Staying in the same public sector contract after April 2017

[teapot418]

Supposing I stayed in a simliar role but PS client wanted to convert to FTC for 6 months to complete the project we were all working on. How red a flag would this be to HMRC? Assuming working practices were the same, it's currently outside based on lack of SDC (though I'd be nervous about having to fight it) but agency is taking a blanket "we don't care, we're calling you all inside" attitude.

It is the client that makes the determination, not the agency. Staying with the same client, doing the same role, as an employee (which is what you are on a FTC) is likely to be a big red flag IMO.

[BoredBloke]

Supposing I stayed in a simliar role but PS client wanted to convert to FTC for 6 months to complete the project we were all working on. How red a flag would this be to HMRC? Assuming working practices were the same, it's currently outside based on lack of SDC (though I'd be nervous about having to fight it) but agency is taking a blanket "we don't care, we're calling you all inside" attitude.

If your working practices are the same under the FTC role then it surely would mean that the previous roles should have been within the scope of IR35 as you will have proved the point that the role really was one of employment - because you are now doing the same thing but now you are an employee....albeit a short term one. Lower rate with a few permie type benefits but none of the security of permiedom. I don't see the attraction of that!

Which agency is it?

[puzzler]

It is the client that makes the determination, not the agency. Staying with the same client, doing the same role, as an employee (which is what you are on a FTC) is likely to be a big red flag IMO.

Red flag is one thing, getting invoked at an hmrc system is another. What do you think the risk of such contractor to FTC cases flagged & invoked post April changes ??

surely umbrella/inside ir35 and PS/inside/outside ir35 got more chances of flagged and invoked at hmrc system as both options comes under the blanket of IR35 directly, and hmrc system can easily compile lists of such people for interrogation, but I dont think same applies to FTC contract on full paye taxes.

Permanent/FTC has nothing to do with ir35 as employee is already taxed at maximum at source

I may still though lack critical bits of understanding.

[teapot418]

Red flag is one thing, getting invoked at an hmrc system is another. What do you think the risk of such contractor to FTC cases flagged & invoked post April changes ??

surely umbrella/inside ir35 and PS/inside/outside ir35 got more chances of flagged and invoked at hmrc system as both options comes under the blanket of IR35 directly, and hmrc system can easily compile lists of such people for interrogation, but I dont think same applies to FTC contract on full paye taxes.

Permanent/FTC has nothing to do with ir35 as employee is already taxed at maximum at source

I may still though lack critical bits of understanding.

I honestly have no more idea than you. But I would not want to be in a position where I had accepted a contract of employment doing exactly the same role that I had previously claimed was outside IR35. If you were investigated, defending your previous status would be very difficult.

[BoredBloke]

Red flag is one thing, getting invoked at an hmrc system is another. What do you think the risk of such contractor to FTC cases flagged & invoked post April changes ??

surely umbrella/inside ir35 and PS/inside/outside ir35 got more chances of flagged and invoked at hmrc system as both options comes under the blanket of IR35 directly, and hmrc system can easily compile lists of such people for interrogation, but I dont think same applies to FTC contract on full paye taxes.

Permanent/FTC has nothing to do with ir35 as employee is already taxed at maximum at source

I may still though lack critical bits of understanding.

It has quite a bit to do with IR35. IR35 is about disguised employment. Taking up a FTC role where the working practices have not changed means that the contracts before should have been within the scope of IR35 all along. As such you can expect HMRC to come knocking. How can you claim your previous role(s) is not one of employment when going forward you end up doing the exact same role as an employee.

[northernladuk]

It has quite a bit to do with IR35. IR35 is about disguised employment. Taking up a FTC role where the working practices have not changed means that the contracts before should have been within the scope of IR35 all along. As such you can expect HMRC to come knocking. How can you claim your previous role(s) is not one of employment when going forward you end up doing the exact same role as an employee.

This... This is basic IR35 stuff and is a risk in any gig, PS or private sector so nothing new or has suddenly become and issue with the PS carry on.

[pictavia]

Supposing I stayed in a simliar role but PS client wanted to convert to FTC for 6 months to complete the project we were all working on. How red a flag would this be to HMRC? Assuming working practices were the same, it's currently outside based on lack of SDC (though I'd be nervous about having to fight it) but agency is taking a blanket "we don't care, we're calling you all inside" attitude.

I guess there will be a few offers like this during the coming weeks but it sounds like scraps from the table to me. The red flag issue would be very real if you were doing the same work as an employee and that does seem to be the case. If you were being offered something significant e.g. currently a contract dev but offered a management role with lots of responsibility etc then it would be hard for HMRC to make assumptions about your previous contracts based on your new employed role. The choice is yours and I understand your loyalty to the project, but why take all of the risks yourself? I'd walk away from this one.

[MPwannadecentincome]

Your economics are slightly awry. It costs an employer somewhere over £175k to employ someone on a £100k salary when all the overheads, notice period and utilisation inefficiency is added in. A £100k salary gig would be charged at rather more than £100k for an annual contract, but less than that £175k.

Yes i agree but I simplied to make the point about employer's NI.

[pscont]

Best case scenario:

PS client decides the contract is outside of IR35 - contract is reworded so it even better reflects IR35 outsideness.
Working practises reflect contract. Agency plays ball with client.

What is to worry about here?

Later HMRC challenge this decision. Who is responsible for what? The way I understand it PS client is responsible for IR35 status, agency for payments and taxes/nic (if inside). Where does the contractor stand?

[SueEllen]

Best case scenario:

PS client decides the contract is outside of IR35 - contract is reworded so it even better reflects IR35 outsideness.
Working practises reflect contract. Agency plays ball with client.

What is to worry about here?

Later HMRC challenge this decision. Who is responsible for what? The way I understand it PS client is responsible for IR35 status, agency for payments and taxes/nic (if inside). Where does the contractor stand?

The agency if sensible will put a clause in their contract which states if they become liable for taxes due to your engagement then you need to pay up.