Reply to: HMRC - Onshore_employment_intermediaries_-_false_self_employment.pdf

[malvolio]

There is little point shooting the messenger. I didn't write the legislation I am just making sure you all know what it says.

I don't need to wait until April to say "I told you so" because other reliable sources have already confirmed the legislation as it stands is as wide as I said it was.

I don't want to be in the position of telling anybody "I told you so" in April because I am hoping that by waking you all up now it won't ever come to that. The one thing I don't want to see is people sleep walking into a complete disaster. Now is the time to respond to the consultation and to contact your MP about this legislation. Come April it will be far too late because nobody will want to be seen revoking anti-avoidance legislation. You already have a lot to do if you want to win this fight and you don't want to be in the same position as you are with the IR35 legislation where it has already passed and you are repeatedly promised some sort of repeal that never comes.

I hink you'll find quite a lot of people already are: 21,000 PCG members for a start...

[Turfer]

Ah well, I guess losing the divis, getting a reasonable salary and shoving all the rest in a pension is the way to go for 2014.

So a Happy New Year to all but Turfer, who has been a joyful little fecker and almost bringing himself off at the prospect of telling everyone 'I told you so' come April (as I'm sure he will).

There is little point shooting the messenger. I didn't write the legislation I am just making sure you all know what it says.

I don't need to wait until April to say "I told you so" because other reliable sources have already confirmed the legislation as it stands is as wide as I said it was.

I don't want to be in the position of telling anybody "I told you so" in April because I am hoping that by waking you all up now it won't ever come to that. The one thing I don't want to see is people sleep walking into a complete disaster. Now is the time to respond to the consultation and to contact your MP about this legislation. Come April it will be far too late because nobody will want to be seen revoking anti-avoidance legislation. You already have a lot to do if you want to win this fight and you don't want to be in the same position as you are with the IR35 legislation where it has already passed and you are repeatedly promised some sort of repeal that never comes.

[LisaContractorUmbrella]

What if a worker had a bona fide intention to work multiple assignments with the Umbrella but after a year of contracting on a single assignment, they got offered and accepted a permie job out of the blue. Would this retrospectively invalidate their expenses for the whole assignment or would the worker just stop claiming from the moment that it became clear that they would only ever work on the one assignment with the umbrella?

As far as I know this point hasn't been tested but according to HMRC wording the tax position changes when the intention changes so claims should stop when the contractor knows that they will only be undertaking a single assignment. Proving 'intention' is difficult but if the worker had attended interviews for perm positions, for example, then I think they would have a job proving that their intention was to continue contracting

[Wanderer]

The agency would only be able to include expenses if they operated an over-arching contract of employment and if the contractor intended to work on more than 1 assignment with them.

What if a worker had a bona fide intention to work multiple assignments with the Umbrella but after a year of contracting on a single assignment, they got offered and accepted a permie job out of the blue. Would this retrospectively invalidate their expenses for the whole assignment or would the worker just stop claiming from the moment that it became clear that they would only ever work on the one assignment with the umbrella?

[LisaContractorUmbrella]

Hi Lisa,

But about the charging.

If the agency is running RTI PAYE, and I'm presuming they will be allowed to include expenses that have been incurred by the contractor, according to what is in the policy document there will be no charges against the contractor then what would be the need of the umbrella?

Also if the agency runs PAYE, as you are now being classed as a temporary employee of the client, I presume the client through the agency will automatically cop for the employer's NI?

I'm presuming that agency would charge out to the client for do their payroll?

Hi

The agency would only be able to include expenses if they operated an over-arching contract of employment and if the contractor intended to work on more than 1 assignment with them. The agency would be responsible for employer's NI and they would also have all the other employer responsibilities that currently fall to umbrella companies - SMP, SSP, SPP, auto-enrolled pension contributions etc etc. All of this would massively increase the agencies' overheads and their legal responsibilities so I think it is unlikely that they would not continue to work with umbrella companies.

[eek]

Hi Lisa,

But about the charging.

If the agency is running RTI PAYE, and I'm presuming they will be allowed to include expenses that have been incurred by the contractor, according to what is in the policy document there will be no charges against the contractor then what would be the need of the umbrella?

Also if the agency runs PAYE, as you are now being classed as a temporary employee of the client, I presume the client through the agency will automatically cop for the employer's NI?

I'm presuming that agency would charge out to the client for do their payroll?

