Staying in the same public sector contract after April 2017

[LondonManc]

Bit harsh, laughing at his apostrophe misuse. Each to their own though.

[Andy Hallett]

A poor guess, IMO. That would be just before the next election. 2021 would be nearer the mark.

"Look how many of these tax avoiding contractors we have put back in the system" is a perfect election message, unless you seriously think that a Corbyn lead Labour Party will be any more contractor friendly?

The most likely reason for this not moving to the private sector would be opposition from large global companies, who will be horrified that their flexible labour market will charge more / demand worker rights.

I was asked for an intelligent guess. A year to get over the debacle of implementation and constant PR stories about it being unfair to the Public Sector and a years notice sees us at April 2019.

[BackupBoy]

I don't think I am wrong. The Public Sector Body would first make the determination, effectively is this a genuine outsourced arms length consultancy project where they are buying in deliverables, or effectively a 'consultancy' running bodies?

I'll write a full response later, currently rebranding our agency as a consultancy ;-)

Here is an entire MoD department outsourced to a consultancy. There's a mixture of contractors here, some are absolutely BAU, so may already be inside and brollied.

Then there's a stack of specialist technical architects, project managers, etc all hired in to deliver a specific project. None of us are expected to be here after August's go live date, and my current contract (along with the other TA's), ends in mid-May.

I find it hard to believe that the PSB would determine us to be in scope.

/naive

[northernladuk]

Here is an entire MoD department outsourced to a consultancy. There's a mixture of contractors here, some are absolutely BAU, so may already be inside and brollied.

Then there's a stack of specialist technical architects, project managers, etc all hired in to deliver a specific project. None of us are expected to be here after August's go live date, and my current contract (along with the other TA's), ends in mid-May.

I find it hard to believe that the PSB would determine us to be in scope.

/naive

The devil is the the details. We've discussed engagement through a consultancy at great length. It depends on how that consultancy is engaged and the scope.of their work. Ultimately we still don't really know as it's complicated. For example. If the contractor is through a consultancy offering a managed service its not strictly correct to say he's doing BAU work for the PS. He's delivering the services contracted to the consultancy. That said they might still be caught. It's complicated.

You need to get a better understanding of the whole legislation, read the threads to understand the nuances and then you can look at different engagements and start making an informed guess at the situation.

[LondonManc]

Here is an entire MoD department outsourced to a consultancy. There's a mixture of contractors here, some are absolutely BAU, so may already be inside and brollied.

Then there's a stack of specialist technical architects, project managers, etc all hired in to deliver a specific project. None of us are expected to be here after August's go live date, and my current contract (along with the other TA's), ends in mid-May.

I find it hard to believe that the PSB would determine us to be in scope.

/naive

You clearly shouldn't be but that won't stop Hector trying to lump everyone inside and then ease things from there. The better route for them would be to go for the lower hanging fruit and they probably will do. Anyone going Contractor -> Agency -> PS Dept will be directly in the line of fire imho, with those via a consultancy shrouded in doubt and difficulty of proof for them. The consultancy would rather place you at, say £1200 a day, than bob at £600 a day; you're delivering and you're not having to be constantly SD&C'd (new verb, deal with it!) like a bob does.

[Andy Hallett]

And you are wrong in this case because:



The legislation is intentionally misleading and confusing and have us running around with assumptions like headless chickens. So this example means exactly what your bold text says.

A PSEC body should start by reviewing all its suppliers where the supply includes any individuals providing services for which the PSEC benefits. It then has to make a determination as to whether the individual would be regarded as an employee for income tax purposes, if it were to look through any intermediary. S.61M(1)(c) defines an intermediary as a third party. This means that you can call yourself a consultancy if you like, but you are an intermediary and the PSEC still has to make the determination. A good example would be a firm of auditors; they should be in scope as there is a bunch of individuals providing a service to the client and that if there were no third party entity between the individuals and the client, income tax law would look to categorise them as employees. However, the contractual relationship will overrule this as you would expect the audit fee will be priced as fixed, and that the individuals do not answer to the client, but to management in the audit firm etc.

