Reply to: Is it as bad as it seems?

[Paralytic]

Yep a sole trader will put everything except cash payments on their SATR

FTFY

[dsc]

Yup, it's tulip but this is the reality.

One man builder likely to be a sole trader. Homeowner doesn't meet requirements of medium-large size business, I would hope there is more to the legislation that specifically excludes that type of engagement.

A crap forgot to look at the client in that scenario, of course it doesn't apply. For a minute there I was thinking that maybe I've overlooked something and I'm out being direct

[ladymuck]

Yep a sole trader will put everything on their SATR.

If your builder was incorporated and was 'BuilderCo Ltd' then that entity would be an intermediary between the house owner and the person building your kitchen extension.

Do people still forget that a LtdCo is a separate legal entity?

[Manic]

I fully agree that the whole thing is skewed and leans heavily into "everyone is inside". Same can be said about HMRCs approach to what's in your contract, if the entire thing checks out they'll say that work practices are more important, but if there's issues with your contract, they will lean on this as being a major problem.



Just because they are direct it doesn't apply? well that's news to me, is that so?

Yup, it's tulip but this is the reality.

One man builder likely to be a sole trader. Homeowner doesn't meet requirements of medium-large size business, I would hope there is more to the legislation that specifically excludes that type of engagement.

[dsc]

Just look at the CEST question...

Skewed somewhat from reality?

I fully agree that the whole thing is skewed and leans heavily into "everyone is inside". Same can be said about HMRCs approach to what's in your contract, if the entire thing checks out they'll say that work practices are more important, but if there's issues with your contract, they will lean on this as being a major problem.

The key difference with your one man band builder is they are not working through an intermediary so the legislation does not apply.

Just because they are direct it doesn't apply? well that's news to me, is that so?

[vas]

I am afraid it will be worse in private sector that the public one.

For one pub. sec. really dont care about any possible tax bill. At all. Do I need to explain why?
Whereas priv. sec. wouldn want to take chances with big tax bills?

Doomed.

[Manic]

HMRC want money and will use anything and everything as an excuse for control - you then get to the tribunal and any decent representative will use Reductio ad absurdum to show how stupid HMRC's claim is.

Yup but now there is no need for a tribunal as the end client will use CEST and determine you inside.

[Manic]

Isn't there always some sort of control regardless of industry and whether you are dealing with permies, permitractors or genuine contractors? If you get a builder to come in to do an extension, you can tell him to come in at 8 bugger off at 17 (whether they oblige is another matter), do specific sections of the house, tell him how you want some details done etc. Surely that is control but no-one has an issues with it, why is it OK in that case but such a no-no thing with office based work? A small one-man-band builder company, might also get a 6 month assignment, comes to the same place to finish work, might not have any other clients whilst he finishes this particular assignment, yet that's assumed to be normal. Similar thing with say graphic designers, surely those ask their clients constantly how stuff should look like etc. is that classed as control by HRMC? I've read details on a case a while back where a contractor was working on a building site and would report to the permit office each day to check who's doing what and what work was safe (standard practice on site), this was classed as control by HRMC which is bollocks of course. I'm all on board when someone says that moving someone from task to task, project to project and fighting fires all over the place using contractors is SDC, but it boils my piss when simply double checking your client needs / requirements is classed as "you are being told what to do".

Just look at the CEST question

Once the worker starts the engagement, do you have the right to decide how the work is done?

• Yes - we decide how the work needs to be done without input from the worker
• No - the worker decides how the work needs to be done without your input
• No - we cannot decide how the work needs to be done because it is a highly skilled role
• Partly - the worker and other people employed or engaged by your organisation agree how the work needs to be done

If your role is part of a project, as part of a team there will always be some discussion with your colleagues as to schedule, platform, approach, coding language, documentation deliverables etc that means Partly has to be the answer.

It's almost like the last answer does not fit the question. It could almost be

No, the worker and other people employed or engaged by your organisation agree how the work needs to be done

or

No the worker and other people employed or engaged by your organisation and tasked with the deliverable agree how the work needs to be done

Then looks at this one

What does the worker have to provide for this engagement that they cannot claim as an expense from your organisation or an agency?

