Reply to: End of the road

[mudskipper]

P14:

Personal Services

The intention is that the worker must personally provide their services to another person (the engager) or be obliged to do so.

Any thoughts on how this fits with RoS?

[jamesbrown]

I think that present a reasonable argument that preempting the outcome of the IR35 discussion by implementing SDC for T&S is premature, but unfortunately, looking at the dismissal of the concerns that were raised at discussion stage, it doesn't look like reasonable arguments are given reasonable consideration.

Precisely, which is why the T&S response is so important (if a little futile) as a precursor to the IR35 discussion. Once the T&S is implemented, it's really quite difficult to see them backing away from precisely the suggestions made in the IR35 discussion, possibly with some added bells and whistles. That said, we need to put this aside for now as a distraction, develop and evidence the case against, and hope that reason has not entirely exited stage left.

[mudskipper]

Seriously, I admire your optimism, but this is a coordinated effort through a number of vehicles (onshore and offshore intermediaries, agency reporting, dividend taxation, T&S consultation and IR35 discussion etc., and you can probably wave goodbye to the VAT FRS and ER soon). This doesn't simply originate from a couple of low-level grunts in HMRC, it's a coordinated attack from HMG on multiple fronts. To a large degree, the writing was on the wall following the pre-election promises to avoid any increases in general taxation, coupled with the negative press surrounding off-payroll arrangements and avoidance. Defining us (PSCs) and conflating us with tax avoidance can be seen as laying the groundwork.

WHS

From the T&S consultation (p6)

"These proposals are part of a strategic approach to clarify the differences between
employment and self-employment, and the use of employment intermediaries. This
will ensure those who are in an employment relationship are taxed as employees, on a
fair and consistent basis."

I think that presents a reasonable argument that preempting the outcome of the IR35 discussion by implementing SDC for T&S is premature, but unfortunately, looking at the dismissal of the concerns that were raised at discussion stage, it doesn't look like reasonable arguments are given reasonable consideration.

[jamesbrown]

If it's such a coordinated effort, how come the consultation document is a pile of tulipe?

Does rather look like some junior wrote it I'm afraid.

Because HMRC consultation documents always look like a pile of tulip. More specifically, since when has HMRC guidance borne any relation to case law or logic for that matter? They always present edge cases to support their argument (as perceived), rather than providing a balanced view.

[suityou01]

Seriously, I admire your optimism, but this is a coordinated effort through a number of vehicles (onshore and offshore intermediaries, agency reporting, dividend taxation, T&S consultation and IR35 discussion etc., and you can probably wave goodbye to the VAT FRS and ER soon). This doesn't simply originate from a couple of low-level grunts in HMRC, it's a coordinated attack from HMG on multiple fronts. To a large degree, the writing was on the wall following the pre-election promises to avoid any increases in general taxation, coupled with the negative press surrounding off-payroll arrangements and avoidance. Defining us (PSCs) and conflating us with tax avoidance can be seen as laying the groundwork.

If it's such a coordinated effort, how come the consultation document is a pile of tulipe?

Does rather look like some junior wrote it I'm afraid.

[jamesbrown]

They're there. There just sitting back and waiting for someone lower down to cotton on so they don't have to get their hands dirty. If it comes to it, they will.

Seriously, I admire your optimism, but this is a coordinated effort through a number of vehicles (onshore and offshore intermediaries, agency reporting, dividend taxation, T&S consultation and IR35 discussion etc., and you can probably wave goodbye to the VAT FRS and ER soon). This doesn't simply originate from a couple of low-level grunts in HMRC, it's a coordinated attack from HMG on multiple fronts. To a large degree, the writing was on the wall following the pre-election promises to avoid any increases in general taxation, coupled with the negative press surrounding off-payroll arrangements and avoidance. Defining us (PSCs) and conflating us with tax avoidance can be seen as laying the groundwork.

[suityou01]

You would be 100% correct if it were not that you are relying heavily on an assumption which remains unproven.

That assumption is that there is anyone "in high places" intelligent enough to be able to "cotton on" to what this means. I would have thought there were plenty such before that budget, but now, one can't be so sure.

Where are the people in government, or even backbench Tory MPs, who are saying, "Wait a minute! What kind of stupidity is this?"

They're there. There just sitting back and waiting for someone lower down to cotton on so they don't have to get their hands dirty. If it comes to it, they will.

[WordIsBond]

Precisely. Trying to boil the frog too quickly. We just need a few people in high places to cotton on what this means for businesses bottom line and this will fold.

Businesses have to engage consultancies instead of contractors. Their bottom line is hit hard. Consultancies do well. PI firms go bust. Mass layoffs of permies. Greater unemployment. Bad news for call me Dave.

Just think it through. This cannot and will not go through as is, or the tulip will hit the fan.

You would be 100% correct if it were not that you are relying heavily on an assumption which remains unproven.

That assumption is that there is anyone "in high places" intelligent enough to be able to "cotton on" to what this means. I would have thought there were plenty such before that budget, but now, one can't be so sure.

