Reply to: Woodrow Mercer - IR35 Webinar

[eek]

I thought that the reason why umbrellas are involved for these engagements is because agencies don't have, or want, the payroll facility?

I do think that umbrellas are going to find post April harder than agencies though. They don't add any value, and at some stage clients are gonna wonder why they don't just run the contractors' payroll alongside their perms.

Running contracts is far more than just payroll - you have whole sets of other employment issues and hassles that umbrellas keep away from agencies.

Also in some markets - the use of umbrellas gives an agency a significant advantage when advertising roles (and by the time the truth is discovered that the 15% extra pay was a trick, it's too late for the person to leave).

[Lance]

Nope - deemed payments is where the tax is deducted by the agency (who pay it to HMRC on you and your companies behalf) before sending what is left to your PSC. Your PSC should then pay the VAT to HMRC and the rest to you directly.

I thought that the reason why umbrellas are involved for these engagements is because agencies don't have, or want, the payroll facility?

I do think that umbrellas are going to find post April harder than agencies though. They don't add any value, and at some stage clients are gonna wonder why they don't just run the contractors' payroll alongside their perms.

[eek]

Hmmm

Eek, are you saying that some clients and agencies, actually, might prefer engaging contractors through statement of work contracts instead as alternative to the off-payroll private sector rules assessments?

Nope - deemed payments is where the tax is deducted by the agency (who pay it to HMRC on you and your companies behalf) before sending what is left to your PSC. Your PSC should then pay the VAT to HMRC and the rest to you directly.

[rocktronAMP]

The irony is that I can currently scare any agency with the new S61o and all the notes HMRC are sending out about umbrellas to the extent that some really would insist on a PSC and deemed payments rather than allowing umbrellas to be involved.

Hmmm

Eek, are you saying that some clients and agencies, actually, might prefer engaging contractors through statement of work contracts instead as alternative to the off-payroll private sector rules assessments?

[jamesbrown]

and even then only if the small company is not providing services to companies operating a blanket ban

Yes, good point.

[eek]

Well, good for him. You seem to have disagreed with my point, unpacked each element of it and then agreed with each element. Curious behavior

From 6 April 2021, BoS contracting is no longer a viable business model. Contracting remains a viable business model for a fraction of people, specifically those for whom the client issues an SDS that is outside, those who provide services to small companies, and those who provide services to fully overseas supply chains (no client or fee payer in the UK).

It is a statement of fact that it is only about "you" in the last two instances. In the first, the client issues an SDS.

and even then only if the small company is not providing services to companies operating a blanket ban

[jamesbrown]

Again, all of it, hanks for asking.

Lots of people do work for small companies and overseas clients - next door but two is wrapping up a piece of work in his garden office for a client in Singapore, for example - and he would call himself a freelance IT contractor.

Well, good for him. You seem to have disagreed with my point, unpacked each element of it and then agreed with each element. Curious behavior

From 6 April 2021, BoS contracting is no longer a viable business model. Contracting remains a viable business model for a fraction of people, specifically those for whom the client issues an SDS that is outside, those who provide services to small companies, and those who provide services to fully overseas supply chains (no client or fee payer in the UK).

It is a statement of fact that it is only about "you" in the last two instances. In the first, the client issues an SDS.

[malvolio]

What part of small companies and overseas companies didn't you understand? Personally, I mainly work for the latter, but let's not pretend that the market isn't going to fundamentally change for a majority, and very soon.

Again, all of it, hanks for asking.

Lots of people do work for small companies and overseas clients - next door but two is wrapping up a piece of work in his garden office for a client in Singapore, for example - and he would call himself a freelance IT contractor.

[eek]

This; it's not that contracting will be dead, but contracts available via Ltd companies will be decimated (even veering towards the literal sense, in that I'd not be surprised if just 10% of contracts remain allowed via a PSC).

The irony is that I can currently scare any agency with the new S61o and all the notes HMRC are sending out about umbrellas to the extent that some really would insist on a PSC and deemed payments rather than allowing umbrellas to be involved.

[jamesbrown]

That rather depends what you do for a living. Are you one of the 0.5m or so freelance contractors in IT and Engineering depending on BigCo support or one of the 4.5m who don't? Or someone with a network that gets you work as an external supplier? And yes I know this is an IT contractor's forum.

What part of small companies and overseas companies didn't you understand? Personally, I mainly work for the latter, but let's not pretend that the market isn't going to fundamentally change for a majority, and very soon.

[Paralytic]

The work will be there - it is just that the only work being offered will be inside IR35 - companies won't be willing to take the risk on HMRC deciding to make them a test case.

This; it's not that contracting will be dead, but contracts available via Ltd companies will be decimated (even veering towards the literal sense, in that I'd not be surprised if just 10% of contracts remain allowed via a PSC).

[eek]

I just don't think the contractor market is going to die - shrink yes and many who jumped on the bandwagon will fall off with the turbulence.

The fact remains if you are skilled, experienced, knowledgeable and demonstrate value there will always be work - that need has never gone away in the years since IR35 was introduced.

We will ride this out!

The work will be there - it is just that the only work being offered will be inside IR35 - companies won't be willing to take the risk on HMRC deciding to make them a test case.

If it hadn't been for Covid I would have expected some companies would eventually find it difficult to recruit people so would end up having to go outside but I don't think that's the case now. A lot of the agencies call I've had have discouraged that hope.

[silverlight1]

I just don't think the contractor market is going to die - shrink yes and many who jumped on the bandwagon will fall off with the turbulence.

The fact remains if you are skilled, experienced, knowledgeable and demonstrate value there will always be work - that need has never gone away in the years since IR35 was introduced.

We will ride this out!

[malvolio]

What part of the client issuing an SDS (or avoiding contractors altogether) didn't you understand?

None of it thanks.

You can speculate all you like about what might emerge in N years, but the legislation from 6 April is what it is.

That rather depends what you do for a living. Are you one of the 0.5m or so freelance contractors in IT and Engineering depending on BigCo support or one of the 4.5m who don't? Or someone with a network that gets you work as an external supplier? And yes I know this is an IT contractor's forum.

[jamesbrown]

Disagree - but let's leave it there for a year or so...

What part of the client issuing an SDS (or avoiding contractors altogether) didn't you understand?

You can speculate all you like about what might emerge in N years, but the legislation from 6 April is what it is.