RBS, contractors and IR35

[cojak]

I've been banned by IPSE for 6 months now, I'm awaiting an answer as to why!

anyway, troll -


troll..


[trɒl, trəʊl]







NOUN.





(in folklore) an ugly creature depicted as either a giant or a dwarf.


I guess you need to find a better definition for me!

What did I say about keeping your nose clean and not annoying the mods?

[webberg]

'Government policy' (as opposed to legislation) can certainly be overturned by a court. That's exactly why Article 50 required a vote of Parliament, because the government's policy was overturned.

.

You are of course correct and I apologise for my lazy language.

I meant that Gov't policy that has been converted into legislation and where that legislation clearly carries the intent of Parliament, a Court or Tribunal is unable to interfere.

In support I could reference a number of APN cases in which Courts have held that the powers granted HMRC cannot be denied (held to account, yes), and that whilst many Judges have found the denial of justice there anathema to them, given that is is policy reduced to legislation, they cannot alter it.

[WordIsBond]

I meant that Gov't policy that has been converted into legislation and where that legislation clearly carries the intent of Parliament, a Court or Tribunal is unable to interfere.

As often as Parliament has shied away from defining employment vs self-employment, I think it would be hard to argue that any legislation really carries the intent of Parliament as to the distinction between employment status for tax and employment status for employment rights. All you have really is case law that says these things have to be 'looked at in the round.'

They've intentionally left it nebulous and open to interpretation, on the one side to HMRC's (and the Tax Tribunal's interpretation), on the other to the Employment Tribunal's interpretation. Given that, it's hard to see how an Employment Tribunal could be accused of going against legislative intent if they decide that part of the 'in the round' assessment, in this brave new world, is to look at IR35 deeming decisions by the client.

And all that still doesn't get around that a court certainly could decide that client assessments for tax is a violation of the Human Rights Act and throw a huge spanner in the works.

[webberg]

I think these days the Taylor Good Work Report is also a key indicator for Judges etc to consider.

The report was clear that definitions should be common for tax and employment law purposes.

The Gov't response was equally clear that they rejected that position.

Not a technical paper from HMRC or an interpretation from a tribunal, but rather a clear statement from Gov't.

Also not of course anything carrying statutory weight or which a Tribunal would necessarily refer to. It is however part of a wider spectrum of material that would be referred to.

I'm always very sceptical about the application of Human Rights Act to matters of taxation. I think the theory here is that the Gov't has the right to claim ALL of your income and assets and that tax law exists to protect you by limiting the that right. Therefore if the Gov't decides NOT to volunteer a restriction to their right to claim everything, they are simply maintaining the status quo.

Human Rights legislation tends to be in situations where the right of a person is being unfairly compromised. In tax, there are no rights, only a concession from Gov't not to exercise its rights. I think this is why Human Rights struggle in tax matters.

That said, I'm clearly not a constitutional lawyer and would happily be corrected.

[WordIsBond]

I think these days the Taylor Good Work Report is also a key indicator for Judges etc to consider.

The report was clear that definitions should be common for tax and employment law purposes.

The Gov't response was equally clear that they rejected that position.

Really? Page 15 of the initial response.

The consultation will consider employment status for both employment rights and tax, including considering the review’s recommendation for greater alignment between the two, in order to tackle this issue holistically.

Page 8 of the report responding to that consultation.

Having a separate framework for determining employment status for the purposes of employment rights and tax adds to the confusion for individuals and employers, and can drive behaviour detrimental to workers and more likely to result in noncompliance from a tax perspective. Matthew Taylor recommended that renewed effort should be made to align the employment status frameworks for the purposes of employment rights and tax to ensure that the differences between the two systems are reduced to an absolute minimum.
The Government agrees that this is the right ambition and will bring forward detailed proposals on how the frameworks could be aligned.

That doesn't sound like a rejection to me.

[WordIsBond]

I'm always very sceptical about the application of Human Rights Act to matters of taxation. I think the theory here is that the Gov't has the right to claim ALL of your income and assets and that tax law exists to protect you by limiting the that right. Therefore if the Gov't decides NOT to volunteer a restriction to their right to claim everything, they are simply maintaining the status quo.