If you are paye with hays they won't be doing expenses as chances are your next contract wouldn't be with them and single site paye jobs don't qualify for expenses

[Graham1967]

Hi Lisa,

But about the charging.

If the agency is running RTI PAYE, and I'm presuming they will be allowed to include expenses that have been incurred by the contractor, according to what is in the policy document there will be no charges against the contractor then what would be the need of the umbrella?

Also if the agency runs PAYE, as you are now being classed as a temporary employee of the client, I presume the client through the agency will automatically cop for the employer's NI?

I'm presuming that agency would charge out to the client for do their payroll?

[Jubber]

I agree with what a lot of others have mentioned in their posts that it depends on how the agencies will react to any final legislation.

Most of my work over the last 16 years has been agency provided - not all, but most. Take someone like HAYS for example - they have it all in place to just say 'Payroll or nothing'. There's plenty out there who will take payroll so it will do me very little good to say "OK - stick your contract - I'm staying Ltd" - in fact, as has already been indirectly suggested on here, Ltd and Umbrellas will become pointless (to someone like me) overnight. Where are the agents on here? What do you think? Dodgy agent? (if you're real)

I do hope the draft is nothing like the final legislation.

[LisaContractorUmbrella]

Hi All,

Long time lurker so I thought I'd like some advice on this.

I work through my own limited company and the chap who sits opposite me works through the Umbrella,

He has been informed by his umbrella that the although only a proposal, if it is enshrined into law then he and many other will not be affected, as he is not self employed.

If HMRC are saying the intermediary will have to run the PAYE system and stop tax and NI at source, i,e the agency, then what will be the requirement of the Umbrella, pay them to do your allowable expenses, the whole thing does not make sense and appears to have been thought up with the intended consequences.

Graham

The agency only has to take contractors on their payroll, if they fall under this legislation, if they are not being taxed through PAYE via some other means e.g. an umbrella company. This should make no difference to umbrella companies at all

[GB9]

Also forgot to add,

The following is also being said, does this reinforce my point over the requirement for an Umbrella?

These workers will face higher tax and NIC liabilities, but will no longer be
paying service charges (which can be as high as £1,250 per year) to an
intermediary company. Some workers will gain overall although for others
there will be a net loss.

Not sure why they would face higher tax liabilities, however, if agencies had to run everyone through their own payroll, I can't see any reason for umbrellas to exist. A silver lining in every cloud eh!

Having said that, many smaller agencies wouldn't or couldn't handle running a payroll and would outsource it to someone else. Probably an off-shore firm, thus ensuring yet fewer jobs for UK workers and a reduction in tax take. All very sensible of course :-)

[Graham1967]

Also forgot to add,

The following is also being said, does this reinforce my point over the requirement for an Umbrella?

These workers will face higher tax and NIC liabilities, but will no longer be
paying service charges (which can be as high as £1,250 per year) to an
intermediary company. Some workers will gain overall although for others
there will be a net loss.

[Graham1967]

Hi All,

Long time lurker so I thought I'd like some advice on this.

I work through my own limited company and the chap who sits opposite me works through the Umbrella,

He has been informed by his umbrella that the although only a proposal, if it is enshrined into law then he and many other will not be affected, as he is not self employed.

If HMRC are saying the intermediary will have to run the PAYE system and stop tax and NI at source, i,e the agency, then what will be the requirement of the Umbrella, pay them to do your allowable expenses, the whole thing does not make sense and appears to have been thought up with the intended consequences.

Graham

[cojak]

Ah well, I guess losing the divis, getting a reasonable salary and shoving all the rest in a pension is the way to go for 2014.

So a Happy New Year to all but Turfer, who has been a joyful little fecker and almost bringing himself off at the prospect of telling everyone 'I told you so' come April (as I'm sure he will).

[Turfer]

PSC can be an agency

Anybody that thinks a PSC direct to a client will be outside the scope of this legislation needs to think more carefully.

It talks about an "agency", but an "agency" is simply defined as somebody other than the individual that has a contract with the client. As such a PSC will be an agency, so even where there is only a PSC you will need to make sure there is no direction, supervision or control.

Where there is direction, supervision or control the only thing that could be outside the scope of this legislation is a person that is self-employed directly to the client.

The only thing you can say is that when it is PSC direct to client there is a far greater chance that the PSC will be more comfortable with the risk and take steps to avoid it.

[Zero Liability]

If their business model were geared to ensuring the client did not exercise significant D&C, they would not have to, but given how they currently operate I would guess not.