New Draft IR35 Legislation Published

[Peoplesoft bloke]

Not sure I understand this. The RTI submission for MyCo is made by my accountants and this info clearly wouldn't show any links to the client. So can someone explain what this means?

It's for the poor sods who end up as an inside IR35 contractor - i.e. paid on the permie payroll, paying the exact same tax and NI but with zero rights. - as mentioned, this is so HMRC can brag about how much "extra" they have collected. It is for the cleintcos (and there are some) aiming to pay inside IR35 contractors through the cleintco payroll.

This won't affect anyone remaining outside IR35.

[SimonMac]

Not sure I understand this. The RTI submission for MyCo is made by my accountants and this info clearly wouldn't show any links to the client. So can someone explain what this means?

Because if you are an off-payroll worker on PAYE (so inside) YourCo won't be doing the RTI's

[Peoplesoft bloke]

Because if you are an off-payroll worker on PAYE (so inside) YourCo won't be doing the RTI's

Exactly.

[DrStrange]

Has anything changed with respect to liability if an "outside" status is later proved "inside"? I.e. is there any chance the client or agent can force any liability back to the contractor?



On a separate point, say a contractor earns £100k from a contract everyone thought was outside but is now inside after FTT. Let's assume client agrees and so pays the ENIC, PAYE and NIC.

Can contractor then reclaim any CT or Div Tax, given the £100k is actually now "net wages"?

[GhostofTarbera]

No, they won’t and No


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[ladymuck]

I've seen some contract clauses saying the contractor will indemnify the agency/client against any claims for unpaid taxes. Not sure how enforceable they are and I would be prepared to quote any legalisation that gets passed to have such clauses removed.

These are for the current state of play, it'll be interesting to see if those clauses change once the legislation is issued.

[DrStrange]

No, they won’t and No


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On the first "no"", is an outside assignment essentially then a guarantee from future issues, as any FTT will only affect the client or agent?

Are they allowed to include any indemnities that they can pass it back to contractor?


Why the second "no"? If my "employer" has paid all ENIC, IT and NIC then the monies paid to me under the new rules are employment income and so not subject to CT or DT.

[jamesbrown]

I've seen some contract clauses saying the contractor will indemnify the agency/client against any claims for unpaid taxes. Not sure how enforceable they are and I would be prepared to quote any legalisation that gets passed to have such clauses removed.

These are for the current state of play, it'll be interesting to see if those clauses change once the legislation is issued.

A contract can say pretty much anything, but I’m also skeptical that such clauses would be enforceable. Even if they were, the supply chain above the PSC would get milked first (fee payer, ordinarily) and it may not survive that.

[jamesbrown]

Why the second "no"? If my "employer" has paid all ENIC, IT and NIC then the monies paid to me under the new rules are employment income and so not subject to CT or DT.

It isn’t employment income, it’s a deemed payment that wasn’t applied properly for which the fee payer is liable (in the first instance). YourCo treated the income correctly, which means that CT was paid on profits and any personal taxes when payments were made to persons.

[jk3838]

I've seen some contract clauses saying the contractor will indemnify the agency/client against any claims for unpaid taxes. Not sure how enforceable they are and I would be prepared to quote any legalisation that gets passed to have such clauses removed.

These are for the current state of play, it'll be interesting to see if those clauses change once the legislation is issued.

I've been wondering about this

Post April, should these 'contractor responsible for any unpaid taxes' clauses be taken out of the new contract, and are they enforceable if they stay in ?

I was going to wait to see if still in and run it by QDOS when it becomes relevant