Reply to: NHS - no more outside IR35

[Andy Hallett]

From the telegraph this morning:

"And last year Jim Mackey, who earns between £215,000 and £220,000 as head of another watchdog, NHS Improvement, spoke of how he believed there was “a door open” at the Treasury , saying the NHS needed to “get our case together” to get more funds."

More than 600 health quango chiefs on six figure salaries amid cash crisis

https://jumpshare.com/v/Et8z2DADOzCYGTJDFmHo

[LondonManc]

From what I have seen the maturity of the people making the call is lacking to say the least.

So while one could think that retro grabs are likely: having now used the tool, got a stringent out result and gone through the process of compiling the supporting evidence. If HMRC would like to investigate should my department go the other way, I will be more likely to be able to prove I am right and they were wrong.

Of the questions I asked them the other week they couldn't answer any of them.

I would expect that if you're out before and still out of IR35 in April, you'll be at the bottom of the list for investigation.

[RonBW]

1) high likelihood current client will declare me outside IR35 to make me stay, + move me to a sister organisation if they have to.

If the client is prepared to make that determination and put that in writing, then the liability would shift to either the agency (if they aren't lying) or the end client (if they are).

So on that basis, I would consider staying as long as the determination is in writing and confirmed by everyone in advance.

[bobspud]

In terms of retro grab, the impression I'm getting from these boards is that it's a higher possibility if you're declared inside when previously 'outside' and nothing else has changed. In your case you're outside and still outside so the risk to you hasn't changed from that of HMRC investigating before this stuff, if that makes sense.

From what I have seen the maturity of the people making the call is lacking to say the least.

So while one could think that retro grabs are likely: having now used the tool, got a stringent out result and gone through the process of compiling the supporting evidence. If HMRC would like to investigate should my department go the other way, I will be more likely to be able to prove I am right and they were wrong.

Of the questions I asked them the other week they couldn't answer any of them.

[gables]

Having made my decision to leave the current outside-IR35 gig - with a plan to find something with new client/agency/role and probably inside-IR35 via an umbrella- I'm now getting more options come my way which I thought I'd share.

1) high likelihood current client will declare me outside IR35 to make me stay, + move me to a sister organisation if they have to.

2) offered a senior perm role elsewhere

I've number crunched no.2 to death and I just can't make it work without an income drop I would notice irl.

No.1 is making me pause though. Am I beating a hasty retreat to new pastures hastily? Given my paranoia about retro checks, would it be foolish to stay if they declare me still outside?

Also does the plan to slip inside via an umbrella make any sense if I can get an outside gig somewhere? Will it make any difference to the retro threat?

In terms of retro grab, the impression I'm getting from these boards is that it's a higher possibility if you're declared inside when previously 'outside' and nothing else has changed. In your case you're outside and still outside so the risk to you hasn't changed from that of HMRC investigating before this stuff, if that makes sense.

[teapot418]

If the role is declared outside, you'd be daft to go brolly. I would also imagine the risk of investigation for previous contracts would be vastly reduced. There's no guarantees though!

[cojak]

Having made my decision to leave the current outside-IR35 gig - with a plan to find something with new client/agency/role and probably inside-IR35 via an umbrella- I'm now getting more options come my way which I thought I'd share.

1) high likelihood current client will declare me outside IR35 to make me stay, + move me to a sister organisation if they have to.

2) offered a senior perm role elsewhere

I've number crunched no.2 to death and I just can't make it work without an income drop I would notice irl.

No.1 is making me pause though. Am I beating a hasty retreat to new pastures hastily? Given my paranoia about retro checks, would it be foolish to stay if they declare me still outside?

Also does the plan to slip inside via an umbrella make any sense if I can get an outside gig somewhere? Will it make any difference to the retro threat?

If these are new variables then you are right to re-consider, particularly with the ESS tool now public (although not stable).

But the other questions you pose still comes up with the usual "No idea - who knows?" answer and so falls back on your risk appetite.

[b r]

high likelihood current client will declare me outside IR35 to make me stay, + move me to a sister organisation if they have to.

Where my OH is they've pretty much decided this too, can't imagine Hammond will be chuffed if a load of the PS do the same.

[NHS1979]

Having made my decision to leave the current outside-IR35 gig - with a plan to find something with new client/agency/role and probably inside-IR35 via an umbrella- I'm now getting more options come my way which I thought I'd share.

1) high likelihood current client will declare me outside IR35 to make me stay, + move me to a sister organisation if they have to.

2) offered a senior perm role elsewhere

I've number crunched no.2 to death and I just can't make it work without an income drop I would notice irl.

No.1 is making me pause though. Am I beating a hasty retreat to new pastures hastily? Given my paranoia about retro checks, would it be foolish to stay if they declare me still outside?

Also does the plan to slip inside via an umbrella make any sense if I can get an outside gig somewhere? Will it make any difference to the retro threat?

[teapot418]

I think it's worth unpacking that statement, because it's at the root of the argument. HMRC would argue that they aren't party to any explicit trade-off between employment rights and the amount of tax due. Instead, the parties to the contract engage in an explicit trade-off between employment rights and remuneration. Separately, for macroeconomic and other reasons, HMG may want to encourage particular forms of working, for which a "legitimate tax benefit" may be intended. Our problem is that such an intention has never been properly codified, and it's now being questioned. Most of the recent reports on this (IFS, Resolution Foundation etc.) have correctly identified the nub of the issue by posing the question: "what, if any, tax benefits does HMG intend for flexible forms of working?". The answer coming back is apparently "none" or, at least, "very few", which is why they not only intend to render equivalent different forms of income/working for tax purposes but they also reject the argument that any re-balancing should be coupled with an increase in employment rights, because they aren't party to that trade-off. That trade-off is between the contractor and the client and is reflected in the contract remuneration.

