Crackdown on personal service companies could raise £400m in tax

[Ned]

Some (hopeful?) intepretation

More IR35 rumours - Contractor Weekly

APSCo however have commented that the Treasury leak suggests that a decision has already been taken whereby contractors will only be able to work for 1 – 2 months before the end client has to apply the supervision, direction or control (SDC) test. This is fundamentally different to what the Guardian and the Mail were reporting unless APSCo are implying that after 1-2 months a contractor will be deemed to be automatically subjected to SDC by the engager, thereby becoming an employee.

Sounds like this may be a push to force clients to be more aware of working arrangements and apply testing for their contractor staff. If this is what it's all about, then the optimist wishful thinker in me, thinks this could actually play in our favor. If the onus of testing is on the clients, and they want to keep contractor staff, it means they are likely to produce documentation to support working arrangement HMRC is after. This would be akin to Confirmation Of Working Arrangements that QDOS likes contractors to get clients to sign which it believes helps in an IR35 investigation.

[hildaoblivion]

I think the way it will run is...

1) Has Contractor been with you for a month? If so run our handy online test to check their status

2) +HANDY ONLINE TEST+ Is the contractor under S, D or C or Recruited by an agency?

3) If so they are now to be treated as an employee - please collect their PAYE and NI contributions before you pay them anything.

So if the check is after 1 month, so is IR35.

[jamesbrown]

I think the way it will run is...

1) Has Contractor been with you for a month? If so run our handy online test to check their status

2) +HANDY ONLINE TEST+ Is the contractor under S, D or C or Recruited by an agency?

3) If so they are now to be treated as an employee - please collect their PAYE and NI contributions before you pay them anything.

So if the check is after 1 month, so is IR35.

Yes, I'd take a punt on that too. Not sure about the agency component - seems unlikely, although there was some earlier speculation about that. The details of the test (questions, how they're posed etc.) will matter to some degree, as will the type/scope of the liability in the event that a wrong determination is made (and, subject to this, the details of the test may not matter that much).

[LucidDementia]

Yes, I'd take a punt on that too. Not sure about the agency component - seems unlikely, although there was some earlier speculation about that. The details of the test (questions, how they're posed etc.) will matter to some degree, as will the type/scope of the liability in the event that a wrong determination is made (and, subject to this, the details of the test may not matter that much).

I'd think it will be far more likely you'll see a different contract each month for a different "slice" of the service required. Far less hassle that way for all concerned.

[jamesbrown]

I'd think it will be far more likely you'll see a different contract each month for a different "slice" of the service required. Far less hassle that way for all concerned.

This is based on a different interpretation of what the one month requirement would be (caught vs. a requirement for determination). Either way, this is the first thing they'll address in any legislation - they'd absolutely have to, otherwise it would be BAU. Once you start defining strict deeming criteria, there's an element of whack-a-mole, but they aren't doing it for a laugh (i.e. aiming to leave it full of holes).

[DaveB]

This is based on a different interpretation of what the one month requirement would be (caught vs. a requirement for determination). Either way, this is the first thing they'll address in any legislation - they'd absolutely have to, otherwise it would be BAU. Once you start defining strict deeming criteria, there's an element of whack-a-mole, but they aren't doing it for a laugh (i.e. aiming to leave it full of holes).

But there is a pretty good chance that this is what will happen anyway. Give it 6 months and the legal pro's will have figured out what the loop holes are and how to use them.

[jamesbrown]

But there is a pretty good chance that this is what will happen anyway. Give it 6 months and the legal pro's will have figured out what the loop holes are and how to use them.

They have bigger guns. A GAAR clause plus (joint and several) liability on the end-user should do it.

[MPwannadecentincome]

I don't think it would kill it. And even if it did, the idea we'd all be replaced by big consultancies at our clients is ludicrous. SMEs simply don't have the interest in using such big consultancies. Companies would simply struggle on without using contractors in the worst case.

Or maybe agencies will effectively become consultancies?

Not all consultancies are big and a lot are offshoots from outsourcing companies.

[MPwannadecentincome]

Recruited by an agency?

Is there a distinction likely between "recruited by" and "invoiced by and paid through"? Many direct contracts are forced through an agency by the client.

[GB9]

Labour were not and certainly not now, committed to eliminating the deficit. Socialist's like to like in a dreamy world were no-one is told NO. The Tories have always had to mop up the mess left by every Labour government, ever.

The current government has reduced the deficit very slowly, it has only halved in 5 years, we still have £70 billion to go and it is hoped that it will be gone by 2020.

The 50% tax rate did not raise any tax and in fact harmed the economy, it should be reduced to 40% asap to encourage enterprise.

Exactly this.

The 50p rate was introduced by Labour 3 weeks before the GE. If they had really believed in a 50p rate they could have introduced it in any of the previous 13 years. Even if they hadn't believed in it but felt it was necessary to bail out the crash they could have introduced it in the previous 5 years. But they didn't.

Like it or not, Bone head is trying to balance the books and we are an easy target. The proof is in whether he just takes more tax of us, or completely destroys the industry and makes lots of us homeless.