Reply to: MoD

[eek]

So they are saying you will pay the employers NI as well as the employee? I thought this was illegal? And the employers NI had to be absorbed by the agency?!

Nope they are saying they will issue a new contract at approximately 13% less. To which the reply should be sorry I'm leaving.

I have past experience however that shows Sopra Steria do not however understand what a legal contract is. Which is why they assume that people will just sign the new 13% lower contract (because a lot of people will).

[SimonMac]

And todays communication delight...

Details of how Sopra Steria Recruitment will apply HMRC Tax and National Insurance rules
In summary:

· Sopra Steria Recruitment will not be seeking a higher rate from its clients if the assignment is deemed to fall ‘inside’ the new rules. The Gross Rate in the Schedule to your new Contract will be set at the same level as the rate in your current contract. However, terms will apply which will allow Sopra Steria Recruitment to pay you at an effective lower rate. This reflects the requirement that Employer’s National Insurance Contributions and Apprentice Levy be accounted for ‘at source’.

· Sopra Steria Recruitment will seek to put in place with your PSC a new contractual agreement that reflects the additional costs now payable by Sopra Steria Recruitment under the new rules. We are currently estimating that the revised rates payable will be approximately 13% less than the fees which you would earn if the Assignment were ‘Outside’ the new rules.

· Sopra Steria Recruitment will deduct PAYE and primary (i.e. employee’s) class 1 National Insurance Contributions from the PSC’s gross invoice. We are compelled to do this under the new rules. The amount of PAYE deducted will be in line with HMRC instructions from time to time and may be changed, e.g. by Notices of Coding. At the beginning of an assignment the deduction may be at an emergency rate.

· The net result of the above is that payments to your PSC will be subject to Tax and National Insurance Contributions as if you were an employee. Details of all deductions will be reported to HMRC under Real Time Information reporting so that your PSC can correspond with HMRC in all matters relating to your tax affairs at any time.

· In order to operate the new rules we will require you to agree to be covered by our ‘VAT Self Billing’ arrangement so that the correct figures can be generated for your PSC’s invoices to us. This will involve you registering for VAT if you are not already registered.

So they are saying you will pay the employers NI as well as the employee? I thought this was illegal? And the employers NI had to be absorbed by the agency?!

[fidot]

This will involve you registering for VAT if you are not already registered.

In order to tax you like an employee, we need you to register for VAT? Bizarre!

[RonBW]

· The net result of the above is that payments to your PSC will be subject to Tax and National Insurance Contributions as if you were an employee. Details of all deductions will be reported to HMRC under Real Time Information reporting so that your PSC can correspond with HMRC in all matters relating to your tax affairs at any time.

That's not quite true - show me an employee who pays employers national insurance

[MrMarkyMark]

Indeed. I see another ban on the horizon

I have had to bite my tongue, its very sore now.

That's all I'm saying

However, I do not need to reply, as always stated

[northernladuk]

Errrrm, not more than enough already

Indeed. I see another ban on the horizon

[MrMarkyMark]

So from 7th April until June we will hear people moaning.

Errrrm, not more than enough already

[MrMarkyMark]

I still reckon that we won't see a spike until people open their first 'pay-packet' in May.

You cruel mistress

[SueEllen]

I still reckon that we won't see a spike until people open their first 'pay-packet' in May.

So from 7th April until June we will hear people moaning.

[cojak]

Judging by the lack of people willing to let go and the late entries to the problem we are seeing on here I can't help but think it won't be as bad as we expect it should be either. A mix of people staying because it's local/safe, those happy to see the gig out, those that can't make a decision and those that just don't have a clue it's happening is going to leave more in the office than I thought it would.

I'd say HMRC are feeling pretty pleased with themselves so far regardless of the mess and confusion they've caused.

I still reckon that we won't see a spike until people open their first 'pay-packet' in May.

[HugeWhale]

Can anyone confirm that all 300 Ltd contractors are leaving MOD's equipment procurement section at the end of the month?
I heard this from a drinking buddy so it's dodgy Intel to say the least!

[northernladuk]

Should we we replace some of that with 'Sopra will reduce its margin and make it look like they've secured and increased rate' in to that?

[Beergander]

And todays communication delight...

Details of how Sopra Steria Recruitment will apply HMRC Tax and National Insurance rules
In summary:

· Sopra Steria Recruitment will not be seeking a higher rate from its clients if the assignment is deemed to fall ‘inside’ the new rules. The Gross Rate in the Schedule to your new Contract will be set at the same level as the rate in your current contract. However, terms will apply which will allow Sopra Steria Recruitment to pay you at an effective lower rate. This reflects the requirement that Employer’s National Insurance Contributions and Apprentice Levy be accounted for ‘at source’.

· Sopra Steria Recruitment will seek to put in place with your PSC a new contractual agreement that reflects the additional costs now payable by Sopra Steria Recruitment under the new rules. We are currently estimating that the revised rates payable will be approximately 13% less than the fees which you would earn if the Assignment were ‘Outside’ the new rules.

· Sopra Steria Recruitment will deduct PAYE and primary (i.e. employee’s) class 1 National Insurance Contributions from the PSC’s gross invoice. We are compelled to do this under the new rules. The amount of PAYE deducted will be in line with HMRC instructions from time to time and may be changed, e.g. by Notices of Coding. At the beginning of an assignment the deduction may be at an emergency rate.

· The net result of the above is that payments to your PSC will be subject to Tax and National Insurance Contributions as if you were an employee. Details of all deductions will be reported to HMRC under Real Time Information reporting so that your PSC can correspond with HMRC in all matters relating to your tax affairs at any time.

· In order to operate the new rules we will require you to agree to be covered by our ‘VAT Self Billing’ arrangement so that the correct figures can be generated for your PSC’s invoices to us. This will involve you registering for VAT if you are not already registered.

[DotasScandal]

DotasScandal may not like it but if disguised employees are behaving like contractors in remuneration plans only, I'm inclined to agree with you that they can't really complain about what's coming.

DotasScandal is of the opinion that there cannot be "disguised employees" without the existence of "disguised employment rights" (like, the right not to be dismissed at the drop of a hat, or the right not to have your remuneration cut at the drop of a hat).
Simple.

[northernladuk]

The problem is I am willing to bet that for every 10 guys with their heads in the sand in the public sector there will be an equal or higher number out there in the private sector doing equally stupid things and telling themselves that they are outside the legislation. The good (or bad) way to look at it is that come the next year or so, there will be very many fewer contractors and those left will be charging like a business rather than a small one man band.

The take away from looking at the tool is that going forwards if you are going for a contract you need to fundamentally own:

The scope of work once you have agreed the problem with your client
The way you do it
where you do it
and finally when

Other than that there are a vast number of contractors that have to turn up every day from 9 - 5 and comply with company rules and regulations that are in for a shock. Its just that the government lot learned the hard way first.

Totally agree but there will be enough articles and guidance out there to allow the to carry on tick box contracting for plenty of time to come. If they aren't aware of how to be a contractor now, all of this won't make much difference. Just one more hoop to ignore.

In fact thinking about it, it suits them better. Someone else deals with the IR35 stuff they couldn't be arsed to understand so making it worse.