In other words, I think any criticism of HMG needs to be more nuanced than "no employment taxation without employment rights", and this is partly why I can't muster too much excitement. If they explicitly decide there shouldn't be any "tax benefit" for flexible working, it's their prerogative. However, in the PS, it's completely different, because HMG is not only acting in their general capacity of managing the economy, but in their specific capacity as client, where the trade-off between (lack of) employment rights and remuneration occurs. They shouldn't be allowed to get away with recruiting contractors to do permie work, and most certainly not on permie rates. They should hire permies to do permie work and, failing that, they should offer rates that fully compensate for the lack of employment rights. In short, if they're going to demand employment for tax purposes, and they don't want employees, they'd better put their rates up substantially.

Not quite such a good sound-bite though

[jamesbrown]

Professional contractors get legitimate tax benefits because they take risk and don't have employment rights.

I think it's worth unpacking that statement, because it's at the root of the argument. HMRC would argue that they aren't party to any explicit trade-off between employment rights and the amount of tax due. Instead, the parties to the contract engage in an explicit trade-off between employment rights and remuneration. Separately, for macroeconomic and other reasons, HMG may want to encourage particular forms of working, for which a "legitimate tax benefit" may be intended. Our problem is that such an intention has never been properly codified, and it's now being questioned. Most of the recent reports on this (IFS, Resolution Foundation etc.) have correctly identified the nub of the issue by posing the question: "what, if any, tax benefits does HMG intend for flexible forms of working?". The answer coming back is apparently "none" or, at least, "very few", which is why they not only intend to render equivalent different forms of income/working for tax purposes but they also reject the argument that any re-balancing should be coupled with an increase in employment rights, because they aren't party to that trade-off. That trade-off is between the contractor and the client and is reflected in the contract remuneration.

In other words, I think any criticism of HMG needs to be more nuanced than "no employment taxation without employment rights", and this is partly why I can't muster too much excitement. If they explicitly decide there shouldn't be any "tax benefit" for flexible working, it's their prerogative. However, in the PS, it's completely different, because HMG is not only acting in their general capacity of managing the economy, but in their specific capacity as client, where the trade-off between (lack of) employment rights and remuneration occurs. They shouldn't be allowed to get away with recruiting contractors to do permie work, and most certainly not on permie rates. They should hire permies to do permie work and, failing that, they should offer rates that fully compensate for the lack of employment rights. In short, if they're going to demand employment for tax purposes, and they don't want employees, they'd better put their rates up substantially.

[DotasScandal]

+1
Always someone out to screw the system.

Of course, HMRC's sitting on their hands for 10+ years and letting the "extreme avoidance" schemes prosper beyond the promoters' wildest dreams has nothing to do with it...No, It's all the fault of the punter.


I asked myself for a moment whether your post was second degree. Then I remembered I'm on CUK...

[b r]

It is this extreme avoidance that gives our collective industry a bad name and then we all suffer with the blunt hammer blow.

+1

Always someone out to screw the system.

[Andy Hallett]

Hang on...

I seem to remember a fair few of your entrepreneurial collegues were stealing vast sums of margin on health sector locum staff...

Maybe if those pigs were not so far in the troff there would have been enough money to share for the front line staff and paying full taxes would have been easier to suffer for them.

I get the hindsight point about umbrella company schemes but many of the ones taken in to them never wanted to be using agency's in the first place.

I value the work you have put in over the past months. That was an un needed stone to chuck.

That's a fair and balanced reply.

I've been doing this for nearly 20 years now and it's generally been a healthy eco-system. Professional contractors get legitimate tax benefits because they take risk and don't have employment rights. Agents who have created the marketplace between supply and demand.

What has also been evident is there are a lot of individuals and companies that seek to take advantage of the perfectly reasonable scenario above in a very aggressive fashion. Teachers paid in Sark and warehouse worker PSC's being just a few examples.

It is this extreme avoidance that gives our collective industry a bad name and then we all suffer with the blunt hammer blow.

My comment is not a general indictment on those who used the schemes. At the end of the day it is a commercial risk for each individual. The issue I had with the poster was their hypocritical sense of injustice.

[bobspud]

I am sorry to burst the bubble, but those type of schemes were always a risk and the old adage of "if it's too good to be true" applies. You took a gamble, you lost.

One assumes taxpayer money funded your training to become a mental health expert, but you were not happy to pay back into the pot.

The business I work for has been built on providing genuine entrepreneurs who have developed specialist skills into scarce markets, however you are exactly the sort of reason that this legislation is used as a blunt stick to beat the many.

All the best with the new career.

Hang on...

I seem to remember a fair few of your entrepreneurial collegues were stealing vast sums of margin on health sector locum staff...

Maybe if those pigs were not so far in the troff there would have been enough money to share for the front line staff and paying full taxes would have been easier to suffer for them.

I get the hindsight point about umbrella company schemes but many of the ones taken in to them never wanted to be using agency's in the first place.

I value the work you have put in over the past months. That was an un needed stone to chuck.