Staying in the same public sector contract after April 2017

[jonnyboy]

Myself and another person who I work with in my current (soon to end) PS role have the same agency. We have separately emailed them to ask their position on the changes, SCD get outs, will they stay in the PS, will they deem everybody in IR35, and they have not replied to either of us. Yes, I know (now) that they cant say what they dont know (until the 5th).. but they didnt even bother with a holding pattern email.

[BoredBloke]

Not yet. The reason we are all assuming that's what agencies will do is because we've worked with them for many years and experience suggests they will do what suits them and not us.

Exactly! Why would an agency run the risk of paying contractors outside IR35 when they have no knowledge of the working practices/SDC aspects of the contract and when HMRC can raise the issue many years after the contract ended. They will take the safest option which will be to remove the risk of IR35 by ensuring contractors work via a brolly or on the payroll through IR35.

[difficulttimes]

I read today that the online tool will NOT be mandatory and there are no changes to the definition of IR35 so what stops an agency making a call that this contract is outside of IR35. The tool itself can't be used in a tribunal anyway and won't agencies just take out insurance in the unlikely case that there is a challenge from HMRC? Am I missing something?

[eek]

I read today that the online tool will NOT be mandatory and there are no changes to the definition of IR35 so what stops an agency making a call that this contract is outside of IR35. The tool itself can't be used in a tribunal anyway and won't agencies just take out insurance in the unlikely case that there is a challenge from HMRC? Am I missing something?

Yep the post by boredbloke directly above yours. Agencies are risk adverse and this could currently go in any direction

[northernladuk]

I read today that the online tool will NOT be mandatory and there are no changes to the definition of IR35 so what stops an agency making a call that this contract is outside of IR35. The tool itself can't be used in a tribunal anyway and won't agencies just take out insurance in the unlikely case that there is a challenge from HMRC? Am I missing something?

The tools itself might not be used but the tool is there to help quantify the contractors position based on a number of factors. Those factors WILL be used in a tribunal so effectively the same thing.

[difficulttimes]

Agencies are a dime a dozen.. it has to be the most competitive market out there and they come and go like the wind - I could set one up by the end of the day. Doesn't this make give an agency a competitive advantage? Many PS clients these days also don't always follow the frameworks and can be added to it afterwards.

[difficulttimes]

The tools itself might not be used but the tool is there to help quantify the contractors position based on a number of factors. Those factors WILL be used in a tribunal so effectively the same thing.

The tool is just there to help make a decision if the end client and intermediary are happy that so be it. Has HMRC ever won a IR35 decision? All this has done is put the fear of god through everyone - they will use this fear to force people inside IR35. Unless there is a tightening up of the legislation that states that this tool has to be used in all cases of off-payroll working then why use it if all parties are comfortable that it sits outside?

[BoredBloke]

Out of interest - if you and the agency and the client deem the contract to be outside IR35 and you are paid as such, if HMRC then decide you are not, who are they going to come after for the extra tax, repayment of monies taken in lieu of expenses etc - my guess, as you've already been paid and you don't have access to expensive lawyers, HMRC will be after you.

[difficulttimes]

Well it is the intermediary then right? Who will have insurance to cover this unlikely event. They have no 'greater powers' than they do at the moment to go after you and in some respect you are more protected. The reason the tool is not mandatory is that it will be changed along the way and what happens then? Do you have to re-take the test and then re-do your contract everytime HMRC have updated the tool? Please that is never going to happen. Also, won't forums like this promote how to 'answer' the questions? As it's not mandatory they can't use this at a tribunal judge can they and even if it was they would have to change the original 2000 IR35 legislation which they are not.

[BoredBloke]

Well it is the intermediary then right? Who will have insurance to cover this unlikely event. They have no 'greater powers' than they do at the moment to go after you and in some respect you are more protected. The reason the tool is not mandatory is that it will be changed along the way and what happens then? Do you have to re-take the test and then re-do your contract everytime HMRC have updated the tool? Please that is never going to happen. Also, won't forums like this promote how to 'answer' the questions? As it's not mandatory they can't use this at a tribunal judge can they and even if it was they would have to change the original 2000 IR35 legislation which they are not.

Possibly...but it could also be you. So all parties agree that a contract that should now be inside IR35 is outside. The agency pay you the non ir35 amount. Then at a later date HMRC come along and decide that the contract should have been inside IR35 and the agency didn't deduct the IR35 tax, my guess is that the agency will be able to worm out of it and it's back to the contractor for the ir35 back taxes. Even if they still hit the agency for the taxes, they'll probably hit the contractor for any and all expenses claimed on a contract where they shouldn't have been able to claim any.

But then regarding the insurance....have you any idea how expensive it would be for an agency to insure itself against the tax liabilities for each and every contractor working through them - spanning years? It's not going to happen. Instead they will simply adopt the default that the contract is inside IR35. In exactly the same way they did when they stopped allowing contractors to be classed as self employed in the 70's. It will simply be the case that if you want the contract you'll to work via their brolly or you could still use your limited company but tax will be deducted at source and you'll still have all the other company expenses to pay out of your post tax income!