HMRC decision tool: doubts about the selected answers, results, implications, ...

[northernladuk]

Indeed but come renewal time they should be running it again and the answer might be different? Strikes me as a very uncomfortable place to be in relying on outdated results of the tool even with their statement honouring it at the time of running it.

[jamesbrown]

Indeed but come renewal time they should be running it again and the answer might be different? Strikes me as a very uncomfortable place to be in relying on outdated results of the tool even with their statement honouring it at the time of running it.

Yup, that's one of many potential disasters waiting to happen. In that scenario, I think you'd need to leave or negotiate an ongoing outside position, assuming the PSB weren't willing to use something other than the ESS. The ESS does not, and will never have, any standing whatsoever in a tribunal or court of law, other than to provide a punchbag for a judge. It would get absolutely ripped apart, both on the specifics and the concept more generally.

[bobspud]

Our department stated their decision was final and for the length of the contract regardless of renewal, as long as the way the engagement is carried out does not change fundamentally.

I think it also helped that I was able to focus their mind on the dangers of workers asking for rights.
After they read the tribunal cases and got an understanding of the problem they were more than happy to understand the contract that was in place and adhere to it.

The cluster duck that HMRC have caused will be massive...

[MeMeMe1966]

The ESS does not, and will never have, any standing whatsoever in a tribunal or court of law .....

But does the HMRC statement that they will abide by the output of the tool as long as the answers are input accurately have any standing in a tribunal or court? Would the tribunal solely be deciding whether you are inside or outside IR35 or would they be deciding that your status is irrelevant given the HMRC promise? Does HMRC have the power to waive taxes that may be due in law?

Edit: I mean if you received an outside determination that HMRC tried to overturn. Obviously if you received an inside determination which was not consistent with case law then the courts would ignore the tool.

[DotasScandal]

The cluster duck that HMRC have caused will be massive...

Waiting in anticipation for the new breed of "contractor schemes" to sprout as a "solution" to said clusterduck. Fully expecting them to make the EBTs of old look like a conservative solution.

"History doesn't repeat itself, but it rhymes" (Mark Twain)

[DotasScandal]

Would the tribunal solely be deciding whether you are inside or outside IR35 or would they be deciding that your status is irrelevant given the HMRC promise? Does HMRC have the power to waive taxes that may be due in law?

HMRC "promises" of ANY kind are not worth the paper they're written on (or not).
If you had any dealings with them, you'd know they're more of a "I am altering the deal" type of bunch.
And as for the second question, the answer is No (roughly since the Goldman Sachs sweetheart deal fiasco). And if they could, they certainly wouldn't given the current climate and pressure they get from the Treasury to "collect" as much as possibly to replenish HMT's empty coffers.

[MeMeMe1966]

HMRC "promises" of ANY kind are not worth the paper they're written on (or not).
If you had any dealings with them, you'd know they're more of a "I am altering the deal" type of bunch.
And as for the second question, the answer is No (roughly since the Goldman Sachs sweetheart deal fiasco). And if they could, they certainly wouldn't given the current climate and pressure they get from the Treasury to "collect" as much as possibly to replenish HMT's empty coffers.

So if you receive an erroneous outside determination from the tool which is subsequently investigated by HMRC and taken to tribunal which rules an inside status. Then:

1) Taxes would be due as if the engagement was inside?
2) The liability for paying the taxes would not rest with the contractor as the legislation has transferred that liability?
3) The liability for paying the taxes would not rest with the client because they could evidence that they took "due care" arriving at their determination?
4) The fee payer would be liable for any additional taxes owing?
5) If the fee payer had a contract with the contractor indemnifying themselves against any taxes owing from the engagement then they could try to pursue the contractor for the taxes owing? <-- not sure if this would stand up in court?
6) Is anyone else getting dizzy?

[bobspud]

6) Is anyone else getting dizzy?

Yes...

I'm not quite sure why, but civil servants seem unable to remove complexity from a situation. The most common sense approach would have been to revoke the whole IR35 law in full and then set in stone a new law that properly covers the need for taxation and small business flexibility. But hey thats too easy so they would never go for it.

[jamesbrown]

But does the HMRC statement that they will abide by the output of the tool as long as the answers are input accurately have any standing in a tribunal or court? Would the tribunal solely be deciding whether you are inside or outside IR35 or would they be deciding that your status is irrelevant given the HMRC promise? Does HMRC have the power to waive taxes that may be due in law?

Edit: I mean if you received an outside determination that HMRC tried to overturn. Obviously if you received an inside determination which was not consistent with case law then the courts would ignore the tool.

It's irrelevant. By definition, there would only be a tribunal if HMRC disagreed with the input provided.

[DotasScandal]

I'm not quite sure why, but civil servants seem unable to remove complexity from a situation

Bureaucrats cannot imagine a solution outside of "more bureaucracy". Quite simply, the paper pushers see to it that they remain employed pushing papers around.
The hilarious thing though is that the ideologue behind this fiasco (textbook psychopath David Gauke) was for many years in charge of the "office for tax simplification". You couldn't make this up.