Results of the public sector consultation is up

[eek]

Employment tribunals as with HMRC will happily look through artificial entities.

And while I haven't chatted with my union mates yet (may see one on Friday lunchtime) I suspect the actual law will be very interesting for them

And to add to the above.

If the law says (as its currently phrased):

if the services were provided under a contract directly
between the client and the worker, the worker would
be regarded for income tax purposes as an employee
of the client or the holder of an office under the client,
or

what do you think an employment tribunal is going to say if you ask for employment rights and the reason why you are in the current position is that you have been required (under duress) to use a separate company...

[Cirrus]

And the award for missing the point goes to this man!


The point is we could take the simple route and all double our day rates - problem solved. But the changes are forcing us to be the same as a permi, but with NONE of the rights. IF a permi is sacked, he gets redundancy, a right to ask why, to take his employer to court, to get paid if he is sick. We get nothing.

Apologies if you are still missing the point.

My lad works for EY. He sits next to you.

If your/his client can the project and EY sack him as a result. He has rights.

However what you can't seem to accept is he gets rights from his employer not his client

Are you following me?

When you are a 2017 contractor and you get canned. You have exactly the rights you crave. You can have sick pay, maternity pay, redundancy. Whatever you like. But it's your company that pays. Not the client. They are not employing you. Just because you keep saying it seems like employment doesn't actually make it so.

HMRC have not said you will be an employee. Everybody here is implying this but I've not heard it yet. What they've said is you'll pay tax rather like an employee (although not identically).

You may well say that is a bit harsh but you're not losing benefits. It's no different to what's happened all these years up to now. What's changing is those benefits are going to be taxed.

[LondonManc]

Apologies if you are still missing the point.

My lad works for EY. He sits next to you.

If your/his client can the project and EY sack him as a result. He has rights.

However what you can't seem to accept is he gets rights from his employer not his client

Are you following me?

When you are a 2017 contractor and you get canned. You have exactly the rights you crave. You can have sick pay, maternity pay, redundancy. Whatever you like. But it's your company that pays. Not the client. They are not employing you. Just because you keep saying it seems like employment doesn't actually make it so.

HMRC have not said you will be an employee. Everybody here is implying this but I've not heard it yet. What they've said is you'll pay tax rather like an employee (although not identically).

You may well say that is a bit harsh but you're not losing benefits. It's no different to what's happened all these years up to now. What's changing is those benefits are going to be taxed.

What benefits?

[VillageContractor]

All my work is in the private sector and I expect that these changes will cause me problems later down the line.

Maybe I'm being naive but companies/businesses/government departments will still need work to be done (there will still be demand), so if they want to continue with temporary staff then they will have to increase the rates they pay otherwise no one will take the role.

Even if it goes to a big consultancy they need to employ capable people and not all companies will accept wet nose grads who have no idea what they're doing.

My clients need a service they pay market rate for a certain level. If I have to pay more tax I raise my rates. My client pays it or tries to get someone in cheaper/lower standards

[BoredBloke]

When you are a 2017 contractor and you get canned. You have exactly the rights you crave. You can have sick pay, maternity pay, redundancy. Whatever you like. But it's your company that pays. Not the client. They are not employing you. Just because you keep saying it seems like employment doesn't actually make it so.

The point is, if you want us to act like a business and allocate these 'rights' then let us act like a true business. Let us retain the money in the company to pay for bench time and settle up the tax at the year end like businesses do. What's happening here is they want to tax us like an employee but then expect us to still act like a business.

If I agree a contract that is expected to run for 6 months but then the client cans the project after 2 (as happened to me at CITI recently) I'm happy to use my retained income to cover pay my salary and cover my business costs while finding my next role. What I'm not happy about is a large slug of that income being taken away at source leaving me less to play with when hunting down my next role.

[BoredBloke]

All my work is in the private sector and I expect that these changes will cause me problems later down the line.

Maybe I'm being naive but companies/businesses/government departments will still need work to be done (there will still be demand), so if they want to continue with temporary staff then they will have to increase the rates they pay otherwise no one will take the role.

Even if it goes to a big consultancy they need to employ capable people and not all companies will accept wet nose grads who have no idea what they're doing.

My clients need a service they pay market rate for a certain level. If I have to pay more tax I raise my rates. My client pays it or tries to get someone in cheaper/lower standards

I suspect that they will no longer be able to attract people at the rate they are prepared to pay and that will mean they can blame a skills shortage to bring in an ICT bod from India - since the big consultancies are not covered by this legislation I expect its going to be a boom period for Wipro and the like.

[malvolio]

...

My clients need a service they pay market rate for a certain level. If I have to pay more tax I raise my rates. My client pays it or tries to get someone in cheaper/lower standards

Well good luck with getting a rate rise any time soon for the bulk of PS work.

Charging more simply won't work. It will take a long while before the PS realise that paying BigCo to fix their problems results in them paying 200% more for the same contractors. And the contractors will rapidly discover they are still going to be paid net if they are working on a PS contract, no matter how many parties are in the daisy chain.

But the choices are simple:

1. Don't do PS
2. Do PS and accept you will lose 20-25% of your income to tax and no expenses
3. Go umbrella (same problem, less paperwork)
4. Take an FTC (same problem, much less income)
5. Go permie.

Personally I'll stick with #1.

[BoredBloke]

What benefits?

I think he means the benefits an employee gets. So we get say 100k for a years work - that's assuming we have no bench time/long term sick etc. Compare that to the permie salary of 40k. The 60k difference is the bit we should be paying the benefits out of. I'd agree if this 100k wasn't going to be taxed at source. So if I'm diagnosed with a long term illness and can't work for months, my company (already taxed) funds are going to dwindle quickly because there is nobody working for the business topping them up. The company would soon fold and I'd be getting nothing....compare that to his permie son who works for the consultancy. In his case there are plenty of others working to provide his benefits when he's off sick or benched.

[eek]

The point is, if you want us to act like a business and allocate these 'rights' then let us act like a true business. Let us retain the money in the company to pay for bench time and settle up the tax at the year end like businesses do. What's happening here is they want to tax us like an employee but then expect us to still act like a business.

If I agree a contract that is expected to run for 6 months but then the client cans the project after 2 (as happened to me at CITI recently) I'm happy to use my retained income to cover pay my salary and cover my business costs while finding my next role. What I'm not happy about is a large slug of that income being taken away at source leaving me less to play with when hunting down my next role.

I think you have to look at this from the other side.

1) HMG see people abusing limited companies to earn more than they would do if working under PAYE and so that needs to be resolved and this solves that problem.

2)Separately there are a set of people who use limited companies but who actually are freelance (us). They may be impacted by the change and that appears to be acceptable collateral to HMG.

3) There is then a separate 3rd group of people who would like to have a permanent job in that public sector department but for various reasons are required to use a limited company to get work there (a prime example is expanding departments where the council are having major cutbacks elsewhere and politics is proving an issue).

Now the question is how big is that second group. I know it contains me and others on here but I suspect that when HMG states that IR35 isn't being used correctly in 90% of cases we are the 10% and the issue is that HMG only have a sledge hammer and they are going to use it.

[NotAllThere]

...
HMRC have not said you will be an employee. Everybody here is implying this but I've not heard it yet. What they've said is you'll pay tax rather like an employee (although not identically)...

Yes. These arguments are the same as back in 1999/2000 when IR35 was introduced. The idea of claiming for employment rights (aka the Nuclear Option) was also mooted then, as way of encouraging clients and agents to write contracts outside IR35. IIRC it was even tried and it failed (HP were the end client?). Employment law has changed since then, so maybe it is time for another try.