Reply to: Out of contractor hands

[northernladuk]

This pretty much sums up my thinking that started this side discussion. Yes, if HMRC come calling then it could cause all sorts of misery for contractors, but I suspect they'll draw a line before April 2021 and only go after those clients that are still classifying some contracts as outside post April 2021.

HMRC have very good forum for introducing retrospective action and they've a massive black hole in their finances to fill. Why do you think they will throw away a perfect chance to get back the money they believe they are owed? They chased GSK in the middle of all this going on? Using your argument why didn't they leave them alone until the legislation hit and then let that drive GSK to blanket determinations?

You could be right, particularly in the short term but to think that HMRC won't come after people is a tad naïve given their history.

It would be nice if it's true... I'm just having a hard time believing it.

Of course, if HMRC then identifies (and wins over) companies that they deem have mis-determined contractors as outside after April 2021, and those contractors have self-determined outside for years before, then there is a sitting duck there...

True but why do you think there is a sitting duck if you believe they won't go after contractors when the client has told HMRC they've been incorrectly determining for years?

But, as has been suggested, individuals have to make up their own minds based on their level of risk aversion.

That's the bottom line but we've seen in the past, and will see again around April that this isn't/won't be the case.

[Paralytic]

I actually believe that HMRC are true to their word on this one. They don’t have to “scare” PSC’s anymore, they can scare companies instead. All the contractors will start paying PAYE and then HMRC wins.

I heard from an individual on this forum via PM, and he knew an ex-IR35 tax inspector who said exactly this. They had been directed to go after companies and not PSC’s.

Look..I know people will be dubious, and make up their own minds, but contracts are hard to come by and if you are outside going to inside, each indidual needs to assess the risks themselves vs the current job market.

Purely making the alternative argument that supports this article.

This pretty much sums up my thinking that started this side discussion. Yes, if HMRC come calling then it could cause all sorts of misery for contractors, but I suspect they'll draw a line before April 2021 and only go after those clients that are still classifying some contracts as outside post April 2021.

Of course, if HMRC then identifies (and wins over) companies that they deem have mis-determined contractors as outside after April 2021, and those contractors have self-determined outside for years before, then there is a sitting duck there...

But, as has been suggested, individuals have to make up their own minds based on their level of risk aversion.

[eek]

That's a very best case scenario and a very big IF they win... and even if the contractor does win they've been through an awful process that members on here have said take years and is soul draining so not much of a win.

I actually don't think that there would be actual court cases - my expectations has always been that HMRC will pick a set of easy clients and just shake the tree and see (as with GSK) who pays up.

[northernladuk]

Option B

Totally get where you are coming from, but just because a client has determined(usually blanketed) a role as being inside when previously the PSC has determined it as being outside does not mean a sure fire HMRC victory.

It's a pretty sweet looking setup that warrants a dam good reaming though. We've said many times this will be low hanging fruit for HMRC. Quick call to the client who confirms WP's are inside and it's a done deal. It's as close as it gets.

Take a scenario where a large company has blanketed an invidual as Inside and he stays there swapping to Brolly. The contractor fights the HMRC case and wins. Now suddenly, HMRC has a issue, the other contractors may challenge the company, the company may change their determinations based on the Judges ruling etc.

That's a very best case scenario and a very big IF they win... and even if the contractor does win they've been through an awful process that members on here have said take years and is soul draining so not much of a win.

And we know a vast number of contractors are clearly inside so that scenario still doesn't give any hope for many.

I actually believe that HMRC are true to their word on this one. They don’t have to “scare” PSC’s anymore, they can scare companies instead. All the contractors will start paying PAYE and then HMRC wins.

I heard from an individual on this forum via PM, and he knew an ex-IR35 tax inspector who said exactly this. They had been directed to go after companies and not PSC’s.

Look..I know people will be dubious, and make up their own minds, but contracts are hard to come by and if you are outside going to inside, each indidual needs to assess the risks themselves vs the current job market.

Purely making the alternative argument that supports this article.

Interesting. Problem is most people don't know, understand or want to accept the risk. Look at the guy we had on the other day outside to inside with 3 plus years behind him and another 18 months to go or something. Do you think he will come back to the forum if he's caught and say, yeah I knew the risk, I got caught, fair dincum?

[BABABlackSheep]

Why when they know there is a treasure trove there. There will be three main scenarios will there not?

