Finance Bill 2019-20 draft legislation

[WordIsBond]

there is no case law where an individual has taken an employee for tax purposes judgement in the FTT to the ET, let alone receive a different judgement.

Yes, because IR35 cases have always been lost AFTER it was too late to go to the ET. So that lack of history is not really relevant.

[WordIsBond]

I don't think it's a weak point. I think it's an important moral distinction.

Same thing, I think. The 'moral distinction' creates a 'weak point' politically.

[WordIsBond]

The people in the pub will probably just ask "why you don't become an employee then?"

Permie roles are not always on offer, you know. If the clients wanted permies they could hire permies.

[WordIsBond]

if they can't get the right people in and senior management will quickly spend several 10'000s on some consultancy by QDOS etc. to get it right.

I disagree with the above.

I'm not maligning QDOS and from what I see they are a professional, careful and prudent organisation.

However, unless senior management is willing to make changes to the work required or the manner in which it is delivered or supervised - in other words make changes that are real and can be proven over the course of the contract - no amount of legal massaging can alter and inside/outside determination.

That decision is (or should be) based on FACTS and no legal contract will produce a magic wand to alter those. Rather it is the opposite. The FACTS on how a job is done should drive the contract.

If QDOS (and I'm sure there are others) can influence those FACTS - and for all I know they can and do - then great.

I don't think you are disagreeing at all, you are just defining what 'get it right' means.

[Maslins]

Yup - good point.

As indeed must all small accountancy firms set up for contractors.

Not fuming, but definitely nervous.

Personally I don't see that inside IR35 Ltd Co working makes sense to anyone. Contractor has all the admin hassle of running a Ltd Co with virtually none of the benefits. Client potentially has risk of contractor going for employment rights (I note webberg's comments re tax/employment law being totally separate, but equally agree with other people's comments surely that can't stand long term). Contractor challenges inside IR35 status, hence gets nice reports from client explaining why the client views them as inside (ie working practices like an employee). Contractor takes those same reports signed by the client to an employment tribunal.

Those contractors who have limited scope for outside will IMHO likely close their companies, and either go permie or umbrella. Due to this I do anticipate over the next 12 months we're going to lose far more clients than normal, and it will be painful/depressing...but I don't see it as the death of our business. I'm confident a decent proportion of contractors will be safe (ie find work where all parties agree it's outside IR35). Also quite a few of our clients are more at the freelancer end (eg web developers doing fixed price websites for small biz, that kind of thing). Plus when it comes to silver linings, we may have a bumper 12 months for MVL Online to compensate

[jamesbrown]

That decision is (or should be) based on FACTS and no legal contract will produce a magic wand to alter those. Rather it is the opposite. The FACTS on how a job is done should drive the contract.

If QDOS (and I'm sure there are others) can influence those FACTS - and for all I know they can and do - then great.

I think I've said this before, but IR35 has always been about the aggregation and subjective weighting of lots of little pointers, plus a few big ones (i.e., little and large "facts").

In most cases, at least some of the "facts" won't support an outside position and, for a BoS role, those facts mostly won't be reversible. No amount of massaging around the edges is going to eliminate the risk, and the risk will be significant for medium and large organisations with many BoS contracts (EDIT: in other words, risk is probably more important than facts). The reality is that a lot of work currently done by contractors doesn't really suit B2B contracts and B2B working practices, even if you could argue (as I would) that such workers are just as enterprising and important to the economy as more specialist contractors (IR35 has always been invidious in that regard).

There will be some % at the top that are clearly outside and some % immediately below them whose WP probably can be improved and rendered very clearly outside (where they are already outside). However, I still come back to that total % as being relatively small. Things are gonna change in a big way (w/ uncertain details and fallout), no matter how you cut this, because medium and large enterprises are attune to risk, and they don't like big and uncertain risks on the horizon; these are game changing when they involve a large number of contracts/contractors. Best guess is that many of these roles will be transitioned to some sort of FTC or temp employment arrangement (full PAYE), and they will become so prevalent that it will be difficult for BoS contractors to refuse them (having sought permie jobs first, perhaps).

[WordIsBond]

Personally I don't see that inside IR35 Ltd Co working makes sense to anyone. Contractor has all the admin hassle of running a Ltd Co with virtually none of the benefits.

If the contractor was outside for even part of this year before starting this contract, or expects/hopes to be outside within a year or so, then having a 6-12 month contract would not be reason to close his company, necessarily.

The real problem with inside IR35 Ltd Co work under this reform is you can't protect against the NI contributions with large pension contributions. You can only do that if you go with an umbrella -- but then you have to pay umbrella fees, too.

Contractor challenges inside IR35 status, hence gets nice reports from client explaining why the client views them as inside (ie working practices like an employee). Contractor takes those same reports signed by the client to an employment tribunal.

Precisely. A week after leaving. Especially if they let him go without notice.

I'm confident a decent proportion of contractors will be safe (ie find work where all parties agree it's outside IR35).

It doesn't take that many of those before the clients who insist that everyone is inside suddenly realise they aren't getting the best people. I agree. There might be a glut of inside determinations initially, but usually market forces attain some kind of equilibrium even when government has tinkered/interfered. That will happen here, too.

[webberg]

I don't think you are disagreeing at all, you are just defining what 'get it right' means.

I was repeating a point that I've been making for a long time now, that the "old think" of having a contract that says many things about the role and how it's performed which if measured on its own is "outside", m
eans that you are actually "outside", never was correct or safe and will become even less so in the new world.

The "new think" has to be to look at the role and its performance first and draw a contract up that reflects it - and to subject that written contract and the actual role to gap analysis at regular intervals. This now has to be done between end client (more likely some form of intermediary) and the contractor.

I accept that the likes of QDOS have a role to play in determining the final position both factually and contractually, but they cannot produce a set of words or clauses which switches an inside contractor role to an outside version.

I read the context of the point I was responding to as suggesting that clever wording could achieve this. I may have put too much weight on that, in which case, my apologies.

[simes]

Personally I don't see that inside IR35 Ltd Co working makes sense to anyone.

Would that even be allowed? Would not the deeming of being Inside automatically mean you Have to be paid via umbrella? ...Probably via some subsidiary of the agency that found the contract for you?

Otherwise, what would be stopping the LtdCo saying Feck it, I will deem my own culpability and status?

[webberg]

Contractor takes those same reports signed by the client to an employment tribunal.

And says what?

If he says to an ET Judge, my [end client] thinks I should be taxed at the equivalent rate as an employee, can I please therefore have the same rights, what might a Judge say?

Q. Is the end client correct? Are you effectively an employee?

A. I don't know yet as the final arbiter here is a tax Tribunal/Court

Q. Has that hearing taken place or been decided?

A. No and it may never happen

Q. So you don't know yet if you are being taxed at the same as an employee and you may never take such a decision to a tax Tribunal?

A. Correct

Decision: When you have a decision from a tax Tribunal, if you are still in time, come back and see me.

I have to say that whilst I think we will see a coming together of tax and employment law in defining employees, this is a generation away.