The Official 2018 Budget DOOM thread

[jamesbrown]

Length of contractor has no bearing on IR35

I don’t know, the short ones are more gullible, I reckon.

[MrWebDev]

You just show your accounts for the past few years. Generally, lenders don't have a clue about the way contractors work, well at least the Halifax don't.

If you're on a fixed-term contract it's my understanding that you will not have any accounts to show as you'll be working outside of your Ltd Co.

Re. the Halifax, they most certainly do understand the current contracting model, it's also my understanding that they're one of the longest serving lenders to contractors too.

[Guvernator]

So this small business clause, they've stated they will be using the definition set out in the Companies Act 2006 so less than £10m turnover and 50 employees. Unless you work direct to the client, most contracts are run through some sort of recruitment agency, most of whom are pretty small.

Does this mean if you are contracted via a small agency you are exempt from IR35?

[jamesbrown]

So this small business clause, they've stated they will be using the definition set out in the Companies Act 2006 so less than £10m turnover and 50 employees. Unless you work direct to the client, most contracts are run through some sort of recruitment agency, most of whom are pretty small.

Does this mean if you are contracted via a small agency you are exempt from IR35?

No contractor is exempt from it, regardless of what the client looks like. They are simply talking about who does the assessment, which will depend on what the client looks like.

The client does the assessment, and the agency makes the appropriate payments to the contractor company (i.e. makes the IR35 deemed payment when caught).

The size of the agency is irrelevant.

[Guvernator]

No contractor is exempt from it, regardless of what the client looks like. They are simply talking about who does the assessment, which will depend on what the client looks like.

The client does the assessment, and the agency makes the appropriate payments to the contractor company (i.e. makes the IR35 deemed payment when caught).

The size of the agency is irrelevant.

Have you actually read the detailed budget report and Consultation document? I know no contractor is exempt from IR35 if it applies, however what they have said is that small businesses are exempt from the new rules i.e. offloading of IR35 status assessments to someone other than the contractor. I'm trying to determine whether that means the contractors PSC, the intermediary agency or the end client. Depending on who they are talking about when they say small business, will have an impact on who has to make the assessment which could be a big deal.

[jamesbrown]

Have you actually read the detailed budget report and Consultation document? I know no contractor is exempt from IR35 if it applies, however what they have said is that small businesses are exempt from the new rules i.e. offloading of IR35 status assessments to someone other than the contractor. I'm trying to determine whether that means the contractors PSC, the intermediary agency or the end client. Depending on who they are talking about when they say small business, will have an impact on who has to make the assessment which could be a big deal.

How could it possibly be the PSC? All PSCs are below the threshold of *any* definition of a small business, and this is about someone *other than* the PSC making the determination. It's quite simple. If the end client is a small business, then the PSC remains responsible for determining their own IR35 status. Otherwise, the end client has a new responsibility to determine status. If the contractual chain involves an agency, the client passes this status information upwards, and the agency makes the deemed payment to the contractor, as appropriate.

[Hobosapien]

Would a borrower be more likely to touch you with 1y fixed contract than as business owner/contractor?

Specialist contractor services typically require minimum 3 months remaining on a contract to consider using the contract rate for finance assessment rather than say last 3 years of accounts for typical self-employed finance assessment.

So fixed or not is irrelevant for this, though typical FTC are rated pro rata to equivalent permie salary (without permie benefits being factored in) so likely to start from a less affordable perspective than a non-FTC for a similar role.

[Hobosapien]

My advice to you all is to get educating your clients now. I've been able to convince one client that initially defaulted everyone to inside to class me as outside. It helps if you can have discussions with your clients before they make any decisions. If you all get clients into the mindset that outside determinations work best for everyone then it will help down the line. Obviously this wont work for everyone and every client as some people are inside and some clients will just blanket but in my experience the work is still available in the public sector for the right roles outside. And if you can get this right the worry of HMRC coming after you is gone.

The other approach is to educate agencies by way of declining roles if they are unable to offer an IR35 friendly contract (or they start defaulting to requiring applicants to be permies via brolly or own payroll), who will then in turn educate clients that the contracts need to change if they are only attracting lower quality applicants, as all the proper contractors are more clued up on how to proceed.

[Guvernator]

How could it possibly be the PSC? All PSCs are below the threshold of *any* definition of a small business, and this is about someone *other than* the PSC making the determination. It's quite simple. If the end client is a small business, then the PSC remains responsible for determining their own IR35 status. Otherwise, the end client has a new responsibility to determine status. If the contractual chain involves an agency, the client passes this status information upwards, and the agency makes the deemed payment to the contractor, as appropriate.

I have no contract with the end client, my contract is with the agency so does this not mean in effect the agency are my client? If so and the agency are a "small business", does this not mean I get to determine my own IR35 status much as before.

[jamesbrown]

I have no contract with the end client, my contract is with the agency so does this not mean in effect the agency are my client? If so and the agency are a "small business", does this not mean I get to determine my own IR35 status much as before.

No, it does not mean this. The whole point of IR35 is that it "looks through" the contractual chain of intermediaries (regardless of how many there are) to establish a hypothetical contract between you (personally) and your end client, in order to establish whether the relationship looks like one of employment. The agent is not your end client for the purposes of IR35, the end client is your end client. As with the PS rules, the end client will determine status when it moves across to the private sector, unless the end client is a small business. Details will be consulted upon, as described in the response to the first consultation.