Staying in the same public sector contract after April 2017

[Gomez]

Yes. You are in scope. You're in a similar position to me. The responsibility for determining IR35 status will pass to the intermediary you have your contract with. Like NLUK says, depends on how that contract is defined.

What I wanted to know was, the scope of the legislation, is it mainly at contractors who are directly working for the PS as end client with an agency/intermediary in the middle?

[boxingbantz]

Yes. You are in scope. You're in a similar position to me. The responsibility for determining IR35 status will pass to the intermediary you have your contract with. Like NLUK says, depends on how that contract is defined.

My contract with the consultancy I am with is IR35 friendly as are my working practices. That's not the issue really. I didn't think I would be in scope as I'm not working for the public sector per se, I'm working for a consultancy directly.

[youngguy]

It's complete madness. At my last PS place there were four contractors, me on a decent rate and the other three guys on a couple of hundered a day in an attempt to save money. They were all gone within 3 months, two for being useless and one who was good (it was his first contract) who worked out that he was being paid peanuts and went elsewhere. This was all while there were over 40 consultants in the next room from one of the big consultancies, costing hundereds of thousands a month and doing bugger all apart from wearing skinny jeans and doodling fancy agile cartoons to stick on the walls. It never seemed to occur to them that saving a few hundered a day on the four contractors wouldn't have much of a positive impact on their burn rate.

Yep, all day long.

I was at a PS site where consultants were on double that of contractors and (broadly ) the output and skill was similar. We all know why consultants cost more but output was broadly the same.

What was clear was that contractor PMs at a few hundred a day just didn't have the experience , so they did get some people on below market rates, but those people were soon gone , which resulted in project delays and more recruitment headaches .

To be fair the PS 'recruiters ' I have spoken to know and understand this but their hands are tied based on budget .

[youngguy]

I have a contract with a consultancy and I am carrying out a specific task for them at a defence site (which would be PS). The man in the middle is the agency. My contract is with the consultancy NOT the end client - I'm effectively an associate for this role.

I'm assuming this will be exempt from the rules as I'm not working for the public sector so to speak. I work for the consultancy and this is made very clear every day at work.

Am I correct in assuming this?

As NLUk says, impossible to say at this stage,however if you are a ltd (PSC in HMRC speak) then I understand the consultation document would see the consultancy collect taxes from you. Have a look at example 3 (iirc) in the doc.

In short. Whoever a ltd is directly linked to is responsible for collecting the taxes .

[youngguy]

My contract with the consultancy I am with is IR35 friendly as are my working practices. That's not the issue really. I didn't think I would be in scope as I'm not working for the public sector per se, I'm working for a consultancy directly.

Are you a ltd or are you an employee of the consultancy?

If you are a ltd you are probably caught.

[boxingbantz]

Are you a ltd or are you an employee of the consultancy?

If you are a ltd you are probably caught.

Edit - just seen your reply.

My point is - I'm not working for the public sector. My contract isn't with them.

[TheFaQQer]

What I wanted to know was, the scope of the legislation, is it mainly at contractors who are directly working for the PS as end client with an agency/intermediary in the middle?

The legislation hasn't been published yet, so it's down to what comes out of the consultation paper. I don't think anyone knows what that is going to be, even those in the treasury or HMRC. Until it's published, it's all speculation.

On the assumption that all this comes to pass, from what I've read about the proposal having a consultancy in the mix is no silver bullet. It would almost certainly take the headache of tax assessment and collection away from the public sector client, because they would rely on the consultancy to do that if necessary (for a no-doubt considerable fee). But I suspect that the legislation will mean that contractors working for a consultancy for a public sector client will still have to be treated in the same way - it just means that the consultancy does the assessment and declares you inside IR35 rather than the ultimate end client.

Until the Autumn Statement is produced I would encourage people to contact their MP, raise your concerns and ask the MP to pass on your concern to the relevant Minister. You may get a standard response back (if you have a Tory MP who pays into their central "research" unit), but the more letters that land on Phil Hammond / David Gauke / Jane Ellison's desks highlighting why this is a bad thing the better.

[boxingbantz]

The legislation hasn't been published yet, so it's down to what comes out of the consultation paper. I don't think anyone knows what that is going to be, even those in the treasury or HMRC. Until it's published, it's all speculation.

On the assumption that all this comes to pass, from what I've read about the proposal having a consultancy in the mix is no silver bullet. It would almost certainly take the headache of tax assessment and collection away from the public sector client, because they would rely on the consultancy to do that if necessary (for a no-doubt considerable fee). But I suspect that the legislation will mean that contractors working for a consultancy for a public sector client will still have to be treated in the same way - it just means that the consultancy does the assessment and declares you inside IR35 rather than the ultimate end client.

Until the Autumn Statement is produced I would encourage people to contact their MP, raise your concerns and ask the MP to pass on your concern to the relevant Minister. You may get a standard response back (if you have a Tory MP who pays into their central "research" unit), but the more letters that land on Phil Hammond / David Gauke / Jane Ellison's desks highlighting why this is a bad thing the better.

Thank you for a great response - this has answered my question.

My consultancy see me as outside of IR35 but it makes you wonder if when the financial risk is then with them, how they may start to alter their stance...

[TheFaQQer]

Thank you for a great response - this has answered my question.

My consultancy see me as outside of IR35 but it makes you wonder if when the financial risk is then with them, how they may start to alter their stance...

Almost certainly, they will change stance. Bear in mind that if they have to make the judgement, they carry the risk plus the costs of doing the assessment in the first place - if they have lots of contractors around, then I just don't see them having the time or inclination to spend on assessing every individual. They are likely to declare everyone inside since that means that they only have the additional cost of collecting tax and paying it over to HMRC.

HMRC will then have to fund the way of refunding people when they get the deductions wrong.

[youngguy]

Edit - just seen your reply.

My point is - I'm not working for the public sector. My contract isn't with them.

It is not about having a contract with the PS, it is about providing services to the PS.

Nothing is certain yet.....BUT if you read the doc and assume they enforce as is then it quite clearly says a PSC (ltd) working with a consultancy that delivers it's services to the PS is caught. I get that you don't like that (I don't either ) but read example 3:-

"A consultancy PLC contracts to provide onsite services to the public sector...The consultancy would need to use the online tool and consider the new rules. They need to operate tax and NI on the payments to the PSC...."

Are you ltd?
Do you provide services to the PS via a consultancy ?
If yes to both of those, the consultancy will collect tax and NI from you (I know the online tool plays a part here but by the questions in the doc it looks like very few would not be caught ).

If you feel it doesn't apply to you then fine, argue the toss with the consultancy you are subbed to!