Staying in the same public sector contract after April 2017

[seeourbee]

So are you also suggesting a full refund of PAYE tax ? For the sake of argument say you earn 100k, taxed 40k and have taken the 60k as net cash in the form of a salary. Then you succeed by being outside ir35 and claim a refund of the (what - 40k?). Then what ? You have still had cash come to you as an individual which presumably would normally be part salary part dividend. How to re-write your tax affairs for that year ? Do you do your tax return again ? There are time limits on all of this and I suspect you'd be well outside of them.

Ok, I know there are a load of folk who've a far better idea of how this will/may work than me, so:

If you take a PS contract (lets say it was £500pd plus VAT), equates to £2500+£500 vat per week.

Do we assume that the agency/PS will then pay £2500 - income tax (40%), employees NI (12%) and employers NI (13.8%). Working on week/month 1 as they'll have no knowledge of the tax position of the individual and/or whether other roles/income (divi's etc) they've had? So about £855 plus £500 vat.

And then presumably you pay yourself from your PSC, how do you square up the deductions with the ones that your PSC will have to make to HMRC?

Or have I totally misunderstood?

I was referring more to the situation where an 'inside ir35' decision is overturned some time after the payment events have happened.

[LondonManc]

I think the loss of earnings is a big pill to swallow, most would rather accept than be on the bench, the biggest issue is the RED flag to HMRC re: retrospective ir35 review.

I totally agree. The problem is that the majority probably haven't even thought about the possibility of a retrospective review.

So I think their are 3 options on the table for PS Contractors

1, Leave before April (ensuring your last invoice clears before 5th April 2017) - On bench, New PS Gig or Private sector gig
2, Stay on but protect yourself somehow from the retrospective element (Switching to a new contract, Brolly? or new agency not sure if this will work)
3, Stay on and hope for the best :-(

its trying to establish best processes/steps for 1 & 2 which minimise the risks.

What would probably be better for the HMRC and indeed for all PS departments if there was a declaration of a line being drawn under all contracts and their status pre-April. Everyone in PS gets issued a new contract to start in April, that runs up to the original contract finish date but clearly states that the contract is inside or, in a minority of cases, outside IR35.

While that would allow continuity of flow and put HMRC in a position to bring in more revenue (in theory, let's not cloud the issue of the mass exodus still being a distinct possibility), it would prevent a mass grab of historic tax revenue that they would feel they are entitled to.

[eek]

I totally agree. The problem is that the majority probably haven't even thought about the possibility of a retrospective review.



What would probably be better for the HMRC and indeed for all PS departments if there was a declaration of a line being drawn under all contracts and their status pre-April. Everyone in PS gets issued a new contract to start in April, that runs up to the original contract finish date but clearly states that the contract is inside or, in a minority of cases, outside IR35.

While that would allow continuity of flow and put HMRC in a position to bring in more revenue (in theory, let's not cloud the issue of the mass exodus still being a distinct possibility), it would prevent a mass grab of historic tax revenue that they would feel they are entitled to.

No politician and no civil servant is going to agree to that. Especially when you consider how easier it would be if it the rule was against work from April 6th not payments after April 6th. That's there for a reason or 3....

When this kicked off in November IPSE thought the odds of it were zilch, I suspect they might do it but wasn't that sure say a 60% chance, based on what I heard last week I'm now 95% sure there will be a retrospective tax grab....

[LondonManc]

No politician and no civil servant is going to agree to that. Especially when you consider how easier it would be if it the rule was against work from April 6th not payments after April 6th. That's there for a reason or 3....

When this kicked off in November IPSE thought the odds of it were zilch, I suspect they might do it but wasn't that sure say a 60% chance, based on what I heard last week I'm now 95% sure there will be a retrospective tax grab....

I never said it was a goer. The fact that I thought it was a logical option clearly precluded that. Be a good boy and scuttle back up your own derriere.

[Semtex]

No politician and no civil servant is going to agree to that. Especially when you consider how easier it would be if it the rule was against work from April 6th not payments after April 6th. That's there for a reason or 3....

When this kicked off in November IPSE thought the odds of it were zilch, I suspect they might do it but wasn't that sure say a 60% chance, based on what I heard last week I'm now 95% sure there will be a retrospective tax grab....

can you elaborate on tis as it may well help a few hundred contractors in their decisions

[Andy Hallett]

I was referring more to the situation where an 'inside ir35' decision is overturned some time after the payment events have happened.

My understanding is that this situation isn't possible. The decision rests with the client, within 31 days of the engagement starting. There is no provision, as far as I am aware, for a retrospective change.

[eek]

[/B]

can you elaborate on tis as it may well help a few hundred contractors in their decisions

Sadly not because I can't put it in a public place.

In other news the supposed reason why the ir35 decision website is late is due to the contractors working on said project leaving.

[jamesbrown]

My understanding is that this situation isn't possible. The decision rests with the client, within 31 days of the engagement starting. There is no provision, as far as I am aware, for a retrospective change.

There's a dispute resolution mechanism for a contractor to disagree with a decision made, and it would be determined, ultimately, against IR35 case law, which is obviously different from the PS client making a determination with the online tool or whatever procedure they use. So, theoretically, I assume it is possible, but it would be odd for a contractor to accept inside terms and then dispute them, and when an edge-payment is caught (i.e. contractor leaves in March and gets paid after April 6), it wouldn't be worth pursuing, given the amount involved.

[SueEllen]

In other news the supposed reason why the ir35 decision website is late is due to the contractors working on said project leaving.

You couldn't make it up.

[northernladuk]

You couldn't make it up.

Erm, anyone with a hole in their arse could have guessed this was going to happen surely?