Answers

• Materials - items that form a lasting part of the work, or an item bought for the work and left behind when the worker leaves (not including stationery, and most likely to be relevant to substantial purchases in the construction industry)
• Equipment - including heavy machinery, industrial vehicles or high-cost specialist equipment, but not including phones, tablets or laptops
• Vehicle - including purchase, fuel and all running costs (used for work tasks, not commuting)
• Other expenses - including significant travel or accommodation costs (for work, not commuting) or paying for a business premises outside of the worker’s home

Highlighted bold where most people would say they were supplying additional elements, discounted by HMRC.

Skewed somewhat from reality?

The key difference with your one man band builder is they are not working through an intermediary so the legislation does not apply.

[JohntheBike]

HMRC want money and will use anything and everything as an excuse for control - you then get to the tribunal and any decent representative will use Reductio ad absurdum to show how stupid HMRC's claim is.

on occasion, HMRC has used arguments on both sides to increase the tax take, i.e. trying to prove that a self employed person was in fact an employee and vice versa. I vaguely remember a recent case of an Asian home assistant worker? who thought she was employed, but HMRC claimed otherwise. I can't remember the details, so they may not quite fit this picture.

[eek]

Isn't there always some sort of control regardless of industry and whether you are dealing with permies, permitractors or genuine contractors? If you get a builder to come in to do an extension, you can tell him to come in at 8 bugger off at 17 (whether they oblige is another matter), do specific sections of the house, tell him how you want some details done etc. Surely that is control but no-one has an issues with it, why is it OK in that case but such a no-no thing with office based work? A small one-man-band builder company, might also get a 6 month assignment, comes to the same place to finish work, might not have any other clients whilst he finishes this particular assignment, yet that's assumed to be normal. Similar thing with say graphic designers, surely those ask their clients constantly how stuff should look like etc. is that classed as control by HRMC? I've read details on a case a while back where a contractor was working on a building site and would report to the permit office each day to check who's doing what and what work was safe (standard practice on site), this was classed as control by HRMC which is bollocks of course. I'm all on board when someone says that moving someone from task to task, project to project and fighting fires all over the place using contractors is SDC, but it boils my piss when simply double checking your client needs / requirements is classed as "you are being told what to do".

HMRC want money and will use anything and everything as an excuse for control - you then get to the tribunal and any decent representative will use Reductio ad absurdum to show how stupid HMRC's claim is.

[dsc]

I think if most contractors were being honest they would agree that subby is a sham and there is always an element of control, be it working patttern, hours, procedures to follow etc. Thinking that clients will write SoWs with deliverables at a fixed price is pie in the sky.

Isn't there always some sort of control regardless of industry and whether you are dealing with permies, permitractors or genuine contractors? If you get a builder to come in to do an extension, you can tell him to come in at 8 bugger off at 17 (whether they oblige is another matter), do specific sections of the house, tell him how you want some details done etc. Surely that is control but no-one has an issues with it, why is it OK in that case but such a no-no thing with office based work? A small one-man-band builder company, might also get a 6 month assignment, comes to the same place to finish work, might not have any other clients whilst he finishes this particular assignment, yet that's assumed to be normal. Similar thing with say graphic designers, surely those ask their clients constantly how stuff should look like etc. is that classed as control by HRMC? I've read details on a case a while back where a contractor was working on a building site and would report to the permit office each day to check who's doing what and what work was safe (standard practice on site), this was classed as control by HRMC which is bollocks of course. I'm all on board when someone says that moving someone from task to task, project to project and fighting fires all over the place using contractors is SDC, but it boils my piss when simply double checking your client needs / requirements is classed as "you are being told what to do".

[JohntheBike]

There is a strong theme here that clients only need to sort themselves out and the problem is magically solved.

In my experience, 99% of contractors are bums-on-seats. What they do couldn't be written down to look any more defined than the job descriptions given to permies. Most contractors will fill roles which involve fitting in with other people's work on a changing and developing basis, controlled necessarily by the organisation concerned, in terms of what should be done, how it should be done and in precisely what timescales, which in turn change frequently and unpredictably.

Contractors got away with ignoring IR35 because the Revenue could never prove anything in 'court' but the tide has turned. Statements-of-work don't change anything. Clients may not want the risk of being landed with big 'fines' or, alternatively, having to pay for contractors who are now massively less useful because they have to be treated like a bunch of one-man Accentures.

Offshorers are going to eat everyone's lunch - flexible resources, do as they're told, and cheap.

In my experience, 99% of contractors are bums-on-seats.