Human Rights legislation tends to be in situations where the right of a person is being unfairly compromised. In tax, there are no rights, only a concession from Gov't not to exercise its rights. I think this is why Human Rights struggle in tax matters.

The violation of the Human Rights Act to which I refer is not the taxation but the absence of an impartial tribunal which determines whether the tax applies. The client is not impartial in this matter, not least because they have one-sided liability.

[webberg]

Really?

That doesn't sound like a rejection to me.

And I'm sure that is as valid a conclusion as mine.

I think time and actions will tell us more than wordsmiths exchanging words.

[WordIsBond]

And I'm sure that is as valid a conclusion as mine.

I think time and actions will tell us more than wordsmiths exchanging words.

LOL, true enough. The problem is that people are trying to plan for this 'brave new world' that is being foisted on us, and these questions can have a bearing on what strategies / tactics may be worth trying. So it is speculation either way but perhaps not pointless speculation.

The possibility of challenge in an Employment Tribunal could have a beneficial effect in causing clients to think twice about an inside determination, and instead tip the balance towards them accepting a proper B2B working relationship with their contractors. That could only be a good thing. So I'm not sure this is entirely a discussion for the future only.

[webberg]

LOL, true enough. The problem is that people are trying to plan for this 'brave new world' that is being foisted on us, and these questions can have a bearing on what strategies / tactics may be worth trying. So it is speculation either way but perhaps not pointless speculation.

The possibility of challenge in an Employment Tribunal could have a beneficial effect in causing clients to think twice about an inside determination, and instead tip the balance towards them accepting a proper B2B working relationship with their contractors. That could only be a good thing. So I'm not sure this is entirely a discussion for the future only.

Agreed. A lot of the above is relevant to people looking at/for new contracts right now.

The uncertainties around the position post payments from April 2020 have the distinct probability to be a breeding ground for problems of the future.

Many end clients seem to be making noises about reducing contractors and either reducing overall headcount or biting the bullet and having permanent employees. That has the advantage of certainty but perhaps a disadvantage in terms of work getting done and cost. (I hesitate to suggest it, but perhaps also a contractor is more committed to getting the job done than a "permie"?)

Agencies are seeing the end of the gravy train and are reshaping their business into a "services" provider or the better ones are working with their end clients to make sure that those who continue contracting post April next, really are outside IR35. I think many agencies at the mid/small level don't yet appreciate that their financial risk is increasing and that the approach many have/had to IR35 assessment from the past 19 years is no longer adequate.

Contractors are naturally looking out for themselves but for many the switch to employee (or being taxed as though they are) will be unwelcome for financial or personal reasons.

Into this will come "advisers" with ideas which magically retain most of the present day rates/take home etc whilst of course being "compliant".

These are what I see as the picture items and I am of the view that whilst we may well see challenges over ET/FTT definitions being brought in both Tribunals, if a contractor/end client relationship has led to that, something has gone wrong.

[JohntheBike]

Agreed. A lot of the above is relevant to people looking at/for new contracts right now.

The uncertainties around the position post payments from April 2020 have the distinct probability to be a breeding ground for problems of the future.

Many end clients seem to be making noises about reducing contractors and either reducing overall headcount or biting the bullet and having permanent employees. That has the advantage of certainty but perhaps a disadvantage in terms of work getting done and cost. (I hesitate to suggest it, but perhaps also a contractor is more committed to getting the job done than a "permie"?)

Agencies are seeing the end of the gravy train and are reshaping their business into a "services" provider or the better ones are working with their end clients to make sure that those who continue contracting post April next, really are outside IR35. I think many agencies at the mid/small level don't yet appreciate that their financial risk is increasing and that the approach many have/had to IR35 assessment from the past 19 years is no longer adequate.

Contractors are naturally looking out for themselves but for many the switch to employee (or being taxed as though they are) will be unwelcome for financial or personal reasons.

Into this will come "advisers" with ideas which magically retain most of the present day rates/take home etc whilst of course being "compliant".

These are what I see as the picture items and I am of the view that whilst we may well see challenges over ET/FTT definitions being brought in both Tribunals, if a contractor/end client relationship has led to that, something has gone wrong.

Have there been any issues in the public sector where tax and NI have been deducted for work done prior to the cutoff? i.e. has anyone challenged that in the courts? What has happened to agency payments, from clients, which can be on 90 day terms?