Payroll service for IR35 PS

[psychocandy]

Inside IR35 in public sector, the fee payer must make the calculation and deduct the tax before paying net to the contractor.

Which is why trying to involve a payroll company is just stupid because you're going to pay someone else to receive the gross amount from the agent / client, calculate and deduct the tax and pay the net amount to your company. Kind of like an umbrella really, but paying the limited company rather than the individual - it adds no benefit.

But agency, at the moment (rightly or wrongly) are refusing to do this. Assume they are allowed to do this - i.e. they offer the business and this is the way they will agree to do it.

Their stance is umbrella or payroll company.....

[Andy Hallett]

Does your accountant not run your payroll for you for Ltd. contracts? Or do you not take a salary? No reason they could not do it once you give them the relevant info. Provided the correct Tax NI is paid HMRC don't care who does it. You could even do it yourself i you felt so inclined.

The recent legislation is the reason

Inside IR35 in public sector, the fee payer must make the calculation and deduct the tax before paying net to the contractor.

Correct

But agency, at the moment (rightly or wrongly) are refusing to do this. Assume they are allowed to do this - i.e. they offer the business and this is the way they will agree to do it.

Their stance is umbrella or payroll company.....

We've heard this about quite a few agencies, and it was something we considered doing as well.

However, based upon feedback from our contractors, we took the decision that we would still pay PSCs 'Inside IR35'. About 25% of our Public Sector runners who have been determined inside are now using this mechanism.

[The Spartan]

What makes you think they'll change their stance come renewal?

WNLUKS ^^

From previously working there as a permie I know full well how contractors operate there and let's just say they should have all been within IR35.

I can't see that much would've changed between then and now.

[TheFaQQer]

I'm slightly confused.

The PS (or their agency) pays your Limited Company invoice net of taxes/NI etc - that is their statutory role, and they also inform HMRC via RTI.

You then pay yourself this net figure and stick it into your accounts/spreadsheet.

At year-end your Accountant (or you) completes a self-assessment and sends off to HMRC.

Or am I totally wrong?

You are right.

[LoughriggFell]

Does your accountant not run your payroll for you for Ltd. contracts? Or do you not take a salary? No reason they could not do it once you give them the relevant info. Provided the correct Tax NI is paid HMRC don't care who does it. You could even do it yourself i you felt so inclined.

This was something my accountant looked into offering, but decided against. Wasn't worth the effort, and also agencies having their 'preferred' umbrella companies, potentially not being happy to work with individual accountants.

[psychocandy]

The recent legislation is the reason



Correct



We've heard this about quite a few agencies, and it was something we considered doing as well.

However, based upon feedback from our contractors, we took the decision that we would still pay PSCs 'Inside IR35'. About 25% of our Public Sector runners who have been determined inside are now using this mechanism.

So it has got to be the agency that does the tax/NI thing. So they are quite within their rights to refuse to operate like this?

BTW -remind me which agencies you represent?

[psychocandy]

WNLUKS ^^

From previously working there as a permie I know full well how contractors operate there and let's just say they should have all been within IR35.

I can't see that much would've changed between then and now.

LOL. Same in a lot of places. I don't think this client is unique in that - its always been a grey area for a lot of people. I will admit that.

Apparently, in this case, the one question that killed it was - would a contractor fix at their own expense? They said no we'd pay them to come in. Strange thing to say.

Even in other BAU type clients if things have gone wrong and its been something I did, I'd make a point of sorting it myself and not claiming any extra time.

Appreciate there are tons of grey areas with things like this at a LOT of clients. You could answer a lot of these questions either way I think. Just a bit surprised that they didn't appear to consider this.

[northernladuk]

LOL. Same in a lot of places. I don't think this client is unique in that - its always been a grey area for a lot of people. I will admit that.

Apparently, in this case, the one question that killed it was - would a contractor fix at their own expense? They said no we'd pay them to come in. Strange thing to say.

Even in other BAU type clients if things have gone wrong and its been something I did, I'd make a point of sorting it myself and not claiming any extra time.

Appreciate there are tons of grey areas with things like this at a LOT of clients. You could answer a lot of these questions either way I think. Just a bit surprised that they didn't appear to consider this.

I don't think this is true. I've yet to see a client that makes contractors fix stuff in their own time. It's part of the job to them. You code something wrong, send docs for review with mistakes, it goes through the process, comes back, gets corrected and through the process again. Part of the daily job. It's not a strange thing to say if they see it as part of the job at all.

I very much doubt you'd do any work in your own time, your fault or not. And even if you do client will see it as a bit of above and beyond and not you fixing it in your own time.

If you were the type that does extra time regularly you could try educate your client that's the time you do the fixes and it's your time but you'd have to be in the gig for that so no help when making the initial determination.

[psychocandy]

I don't think this is true. I've yet to see a client that makes contractors fix stuff in their own time. It's part of the job to them. You code something wrong, send docs for review with mistakes, it goes through the process, comes back, gets corrected and through the process again. Part of the daily job. It's not a strange thing to say if they see it as part of the job at all.

I very much doubt you'd do any work in your own time, your fault or not. And even if you do client will see it as a bit of above and beyond and not you fixing it in your own time.

If you were the type that does extra time regularly you could try educate your client that's the time you do the fixes and it's your time but you'd have to be in the gig for that so no help when making the initial determination.

Know what you mean - clients tend not to understand the issues.

[The Spartan]

LOL. Same in a lot of places. I don't think this client is unique in that - its always been a grey area for a lot of people. I will admit that.

Apparently, in this case, the one question that killed it was - would a contractor fix at their own expense? They said no we'd pay them to come in. Strange thing to say.

Even in other BAU type clients if things have gone wrong and its been something I did, I'd make a point of sorting it myself and not claiming any extra time.

Appreciate there are tons of grey areas with things like this at a LOT of clients. You could answer a lot of these questions either way I think. Just a bit surprised that they didn't appear to consider this.

LOL Behave the the only thing that's grey there it the career civil serpents that work there, don't forget that one of my best mates left there recently and while he was there they did everything they possibly could to keep him. Ultimately while he was there he took every precaution necessary to ensure it was outside IR35. We used to have daily conversations on Slack about how he had to refuse to do certain work as it was outside the scope of his contract.