Where there is a chain of intermediaries, the PSEC should inform its immediate supplier, who should then trickle that decision down the line. If this is not known before the contract commences, the legal person above the lowest intermediary should ask his client to ask the question of his client, and so on until the PSEC makes the determination. In plain English, this means that where you have Individual > PSC > Agent 1 > Agent 2 > PSEC, then Agent 1 is the fee-payer and the one with the risk in the absence of any determination. Agent 1 should therefore ask his client, Agent 2 for a determination. Agent 2 is not PSEC, but by formally asking him the question, Agent 1 has now made him the fee-payer (and hence potentially liable) under s61S(5). Agent 2 therefore will immediately ask the PSEC to push the liability on and force the determination.

The legislation is not intentionally misleading; it’s quite clear.

[malvolio]

The legislation is not intentionally misleading; it’s quite clear.

Agreed. Still bloody stupid though....

[David Mackay]

WE may be missing a trick here. consider...

The client says you are IR35 fodder, and (their agency) taxes you accordingly. You however are sure you are not, from your knowledge of the rules and in defiance of the client's view and the tools assessment (which is almost certainly wrong in law anyway). So you take the client to the EAT and claim employment rights, since the client is saying you are under their full direction and control and providing a personal service, ergo you have all the hallmarks of an employee so why not any of the rights. The client don't want you to win that one, so they are now forced to prove that you are outside IR35.

Would that work...?

Great question. Highlights the problems in having a mis-match between employment and tax law. It shouldn't work because the tax law just deems a payment to be made which is subject to income tax; it does not alter the underlying commercial supplier relationship you have established. However, if a contractor did want to be considered an employee then he has a right to take this to the tribunal. Of course, you could threaten to take your client to the tribunal unless they badge you as outside IR35. I suspect they might not be your client for very long if you did this.

[bobspud]

I can see the contract law specialists lining up now....

A PSEC body should start by reviewing all its suppliers where the supply includes any individuals providing services for which the PSEC benefits. It then has to make a determination as to whether the individual would be regarded as an employee for income tax purposes, if it were to look through any intermediary. S.61M(1)(c) defines an intermediary as a third party. This means that you can call yourself a consultancy if you like, but you are an intermediary and the PSEC still has to make the determination. A good example would be a firm of auditors; they should be in scope as there is a bunch of individuals providing a service to the client and that if there were no third party entity between the individuals and the client, income tax law would look to categorise them as employees. However, the contractual relationship will overrule this as you would expect the audit fee will be priced as fixed, and that the individuals do not answer to the client, but to management in the audit firm etc.

Where there is a chain of intermediaries, the PSEC should inform its immediate supplier, who should then trickle that decision down the line. If this is not known before the contract commences, the legal person above the lowest intermediary should ask his client to ask the question of his client, and so on until the PSEC makes the determination. In plain English, this means that where you have Individual > PSC > Agent 1 > Agent 2 > PSEC, then Agent 1 is the fee-payer and the one with the risk in the absence of any determination. Agent 1 should therefore ask his client, Agent 2 for a determination. Agent 2 is not PSEC, but by formally asking him the question, Agent 1 has now made him the fee-payer (and hence potentially liable) under s61S(5). Agent 2 therefore will immediately ask the PSEC to push the liability on and force the determination.

The legislation is not intentionally misleading; it’s quite clear.

But lets not forget that every one of those changes affects a contract that is already signed and in place. All of those contracts will have clauses for termination and key measurements for delivery. You cannot just terminate a contract where there is not a material reason for doing so. The injured party in the termination would have the rights to sue for the lost contract values + costs. Thats why sending a car back early or trying to bin a mobile phone contract is so bloody hard....

So in the next month Government departments will start asking if its ok to change a contract that they have signed and is being delivered against...

Nope can't see anything bad happening there....

[DaveB]

But lets not forget that every one of those changes affects a contract that is already signed and in place. All of those contracts will have clauses for termination and key measurements for delivery. You cannot just terminate a contract where there is not a material reason for doing so. The injured party in the termination would have the rights to sue for the lost contract values + costs. Thats why sending a car back early or trying to bin a mobile phone contract is so bloody hard....

So in the next month Government departments will start asking if its ok to change a contract that they have signed and is being delivered against...

Nope can't see anything bad happening there....

Nope, a change in the law is material grounds to change a contract to keep it in line with that law.

Contracts will be terminated, news ones will be issued. Sign or walk is the choice you have.