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

[Zero Liability]

It is going to be "hell broken lose" for ClientCos.

And the government itself, given how much it relies on contractors. Gideon's not going to be anyone's darling boy if the articles linked by JB are accurate.

[centurian]

"Maybe in some cases, but what about cases where the consultant would like more time to gain an appreciation of the business, particularly where the project is quite complex and more time s required to devise a solution/offer advice? There is already a lot of resentment amongst permies in some businesses towards parachuting in consultants, who then leave a couple of months afterwards (rarely as little as one month), leaving someone else to pick up the mess. I don't think anyone is a winner from this, not even HMG itself."

Yeah, but that will be the headache of the ClientCo - not mine. They are one to come up to hiring me
As far as i am concerned, i will demand that "one month" only time model, and its up to the clientco to sort things out for me, if they are desperate to hire me.
May be they will split the work into multiple pieces, the first piece to get the knowledge thing that you are talking about, then come back in a few weeks time after that and get me another contract to do the piece of work (i.e. within another one month; and then possibly split it into multiple pieces across many consultants, to do it one after the other)
Or else have me to do it for 3 months, breaking my one month only time limit model, but me ending up demanding the moon of the rate for the 3 months piece of work.

You see, this is another headache for the ClientCo, not mine
I am an individual, i will moan, and if i was like others here - may be I will blame the foreigners and then move on!
On the other hand, ClientCo have longer term business to do for their work/projects.
So it becomes a newer headache for them to deal with - on top of other bits i have already thought of!
They have to do a lot of thinking about these things, not me!

It is going to be "hell broken lose" for ClientCos.

Or they just don't bother to hire you at all - and hire a permie instead, or a 3rd party managed resource, or hire a "temp".

Or they decide that the cost of getting in the resources outweighs the business case, and they bin their project completely

Sure, there will be some projects where they are absolutely desperate - and they will have no choice but to bend over backwards. But for everything else, if hiring a contractor causes them migraine levels of corporate headaches, it will make them explore alternatives.

BUT the interesting thing is, the cliencos are completely oblivious to all this
When they wake up to reality eventually (which i doubt will happen), maybe they will just have enough time to stop Gideon throwing the hell on them, and be able to stop the law passing.
Here is hoping!

I think that's the most likely path out of this minefield - as long as it doesn't happen too late

[Milkyway]

Or they just don't bother to hire you at all - and hire a permie instead, or a 3rd party managed resource, or hire a "temp".

Or they decide that the cost of getting in the resources outweighs the business case, and they bin their project completely

Sure, there will be some projects where they are absolutely desperate - and they will have no choice but to bend over backwards. But for everything else, if hiring a contractor causes them migraine levels of corporate headaches, it will make them explore alternatives.



I think that's the most likely path out of this minefield - as long as it doesn't happen too late

That is what I said too.
Absolutely correct, but what you must also note is that all those options are BIG problems for the clientco, not mine
These option will hit them very hard!

I have other options in my life, and i will move on!
They can't carry on doing those options. They will sink!

[jamesbrown]

Not quite the devil is in the detail.

From the mail's article

.....

Which is rather different from what the guardian says.

There are bound to be some inconsistencies as this is a complicated area for your average hack to understand and for your low-level Treasury lackey to faithfully communicate.

Anyway, we know they're going to do something, and it's going to be at the severe end of possibilities. We also know that they're happy to take some heat from big businesses, unlike v1 in 1999. It's early in the parliament, there's zero effective opposition, they need to fill a gap from the tax credit debacle, and these numbers only need to be vaguely plausible to thread a story. Plus it's an area that's as widely supported for reform as it is misunderstood. Low-hanging fruit. Of course, they've misunderstood the impacts, but they'll take the heat on that in due course.

We'll need to wait for the specifics in the Autumn statement. There are indeed some hooks in the fineprint (as far as that's reliable), such as the highlighted quote below, but the upfront statement is 90% (in keeping with the consultation document), so everything should be interpreted in that context.

In future, anyone working for an organisation for more than a month will normally be considered to be an employee. HM Revenue and Customs is also devising an online checklist to allow employers to assess quickly whether a contractor should be reclassified as a member of staff.

At this stage, I have no idea how it's going to impact me. I typically have a bunch of simultaneous clients, most of whom have no UK tax presence, but the specialist consultancy I provide is generally on infrastructure projects where the first month may be re-writing their requirements I'll probably need to operate a direct PAYE (DPNI) scheme or something. There's zero chance that an overseas client will form a UK subsidiary for a short-term consultancy gig.

[Waldorf]

But you're only taking the Daily Wail type of approach. What about the downsides such as periods out of work, benefits of being a permie etc etc?

If contracting is as easy as a regular pay cheque, let the average man on the street go out and do it and stop whinging about the fact that someone else might be doing better than they are.

Well I was trying to see it how the average person will see it. I accept the downsides although in my experience most contractors are rarely sick and rarely out of contract unless they chose to be.

[Zero Liability]

Well I was trying to see it how the average person will see it. I accept the downsides although in my experience most contractors are rarely sick and rarely out of contract unless they chose to be.

It's whether the entitlement exists or not that matters. There are tradeoffs involved whether the average person is informed of them or not. What's stopping them from becoming contractors, anyway? Probably the trade-offs in question; alternatively, lack of an appropriate skillset. Usually the people I see whining about contractors have the skillset, just not the wherewithal.

[Tasslehoff]

Contracting is a massive risk, and that risk should be rewarded relatively.

[stek]

Did anyone see this bit in the linked article?

The government acknowledges that a small number of professionals will still legitimately use personal service companies. Some IT workers might work for a company for a short period or they might work for multiple companies at the same time. In that case they would not be seen as an employee. Builders doing one job on a private house would be exempt.

[jamesbrown]

Did anyone see this bit in the linked article?

Yeah, some of the details will matter, but let's not lose sight of the 90% target. If they have a 1-month baseline and a set of conditions for longer contracts, those conditions will be onerous, such as a relatively even distribution between clients. There's a lot more to this than defining headline conditions though. For example, "1 month" will require a precise definition to avoid a sequence of interconnected ~1-month contracts based on project stages. One of the issues with defining strict deeming criteria, rather than vague notions such as SDC, is that people will be looking for loopholes.

[centurian]

Did anyone see this bit in the linked article?

Yep, saw that, but the devil is in the detail.

I think those that genuinely have multiple clients on the go at the same time may escape this - if ClientCo will still be willing to engage them, now that they are on the hook.

Although, I think the number of contractors that really have dual contracts are very low - a few hours in the evening or at the weekend working for someone else won't cut it - the judge ignored that in the Dragonfly case.