The HMRC online test for IR35

[ChimpMaster]

I'm not Public Sector but had a bash at this for fun just now:

https://www.tax.service.gov.uk/check...r-tax/cluster/

Of course the test has been loaded so that it's difficult to escape IR35 and, given the way the questions are specified, I imagine 90% of contractors would fail.

The substitution one is a good example of heads I win tails you lose:

If the worker's business sent someone else to do the work (a substitute) and they met all the necessary criteria, would the end client ever reject them?
(a) Yes - the end client has the right to reject a substitute for any reason, including if it would negatively impact the work
(b) No - the end client would always accept a substitute who met these criteria

Even the IPSE contract specifies that Subs can be introduced by the Consultant but "with prior written approval of the client". So this means that you would always have to answer (a) above.

Having run through a number of iterations, it seems that you have to answer 3 or 4 of the questions very specifically to escape IR35. A sure-fire win is if you can answer (b) on the Substitution question above, and better of course if you have actually subbed someone in. The questionnaire stops there: you win.

Another one is if you display that you decide how the work is done, without any input from the client. It helps if your work is specialised so that no one else at client co understands what you do.

Doing work outside the remit of your contract - without getting a new contract/agreement agreed - is a big No No.

It's equally important to be able to work to your own schedule (working hours) and not be told by the client that you'll be working specific hours. This if often difficult if you have to cover normal business hours of say 9-5.

Having the choice of where to work is a good one too.

I'm sure most of us here are clued up on IR35, Substitution and SDC. I just found it interesting to take a shot at the test and just about get through without falling foul of IR35 - and this is after, in my mind, I am way clear of it (specialised tech, work where/when I choose, no SDC...but no Sub put in yet).

Anyone else had a go?

[vwdan]

The sub thing really ****s me off. When I hire my builder, I expect him to be doing the majority of the work. If he calls me and says "I'm going to be ill, do you mind if I send my mate Dave round" and I say "Actually, I'd rather wait and you do it" does this mean I now employ him?

It's a ******* joke.

Another one is if you display that you decide how the work is done, without any input from the client. It helps if your work is specialised so that no one else at client co understands what you do.

This is where I'm lucky - because I'm a specialist, I get to actually wear the consultant badge most of the time.

[poorautojobber]

What's the 'criteria'? They could reject them because they didn't meet the 'criteria' and that would be ok is how I read that but that's not actually the question. How is that even a question? All you need is some dickhead grad at clientco to not understand the question and your ****ed with no recourse.

[jamesbrown]

Anyone else had a go?

Yes, I’ve put my current contracts through, out of curiosity, and they all passed, but I was conservative on the sub question, so they only passed on lack of D&C (specialist work with complete control on when/where/how). If answered truthfully, the average BoS contract would fail or show undetermined at best, yet it could well be outside in reality. I’d be skeptical of any pass on the sub question, given how unrealistically it is posed.

The CEST is not worth the paper it isn’t written on, and probably will not be used by the private sector when the PS rules inevitably get rolled out, possibly in the Autumn Budget (if they can get it through).

[jamesbrown]

What's the 'criteria'? They could reject them because they didn't meet the 'criteria' and that would be ok is how I read that. How is that even a question? Surely that can't be a legally binding question?

The CEST has no basis in law fullstop, but they will stand by it if answered “truthfully” ().

[ChimpMaster]

Yes, I’ve put my current contracts through, out of curiosity, and they all passed, but I was conservative on the sub question, so they only passed on lack of D&C (specialist work with complete control on when/where/how). If answered truthfully, the average BoS contract would fail or show undetermined at best, yet it could well be outside in reality. I’d be skeptical of any pass on the sub question, given how unrealistically it is posed.

The CEST is not worth the paper it isn’t written on, and probably will not be used by the private sector when the PS rules inevitably get rolled out, possibly in the Autumn Budget (if they can get it through).

Same for me, passed based on the specialised role and that I work wherever I want (normally home ).

