Staying in the same public sector contract after April 2017

[NHS1979]

The question was about previous contracts. The OP's current contract is new, so tax liability would be relatively limited if caught.

Really appreciate everyone's responses - the changes are making me increasingly anxious re landing in a safe place in April, and outside of this board people seem clueless! I've had dozens of different conversations that have yielded contradictory advice from other contractors, agencies, my accountant, insurers etc.

My NHS orgs are discussing some recommendations from an ‘IR35 working group’ their collective HR set up. I strongly suspect they will want to just switch everyone onto PAYE on their payroll (some talk of an ‘alternative payroll’ for such people), which I understand is what Tower Hamlets and Newham Clinical Commissioning Groups are doing. All sorts of unanswered questions re this, such as what happens to the agency and their contractual clauses re switching employment? what terms are the interims being switched to (Agenda for Change, previous day rates, or increased day rates)? No official comms to contractors yet, and the pace is as glacial as ever with NHS decision making.

I’ve set out the questions above re the ‘switching to NHS payroll’ scenario, but as you know the NHS could theoretically also include options re switching to umbrella companies or switching to the agency’s payroll.

I am no longer bothered about drop in income, my concerns are solely that if I stay in the role I've been in since Jan, which currently has a contract which expires end of March, via a new contract from April onwards subject to the options above, that I will end up on some HMRC list of people to target for retrospective tax investigations (crawling over all my previous 2.5 years' assignments too) and expose me to a giant tax bill that I am not expert enough to know if I (and all other similar one-man-band NHS manager contractors) could defend against. It would cause me great stress, and if successful would really damage my family finances.

One of the agencies is doing the rounds in my patch with a pamphlet they've pulled together talking about developing "a full range of tax-compliant engagement options to help you...ensure you are able to retain existing resource and to continue to attract skilled resource to deliver against your targets going forward." Apart from using their payroll (obviously) it also talks about "putting in place compliant contracts outside IR35 and paid gross where this reflects the reality of the work being done (e.g. Statement of Work contracts with defined deliverables)."

Just can't work out if leaving to get something else is a bit of a nuclear option, or the only prudent way of firewalling this assignment and staying off HMRC's list. The other contractors will either leave because of the income drop and no expenses, or stay because they are not as anxious about the retro stuff as me, based on conversations.

[northernladuk]

TLR

Why people just don't leave and get a decent gig in the private sector is beyond me. How can it be a nuclear option? It's what are you going to have to do at some point so all you are doing is cutting it a bit shorter than it was. All this fretting over a gig. You realise you are exactly the type person the gov were trying to catch?
How long have you been there BTW?

[NHS1979]

TLR

Why people just don't leave and get a decent gig in the private sector is beyond me. How can it be a nuclear option? It's what are you going to have to do at some point so all you are doing is cutting it a bit shorter than it was. All this fretting over a gig. You realise you are exactly the type person the gov were trying to catch?
How long have you been there BTW?

Well I'm fretting about the retro tax thing, I'm fairly resigned now to a 30-35% income loss. Leaving the current gig is unfortunate as they love what I've already done and it's been good so far. But I will do whatever it takes to mitigate the retro tax. We all have mouths to feed!

I know they're trying to target people like me, but it's foolish as we are cheaper than management consultancy by some distance. As you know we consume our own smoke if we don't get work, which happened to me when I became ill last year. It's short sighted and will make public bodies immediately suffer a brain drain. They would have been better off forcing down rates paid to people like me who are good but won't commit to one org.

I've been in this current role since beginning of Jan. The contract runs till end of March at my insistence (they wanted till October). everything else is as per my previous post - stay and follow whatever option is on the table, or leave regardless of options to be smart and avoid the hmrc retro list.

[eek]

Yes I'm on weekly payments and have sorted accelerate payments so paid within 7 days. Limited exposure on the 3 month contract, but I'd assumed they would go back over previous assignments with different clients and agencies for the full 2.5 years?

They can do that anyway, whether or not you're with a different agency or client. They need to investigate each engagement separately. Make sure you keep your tax investigation insurance up to date - they can go back six years.

Because it isn't what I'm expecting the retrospective cases to look like. I expect its going to go

Say there are 10,000 in the same contract in April that they were in in March (Feb... Jan... 2014) and the client states they are inside come April so we'll send letters to them.

8,000 will complain but pay up. The rest will go via IPSE or QDOS and HMRC will either back down or go full on...

