Agency to provide HMRC with quarterly updates on personal service companies

[jamesbrown]

I agree with QDOS that we are collateral in this exercise, which is why the precise reporting requirements are so opaque. This wasn't aimed at Ltd company contractors operating IR35, but when the question arose, they certainly weren't going to eliminate that potential avenue for future enforcement, despite noises to the contrary early on This needs to be viewed in a broader enforcement context across all types of agency arrangements, as will become clear in the coming months and years (cough. FLC. cough). Where I differ with QDOS is over the implications for use of Ltd companies, as I think it will have the opposite effect on contracting; also, while IR35 has worked for HMRC, it remains expensive to operate as an enforcement mechanism and relies heavily on deterrence. There are powerful arguments for tax simplification in the longer term, but it won't be pretty in the interim.

[BlasterBates]

I suspect that this is more of an information gathering exercise on the back of the new legislation to better judge how much potential tax or NIC there is to collect and then to consider alternatives how to increase it, which will in any case will depend on who is the new government.

[Zero Liability]

It could happen but I wouldn't be surprised if the FLC suddenly resurfaced in discussions in the not too distant future, as IR35 is cost-prohibitive.

[Qdos Contractor]

The idea of HMRC using the data to find IR35 targets is speculation. It's a reasonable concern, but speculation all the same.

Obviously the reason this is happening is because of the false self employment legislation, which is ostensibly aimed at sole trader types working through agencies (construction workers etc). Unfortunately HMRC are using the standard sledgehammer approach and limited company contractors are being caught in the crossfire.

A probably consequence of both the false self employment legislation and the government's apparent dislike of umbrella companies is that more and more people will herd into PSCs. If that happens I wouldn't be surprised if both IR35 and MSC activity was stepped up significantly.

[Zero Liability]

That's assuming they don't already have means of telling if someone is a contractor, which they do. That, plus they went after quite a few contractors going at it direct last year. The only new information this stuff adds is the client or project name and length of the engagement and, I suppose, the fact that you're working through an agency, which is very commonplace. It may help them fine tune their targeting and "campaigns" a little but like SueEllen said it doesn't really change very much else.

It may, however, integrate well with the proposed FLC concept, should agencies be exempted from reporting payments to those, but that is hypothetical at present; these requirements are mainly targeted at dodgy umbrellas and it doesn't really provide much information other than that detailed above, which again, is far less important than the stuff they already know through your accounts and returns alone.

[Whorty]

Ironically, me as a contractor who gets my roles (6 - 12 months max in length) via an agency could be open to being investigated, but a chap i spoke to last week who has contracted direct with the same company for 9 years (he used to work for them as a perm before that) would not be on the HMRC radar!

[BlasterBates]

It does sound like now as a contractor you can expect an HMRC bod to look at you at some point, even if it's a cursory glance on a computer screen. In the past you would be unlucky if someone were to check up. It was possible to hide amongst the millions of small companies.

[Boo]

Wish people would think that if a new piece of legation is coming it might just possibly been discussed a number of times and spend a few minutes searching.

Wish people who are oposed to the exchange of opinions and information on forums like these would just foxtrot oscar and leave the rest of us to it.

Boo

[northernladuk]

Wish people would think that if a new piece of legislation is coming it might just possibly been discussed a number of times and spend a few minutes searching.

[TykeMerc]

Since they have limited man power it won't help that much.

However as one poster posted a while ago that someone she knew was contracting through a dissolved company so not paying VAT, it does mean that in theory the different parts of HMRC can work together to find people.

With their track record of screw ups (I still get frequent letters from them attempting to collect a non debt from years ago) they will end up hassling the innocent and ignoring the fraudulent

[SueEllen]

Its a new requirement that's been brought in. Its to help HMRC target IR35 investigations.

Since they have limited man power it won't help that much.

However as one poster posted a while ago that someone she knew was contracting through a dissolved company so not paying VAT, it does mean that in theory the different parts of HMRC can work together to find people.

[SueEllen]

.

Does this have any negative implications for contractors?

Yep if you act dodgy and HMRC want to nail you.

[BolshieBastard]

Apparently from next week the on site agency will send contractor information to HMRC on a quarterly basis (name, address, payments, etc).

Something to do with the "Income Tax Earnings & Pensions Act 2003 (ITEPA)".

Does this have any negative implications for contractors?

Its a new requirement that's been brought in. Its to help HMRC target IR35 investigations.

[dmuk]

Apparently from next week the on site agency will send contractor information to HMRC on a quarterly basis (name, address, payments, etc).

Something to do with the "Income Tax Earnings & Pensions Act 2003 (ITEPA)".

Does this have any negative implications for contractors?