Shows the importance of having a very specific task/project in your contract, so that you're not viewed as a generalist and assigned to all sorts of different jobs at the client.

I still think 90% of bum-on-seat contractors would fail this test because it is so heavily loaded in HMRC's favour. HMRC know that most clients will want their consultants on-site and working core office hours (because project teams will be working together).

And yes the CEST is not legally binding by any means, but it illustrates how HMRC's thought process is so flawed and clouded by their own propaganda in the war on the UK's service sector. If any contractor were to be investigated on IR35 grounds, then you can see how they would challenge you. They would use the same line of questioning as the CEST and they would load the dice in their favour.

Best get that Sub lined up to take over for 1 week every contract

[jamesbrown]

Same for me, passed based on the specialised role and that I work wherever I want (normally home ).

Shows the importance of having a very specific task/project in your contract, so that you're not viewed as a generalist and assigned to all sorts of different jobs at the client.

I still think 90% of bum-on-seat contractors would fail this test because it is so heavily loaded in HMRC's favour. HMRC know that most clients will want their consultants on-site and working core office hours (because project teams will be working together).

And yes the CEST is not legally binding by any means, but it illustrates how HMRC's thought process is so flawed and clouded by their own propaganda in the war on the UK's service sector. If any contractor were to be investigated on IR35 grounds, then you can see how they would challenge you. They would use the same line of questioning as the CEST and they would load the dice in their favour.

Best get that Sub lined up to take over for 1 week every contract

Yep. If HMRC were stupid enough to base an actual legal case around the CEST, they'd get laughed out of court. It's essentially just a front to stack things more in their favour, since there isn't a simple mechanism (i.e. a meaningful duty of care) to require that the fee payer makes a realistic assessment (which would mean not using the CEST).

[washed up contractor]

The CEST is not worth the paper it isn’t written on, and probably will not be used by the private sector when the PS rules inevitably get rolled out, possibly in the Autumn Budget (if they can get it through).

The Autumn Statement is the 'new' budget and as such, is a Finance Bill. The convention since 1911 is that the HoL does not reject a Finance Bill of the sitting Government.

It would need an albeit small number of conservative MP's to revolt to stop any part of the Budget and that's not to say they wouldnt.

The HoL did challenge osborne's Tax Credits changes because this change used a Statutory Instrument and not in a Finance Bill.

[jamesbrown]

The Autumn Statement is the 'new' budget and as such, is a Finance Bill. The convention since 1911 is that the HoL does not reject a Finance Bill of the sitting Government.

It would need an albeit small number of conservative MP's to revolt to stop any part of the Budget and that's not to say they wouldnt.

The HoL did challenge osborne's Tax Credits changes because this change used a Statutory Instrument and not in a Finance Bill.

Like I said, Autumn Budget.

Point of reference: Class 4 NICs in the Spring Budget (this is what happens when a policy is not properly sounded out with backbenchers). A Finance Bill isn't going to get voted down, but the question is whether soundings have been taken on a rollout and whether they are supportive, or at least not sufficiently negative. The Grauniad was reporting earlier this year from an unnamed Minister (sounded like the Chief Secretary to the Treasury at the time) that they didn't think it would pass muster on the backbenches, due to pushback from the private sector. I have my doubts.

[washed up contractor]

Like I said, Autumn Budget.

Point of reference: Class 4 NICs in the Spring Budget (this is what happens when a policy is not properly sounded out with backbenchers). A Finance Bill isn't going to get voted down, but the question is whether soundings have been taken on a rollout and whether they are supportive, or at least not sufficiently negative. The Grauniad was reporting earlier this year from an unnamed Minister (sounded like the Chief Secretary to the Treasury at the time) that they didn't think it would pass muster on the backbenches, due to pushback from the private sector. I have my doubts.

Like I said, if the Government tried to implement private sector IR35 akin to the public sector in a Finance Bill, it would fall to MP's to vote it down not the HoL. A small number of conservative MP's would have to rebel.

I dont believe the Government would try and push private sector IR35 through this Parliament. Each to their own.