I would agree. In my 23 years of contracting, I've never worked with anyone who some representative organisations would claim were IBOYOA. i.e., contracted directly, had multiple clients, had a web sire, had business cards etc etc. This has been part of the problem. Those running those representative organisations felt that they could counter IR35 by pushing the IBOYOA ideology, whilst ignoring that very few contractors worked this way.

[Manic]

There is a strong theme here that clients only need to sort themselves out and the problem is magically solved.

In my experience, 99% of contractors are bums-on-seats. What they do couldn't be written down to look any more defined than the job descriptions given to permies. Most contractors will fill roles which involve fitting in with other people's work on a changing and developing basis, controlled necessarily by the organisation concerned, in terms of what should be done, how it should be done and in precisely what timescales, which in turn change frequently and unpredictably.

Contractors got away with ignoring IR35 because the Revenue could never prove anything in 'court' but the tide has turned. Statements-of-work don't change anything. Clients may not want the risk of being landed with big 'fines' or, alternatively, having to pay for contractors who are now massively less useful because they have to be treated like a bunch of one-man Accentures.

Offshorers are going to eat everyone's lunch - flexible resources, do as they're told, and cheap.

+1 to all of that.

The era when companies used contractors to replace / supplement permanent employees has gone with these changes. The greatest fear of most companies is that HMRC will find one badly managed contractor who now looks like an employee and HMRC ask for the 500 other contractors to be included in the case.

Equally once a company gets to the point of writing statements of work you may as well give someone the entire project and offshore it - I know that's what I would do. Why manage it yourself when you can throw the entire project elsewhere on a payment on delivery model.

Yup agreed. It doesn't matter how much case law is presented from the contractor side, the client will look to reduce risk. At the end of the day the premium for reducing risk is a big fat zero as the rate will just absorb it. Yes some rates might rise, but the market will now be reset.

The HMRC view, and the view they will be giving clients is that 90% of contractors are caught. No arguments.

I think if most contractors were being honest they would agree that subby is a sham and there is always an element of control, be it working patttern, hours, procedures to follow etc. Thinking that clients will write SoWs with deliverables at a fixed price is pie in the sky.

[eek]

There is a strong theme here that clients only need to sort themselves out and the problem is magically solved.

In my experience, 99% of contractors are bums-on-seats. What they do couldn't be written down to look any more defined than the job descriptions given to permies. Most contractors will fill roles which involve fitting in with other people's work on a changing and developing basis, controlled necessarily by the organisation concerned, in terms of what should be done, how it should be done and in precisely what timescales, which in turn change frequently and unpredictably.

Contractors got away with ignoring IR35 because the Revenue could never prove anything in 'court' but the tide has turned. Statements-of-work don't change anything. Clients may not want the risk of being landed with big 'fines' or, alternatively, having to pay for contractors who are now massively less useful because they have to be treated like a bunch of one-man Accentures.

Offshorers are going to eat everyone's lunch - flexible resources, do as they're told, and cheap.

+1 to all of that.

The era when companies used contractors to replace / supplement permanent employees has gone with these changes. The greatest fear of most companies is that HMRC will find one badly managed contractor who now looks like an employee and HMRC ask for the 500 other contractors to be included in the case.

Equally once a company gets to the point of writing statements of work you may as well give someone the entire project and offshore it - I know that's what I would do. Why manage it yourself when you can throw the entire project elsewhere on a payment on delivery model.

[Cirrus]

As if by magic?

the default lawyer template letters to HMRC from end clients can ensure the end contractor is outside IR35.

There is a strong theme here that clients only need to sort themselves out and the problem is magically solved.

In my experience, 99% of contractors are bums-on-seats. What they do couldn't be written down to look any more defined than the job descriptions given to permies. Most contractors will fill roles which involve fitting in with other people's work on a changing and developing basis, controlled necessarily by the organisation concerned, in terms of what should be done, how it should be done and in precisely what timescales, which in turn change frequently and unpredictably.

Contractors got away with ignoring IR35 because the Revenue could never prove anything in 'court' but the tide has turned. Statements-of-work don't change anything. Clients may not want the risk of being landed with big 'fines' or, alternatively, having to pay for contractors who are now massively less useful because they have to be treated like a bunch of one-man Accentures.

Offshorers are going to eat everyone's lunch - flexible resources, do as they're told, and cheap.