Reply to: You thought IR35 was bad.

[jamesbrown]

Can you check my April to July timeline above? I'm 100% sure it's right but it's so insane that I could do with the confirmation.

Yes, your understanding matches mine - the main thing being that the deadline for delivering the SDS is not the start of the engagement, but the first payment made by the end client. There's a chance they got it wrong, I suppose, but your timeline is consistent with what they said.

[eek]

Completely agree with eek - terrible. From what I could tell, their main responses under duress were "we're a training team and not versed in the finer points of the law" and "that's a commercial decision". It was really quite laughable.

Can you check my April to July timeline above? I'm 100% sure it's right but it's so insane that I could do with the confirmation.

[jamesbrown]

And boy was that painful.

An SDS can be issued at any time prior to first payment - do HMRC know how the world actually works and what a legal contract is and that an inside IR35 contract may need a different signature / party to an outside IR35 contract.

And an agency suggesting using the opt out of regulation rules to reduce (their) risk.

Completely agree with eek - terrible. From what I could tell, their main responses under duress were "we're a training team and not versed in the finer points of the law" and "that's a commercial decision". It was really quite laughable.

[eek]

And the irony is that I only attended the call to check a minor issue regarding feepayers and what happens if the tax isn't correctly paid or deducted.

[eek]

If you start with a contract to your LTD. and before 1st payment someone decides that you're inside, and they then refuse top pay the LTD and want to do PAYE that will put the agency in breach of contract with the PSC. So maybe it will push the agencies to get that SDS beforehand to cover their risk.
Mebbe.

IANAL

I posted this elsewhere but it was probably more valid here given that this is where I mention the conference call me and JamesBrown attended.

Under the new rules this is a perfectly valid SDS delivery model

6th April - start work - yep we think you are outside
May payment from agency (factored invoice April's work)
June payment from agency (factored invoice May's work)
July SDS issued (determining that the contract is inside IR35) just prior to first payment by end client

The agency paying your limited company then fixes this by creating appropriate amendments for the earlier months and withholds money until all the tax has been paid.

But the thing is it's not PAYE it's deemed payments. The fact it's a material change in the contract is a legal issue that HMRC do NOT care about for it's outside their payband.

And the sad bit is that I'm not making this up - while an SDS does need to be provided the deadline for it being provided is no longer the start of the project as it was from 2017 but prior to payment of the first invoice by the end client.

[Lance]

Yep but HMRC's actual argument was that the actual working conditions are only known when the person is working there so you can't 100% determine if you are inside or outside until the person has been there a period of time.

Hence why the SDS doesn't need to be issued until after you are there.

Of course we know the reality both of how it's going to work and why they plan is a complete failure but those are commercial issues outside the scope of IR35.

I didn't go too far down the legal side of things for they knew absolutely nothing.

The one thing I got is that HMRC's opinion of something matches mine and definitely doesn't match what other people have been saying.

Due diligence of the contractual supply chain is very important.

If you start with a contract to your LTD. and before 1st payment someone decides that you're inside, and they then refuse top pay the LTD and want to do PAYE that will put the agency in breach of contract with the PSC. So maybe it will push the agencies to get that SDS beforehand to cover their risk.
Mebbe.

IANAL

[eek]

that says to me that nobody should start work until they've received the SDS.

Yep but HMRC's actual argument was that the actual working conditions are only known when the person is working there so you can't 100% determine if you are inside or outside until the person has been there a period of time.

Hence why the SDS doesn't need to be issued until after you are there.

Of course we know the reality both of how it's going to work and why they plan is a complete failure but those are commercial issues outside the scope of IR35.

I didn't go too far down the legal side of things for they knew absolutely nothing.

The one thing I got is that HMRC's opinion of something matches mine and definitely doesn't match what other people have been saying.

Due diligence of the contractual supply chain is very important.

[Lance]

And boy was that painful.

An SDS can be issued at any time prior to first payment - do HMRC know how the world actually works and what a legal contract is and that an inside IR35 contract may need a different signature / party to an outside IR35 contract.

And an agency suggesting using the opt out of regulation rules to reduce (their) risk.

that says to me that nobody should start work until they've received the SDS.

[LondonManc]

Given the state of permanent jobs not being permanent any more, a 12-month contract via PAYE on £600 per day is still far better than a permie job on £60k pa if you want to keep doing the gig thing. Times are hard for everyone and grumbling about having to pay "normal tax" on a £120k pa gig isn't going to get you many hugs.

[eek]

Because they believe we are all disguised permies who should be inside that option has occurred to them.

Because HMRC haven't got the first clue of how the real world actually works and how their deemed payment scheme completely falls apart.

It was beyond painful and be careful I might ring and rant - it was that bad...

[northernladuk]

And boy was that painful.

An SDS can be issued at any time prior to first payment - do HMRC know how the world actually works and what a legal contract is and that an inside IR35 contract may need a different signature / party to an outside IR35 contract.

And an agency suggesting using the opt out of regulation rules to reduce (their) risk.

Because they believe we are all disguised permies who should be inside that option has occurred to them.

[eek]

And boy was that painful.

An SDS can be issued at any time prior to first payment - do HMRC know how the world actually works and what a legal contract is and that an inside IR35 contract may need a different signature / party to an outside IR35 contract.

And an agency suggesting using the opt out of regulation rules to reduce (their) risk.

[jamesbrown]

https://www.eventbrite.co.uk/e/opw-w...=eemailordconf

I think there are still tickets for the one next Wednesday

Thanks! I actually managed to squeeze in for the one tomorrow.

[eek]

Do you have a link or is that by invitation only?

https://www.eventbrite.co.uk/e/opw-w...=eemailordconf

I think there are still tickets for the one next Wednesday

[jamesbrown]

I'm merely reporting what I heard - whether it's due to misinterpretation isn't something I'm going to speculate on although I will be attending HMRC's seminar tomorrow to hear exactly what is being said.

Do you have a link or is that by invitation only?