I really don't expect them to go and look at individual contracts because that implies they are doing it individual by individual. This is a bulk campaign that would be handled far more like an HMRC enquiry scheme than how IR35 ones have been handled in the past.

And that is why you answer confuses me. He's asking about a particular set of circumstances you are talking about generalities from what I reckon is the old world of investigations and not the new one we are about to see...

And that is why I recommend everyone in a public sector contract gets out and ensures they are fully paid by April 5th...

[teapot418]

Because it isn't what I'm expecting the retrospective cases to look like. I expect its going to go

Say there are 10,000 in the same contract in April that they were in in March (Feb... Jan... 2014) and the client states they are inside come April so we'll send letters to them.

8,000 will complain but pay up. The rest will go via IPSE or QDOS and HMRC will either back down or go full on...

I really don't expect them to go and look at individual contracts because that implies they are doing it individual by individual. This is a bulk campaign that would be handled far more like an HMRC enquiry scheme than how IR35 ones have been handled in the past.

And that is why you answer confuses me. He's asking about a particular set of circumstances you are talking about generalities from what I reckon is the old world of investigations and not the new one we are about to see...

I think we're saying the same thing. The risk of retrospection for OP's previous contracts is (probably) no different whether or not they stay with this client. Different contracts with different clients (probably) won't fall under the blanket trawl, if indeed there is one. Although as jamesbrown says, if they are investigating you, they may look at previous contracts - but these would still have to be done individually.

It's all guesswork though - there is no definitive answer. To reduce the risk of any investigation, get out of the public sector before April's payments are due, or at least finish your contract and start a new one with a new client afterwards.

[cojak]

And for those people who think that we should be debating this "behind closed doors" - CUK is not a rocket scientist's forum. We are not saying things that haven't already been considered in HMRC (I can see fault tree analysis written all over this).

What we ARE doing is making deliberations that have been done in private, public.

Really, we are WAY behind the curve on this - HMRC are not going to find anything earth-shattering here. They're just finding people talking about it in public.

(Which they won't be thrilled about but will go 'meh..'.)

[teapot418]

And for those people who think that we should be debating this "behind closed doors" - CUK is not a rocket scientist's forum. We are not saying things that haven't already been considered in HMRC (I can see fault tree analysis written all over this).

What we ARE doing is making deliberations that have been done in private, public.

Really, we are WAY behind the curve on this - HMRC are not going to find anything earth-shattering here. They're just finding people talking about it in public.

(Which they won't be thrilled about but will go 'meh..'.)

Indeed. If HMRC are reading this , then they need to appreciate that people need clarity. If this measure was intended to remove uncertainty, it has had the opposite effect. Clients are running round like headless chickens for want of clear guidance, the tool which is supposed to assist the client with making the determination - which they are being asked to do now in order to avoid April payments - is not ready. HMRC need to do one or more of the following 1) Postpone implementation until the guidance and tool is ready (better still can the whole daft idea) 2) Apply it to work done after April, not payments 3) provide an amnesty for work done before April.

If they don't, the effect on public sector projects as contractors walk in large numbers will be catastrophic.

[eek]

And for those people who think that we should be debating this "behind closed doors" - CUK is not a rocket scientist's forum. We are not saying things that haven't already been considered in HMRC (I can see fault tree analysis written all over this).

What we ARE doing is making deliberations that have been done in private, public.

Really, we are WAY behind the curve on this - HMRC are not going to find anything earth-shattering here. They're just finding people talking about it in public.

(Which they won't be thrilled about but will go 'meh..'.)

Who has said we should be debating this behind closed doors?

That's the one thing I definitely did not want to do - because if what I expect does occur I want to be able to say yep told you about the issues from May 2016 onwards and from January 2017 I told anyone who would listen exactly what was going to happen and how to get out.

I also suspect that for the people implementing this policy they don't care about the chaos they are creating its just one of those things - and do to the impact it has on others who would be competing for the next promotion its a double win for them (policy has become law, other managers in implementation are having problems so won't get that promotion)...

[cojak]

Oh eek, I didn't mean you!

There have been some EBT'ers who have suggested this...

[eek]

Oh eek, I didn't mean you!

There have been some EBT'ers who have suggested this...

I know its not me. I was wondering who is stupid enough to think that keeping things quiet is going to do anything especially as HMRC are sneaky enough to try and get into most private forums...

And to be blunt I actually don't think HMRC care about us talking about it. Firstly for my reason above, secondly because all they have been tasked to do is fix what has over the years become a serious problem and finally because no matter who leaves before April there will be plenty of others to target...