Option A) Outside to outside - HMRC may come looking to check.. but that means time and effort and no certain outcome
Option B) Outside to inside - Lovely lovely. Pretty easy slam dunk historic cases. May even pay up with a letter. At em boys....
Option C) Outside to no determination - Interesting. They've done this purely to avoid the hassle of making a determination. Lets go ask them about working practices. If they are inside then we've got a nice tasty option B. Bit more work but the client says WP are inside.

I don't see why you think HMRC will pick the lowest risk vs return option when there are two sitting ducks there. The 'no determination' you keep banging on about being one of them. Remeber the OP does say 'hey probably know that working practices can be key to winning cases and will seek the client’s version of the truth on them' which has nothing to do with determination or lack thereof.

Option B

Totally get where you are coming from, but just because a client has determined(usually blanketed) a role as being inside when previously the PSC has determined it as being outside does not mean a sure fire HMRC victory.

Take a scenario where a large company has blanketed an invidual as Inside and he stays there swapping to Brolly. The contractor fights the HMRC case and wins. Now suddenly, HMRC has a issue, the other contractors may challenge the company, the company may change their determinations based on the Judges ruling etc.

I actually believe that HMRC are true to their word on this one. They don’t have to “scare” PSC’s anymore, they can scare companies instead. All the contractors will start paying PAYE and then HMRC wins.

I heard from an individual on this forum via PM, and he knew an ex-IR35 tax inspector who said exactly this. They had been directed to go after companies and not PSC’s.

Look..I know people will be dubious, and make up their own minds, but contracts are hard to come by and if you are outside going to inside, each indidual needs to assess the risks themselves vs the current job market.

Purely making the alternative argument that supports this article.

[eek]

Thinking about it, the client will have better lawyers to defend a claim from HMRC as well.

HMRC will be operating on the basis of picking the most blatant sure-win examples and asking for x,000 others to be added when they win that test case.

[northernladuk]

FTFY.

I fully expect HMRC to only target clients who have determined contractors outside post April 2021, except in cases where individual contractors are looked at for other/additional specific reasons.

Why when they know there is a treasure trove there. There will be three main scenarios will there not?

Option A) Outside to outside - HMRC may come looking to check.. but that means time and effort and no certain outcome
Option B) Outside to inside - Lovely lovely. Pretty easy slam dunk historic cases. May even pay up with a letter. At em boys....
Option C) Outside to no determination - Interesting. They've done this purely to avoid the hassle of making a determination. Lets go ask them about working practices. If they are inside then we've got a nice tasty option B. Bit more work but the client says WP are inside.

I don't see why you think HMRC will pick the lowest risk vs return option when there are two sitting ducks there. The 'no determination' you keep banging on about being one of them. Remeber the OP does say 'hey probably know that working practices can be key to winning cases and will seek the client’s version of the truth on them' which has nothing to do with determination or lack thereof.

[LondonManc]

Yep, there's nothing surprising here - this was the motivation for the reform. Remember that the 2021 version of IR35 is closer to the intended version in 2000, before lobbying killed it. Policing at the level of individual contractors was always a stupid idea when you have clients that have N contractors, many of whom are operating roughly the same working practices, and the client is much less likely to disappear than a PSC and more likely to have risk-averse legal and compliance.

Thinking about it, the client will have better lawyers to defend a claim from HMRC as well.

[LondonManc]

They simply say they won't engage with PSCs - as many companies did prior to April 2020. No determination needed. They then just ask the agency to provide them with what they need within that constraint.

Well maybe. There are other options - outside and we can use a contractor or very well paid FTC. Inside, umbrella route.

[Paralytic]

You sure you've got that right this time?

I've no idea what you're on about.

[northernladuk]

They simply say they won't engage with PSCs - as many companies did prior to April 2020. No determination needed. They then just ask the agency to provide them with what they need within that constraint.

You sure you've got that right this time?

[Paralytic]

How will they know how to engage a contractor and what to pay without having made a determination?

They simply say they won't engage with PSCs - as many companies did prior to April 2020. No determination needed. They then just ask the agency to provide them with what they need within that constraint.

[LondonManc]

Absolutely but the mentality we've seen of being one in millions so it won't be me will have gone. HMRC contact a client to look at their overall working practices and get every contractor in one go. GSK v2.0 but with teeth?

Up to contractors to build the outside case then. Get a substitute used, turn work down, etc.

Or be a bum on a seat and take your medicine.

[LondonManc]

FTFY.

I fully expect HMRC to only target clients who have determined contractors outside post April 2021, except in cases where individual contractors are looked at for other/additional specific reasons.

How will they know how to engage a contractor and what to pay without having made a determination?

[Paralytic]

A year? - It will only be in February 2023 that we will know who is being investigated for work this year.

True - have updated my response.