking it in the bank each month (or whenever). If you do that and live on the rest then after 6 years the different becomes yours and if HRCM kick your door down demanding money you can give it to them but being as you were not counting on it anyway there is no loss.

I am not taking into account fines - are they manadatory?

This thread is about attempts to force public sector contractors to pay up as if in IR35, so I don't so see how your question is relevant.

[MyUserName]

This thread is about attempts to force public sector contractors to pay up as if in IR35, so I don't so see how your question is relevant.

Hmm - of all the critisism I was expecting that one caught me off guard!

I guess it was not strictly relevant to that original point. However, I do not feel that bad for positing it as it is quite common for conversations to meander along related paths as people's interest and information dictate.

[malvolio]

OK, let's think about this. You sign up to one of these idiot contracts that says you should pay tax as being IR35 caught. You aren't, and so ignore that bit of the contract. Assuming anyone finds out (and i can see how HMRC would find out very easily) you get hauled up for IR35 So you appeal to the Tribunal, the usual rules about D&C, MOO nd RoS demonstrate you are outside IR35 and your PCG-sponsored represenatie gets you off. So in effect your contract is demanding you pay taxes that aren't owed. So now what; can you be prosecuted for not paying a non-existent debt? Can you counter sue the agency for acting as a shadow director by trying to influence your corporate financial matters?

The whole thing has more holes than a vey holey chees that's been shot at with an AK47. This one will run and run...

[Old Greg]

OK, let's think about this. You sign up to one of these idiot contracts that says you should pay tax as being IR35 caught. You aren't, and so ignore that bit of the contract. Assuming anyone finds out (and i can see how HMRC would find out very easily) you get hauled up for IR35 So you appeal to the Tribunal, the usual rules about D&C, MOO nd RoS demonstrate you are outside IR35 and your PCG-sponsored represenatie gets you off. So in effect your contract is demanding you pay taxes that aren't owed. So now what; can you be prosecuted for not paying a non-existent debt? Can you counter sue the agency for acting as a shadow director by trying to influence your corporate financial matters?

The whole thing has more holes than a vey holey chees that's been shot at with an AK47. This one will run and run...

I expect it will run and run. But if I were them, the first thing I wold do is demand contracts which specify D&C, MOO and no RoS, leaving us to rely on our working practices over contract terms.

[cojak]

Hmm - of all the critisism I was expecting that one caught me off guard!

I guess it was not strictly relevant to that original point. However, I do not feel that bad for positing it as it is quite common for conversations to meander along related paths as people's interest and information dictate.

In General, yes. Otherwise I would advise starting another thread.

[malvolio]

I expect it will run and run. But if I were them, the first thing I wold do is demand contracts which specify D&C, MOO and no RoS, leaving us to rely on our working practices over contract terms.

Ah but, to get D&C, you don't hire an independent expert, to get a non-minimal level of MOO you have to pay for no-working days and to deny an RoS you stray into personal service and hence employment.

[Old Greg]

Ah but, to get D&C, you don't hire an independent expert, to get a non-minimal level of MOO you have to pay for no-working days and to deny an RoS you stray into personal service and hence employment.

But put yourself in their shoes. Contract terms:

- Old Greg Ltd will be represented solely by Old Greg, who will deliver a personal service. It will not be permitted for Old Greg Ltd to send an alternative representative or substitute.
- Old Greg will remain under the direction and control of Mr Line Manager as representative of Client and will undertake any reasonable duties required.
- The contract can be terminated by wither side by giving 14 days' notice.

[malvolio]

But put yourself in their shoes. Contract terms:

- Old Greg Ltd will be represented solely by Old Greg, who will deliver a personal service. It will not be permitted for Old Greg Ltd to send an alternative representative or substitute.
- Old Greg will remain under the direction and control of Mr Line Manager as representative of Client and will undertake any reasonable duties required.
- The contract can be terminated by wither side by giving 14 days' notice.

At which point, Mr Old Greg says "You're treating me as an employee, where are my employee rights' protections, pensions fnding, SSP and so son..."

It's different to arguing that IR35 is a tax based on employment criteria. To make these contracts work, they are getting very close to making you a real employee.