Where are the people in government, or even backbench Tory MPs, who are saying, "Wait a minute! What kind of stupidity is this?"

[suityou01]

Yeah, well I'm not a paper, but I do, too, after that budget.

Three things:
1) Definite tax changes announced (divi tax, employment allowance).
2) Aggressively tighten rules on T&S.
3) Aggressively tighten rules on IR35.

Any one of those three, in isolation, I could understand, even support. All three? Or even two of them? What happened, did a contractor steal a girl that Georgie and Davie wanted back at uni, and they are just now getting their revenge?

Thanks for the point on Ben's computer, I'll add that in.

Precisely. Trying to boil the frog too quickly. We just need a few people in high places to cotton on what this means for businesses bottom line and this will fold.

Businesses have to engage consultancies instead of contractors. Their bottom line is hit hard. Consultancies do well. PI firms go bust. Mass layoffs of permies. Greater unemployment. Bad news for call me Dave.

Just think it through. This cannot and will not go through as is, or the tulip will hit the fan.

[WordIsBond]

Haven't you heard? It's trial by media these days. Plenty of papers want to have a pop at the Tories.

Yeah, well I'm not a paper, but I do, too, after that budget.

Three things:
1) Definite tax changes announced (divi tax, employment allowance).
2) Aggressively tighten rules on T&S.
3) Aggressively tighten rules on IR35.

Any one of those three, in isolation, I could understand, even support. All three? Or even two of them? What happened, did a contractor steal a girl that Georgie and Davie wanted back at uni, and they are just now getting their revenge?

Thanks for the point on Ben's computer, I'll add that in.

[suityou01]

Unnecessary. I don't care whether it is malice or stupidity, so I don't have to try to decide. I just grant myself the luxury of pointing out the two alternatives to my MP. It's his job to diagnose whether the people who allegedly work for him (well, for the government) are stupid or malicious, and what he and his colleagues should do about that diagnosis.

Haven't you heard? It's trial by media these days. Plenty of papers want to have a pop at the Tories.

[suityou01]

In many cases, the client wants to deal with an agency, not with contractors directly. I think it's not unreasonable to assume that clients will be risk adverse.

But I'm sure you're right - there will be ways round at least some of this - but creating a different set of hoops to jump through rather defeats the object of what they're trying to achieve, doesn't it?

Again why I think this will rather leave them flat footed. The consultation document doesn't take into account divvy tax. How embarrassing. When they make their move, the agencies and lawyers will cut through it all and find another way around it all, making is an expensive waste of time.

I want to know who these stakeholders are they mention, as they should have approved the document and are equally embarrassed.

The incompetence is there for all to see. They had the option to boil the frog slowly, but tried to go straight for the boiling water option. I see HMRC being greatly outnumbered, and coming out of this quite badly unless they get the house in order pdq.

[suityou01]

This has been discussed in some detail: http://forums.contractoruk.com/futur...tudy-ir35.html

If there are other details that you think we've missed, please comment so we can include them in the response. Certainly, the problems with this lawyer comparison should be part of the response we give.

The output based on those case studies will be very valuable to HMRC in the short run because it will bring in more tax, but very detrimental in the long run because it will destroy the flexible workforce.

It doesn't recognise the real world, it doesn't recognise long term ramifications, it doesn't recognise differences between the cases they are comparing, it doesn't recognise the impact on contractors, who will be worse off than employees, all it looks at is how much money HMRC takes from a nominal amount of compensation, not even recognising that the nominal amount, in reality, is drastically different for the two cases. It doesn't even recognise the impact of legally-mandated auto-enrolment nor the fact that dividend taxation is changing next April. It is either incompetence on a staggering level or intentional misrepresentation. (I hope I'm not being too diplomatic.)

Well I think it's pretty well covered, but I assume the PAYE lawyer is provided with a computer. I have to run my own equipment which involves upgrades and maintenance costs, and of course software licensing. Not to mention additional hours fixing them when they go wrong.

If it's in the thread apologies but I didn't see it.

[WordIsBond]

I would think applying Hanlons razor here is a wise choice, if even only for your sanity.

Unnecessary. I don't care whether it is malice or stupidity, so I don't have to try to decide. I just grant myself the luxury of pointing out the two alternatives to my MP. It's his job to diagnose whether the people who allegedly work for him (well, for the government) are stupid or malicious, and what he and his colleagues should do about that diagnosis.

[teapot418]

I guess we need a clear definition of what "through an agency" means. Does this mean the initial introduction?

Could the agency do the initial introduction, and the PSC then invoice directly, and the agent then invoice the PSC for his/her cut?

In many cases, the client wants to deal with an agency, not with contractors directly. I think it's not unreasonable to assume that clients will be risk adverse.

But I'm sure you're right - there will be ways round at least some of this - but creating a different set of hoops to jump through rather defeats the object of what they're trying to achieve, doesn't it?