Reply to: ICAEW responds to proposed travel & subs changes.

[Danglekt]

i think their IR35 response is very good indeed.

[jamesbrown]

Point 20:

Having made the agencies responsible for the operation of PAYE, and having done so on the
basis that their business is the sourcing of labour, it is inappropriate to make the engager
responsible; it is anomalous – and excessively complicated – to pass this liability by transfer of
debt on to the engager. It more naturally sits with the agency, and we suggest that it sits there
rather than with the engager except in cases where there is no agency. That would be
complicated but less anomalous and more readily comprehensible.

OK, thanks, that must be in the T&S response. This is not suggested in the IR35 response, AFAIK.

[Zero Liability]

I agree - it would be an utterly pointless exercise unless it was included in the reporting requirements; then, from HMRC's point of view, it would flag any claims of workers being outside SDC which would give them a target for the first test cases. I can't see any benefit to anyone else in doing it.

Yup, which goes against the grain of the rest of their reply. It's the only part that really stuck out as bizarre.

oops missed that

To be fair, I abuse the edit button.

[LisaContractorUmbrella]

Twice for emphasis.

oops missed that

[LisaContractorUmbrella]

She's referring to the T&S piece and specifically:






It might but it could end up being as useless as the "PSC" question on the SATR, or abused given how such a complex question is really not amenable to a tick box. I guess they're suggesting it as a substitute to blanket assumption of SDC but is getting the agency or even the end client to tick a box (and what if they don't tick it "correctly?) any better, especially given all the arguments they've put against the idea?

I agree - it would be an utterly pointless exercise unless it was included in the reporting requirements; then, from HMRC's point of view, it would flag any claims of workers being outside SDC which would give them a target for the first test cases. I can't see any benefit to anyone else in doing it.

[Zero Liability]

Twice for emphasis.

[LisaContractorUmbrella]

To which response and paragraph number are you referring? I've only read the IR35 response so far, but I didn't see anything about that, only that it will be inherently difficult for the engager to determine the correct liability, especially with an agency in the chain...

Point 20:

Having made the agencies responsible for the operation of PAYE, and having done so on the
basis that their business is the sourcing of labour, it is inappropriate to make the engager
responsible; it is anomalous – and excessively complicated – to pass this liability by transfer of
debt on to the engager. It more naturally sits with the agency, and we suggest that it sits there
rather than with the engager except in cases where there is no agency. That would be
complicated but less anomalous and more readily comprehensible.

[Zero Liability]

She's referring to the T&S piece and specifically:

20. Having made the agencies responsible for the operation of PAYE, and having done so on the basis that their business is the sourcing of labour, it is inappropriate to make the engager
responsible; it is anomalous – and excessively complicated – to pass this liability by transfer of debt on to the engager. It more naturally sits with the agency, and we suggest that it sits there
rather than with the engager except in cases where there is no agency. That would be complicated but less anomalous and more readily comprehensible.

I suppose a box ticking exercise gives HMRC a place to start

It might but it could end up being as useless as the "PSC" question on the SATR, or abused given how such a complex question is really not amenable to a tick box. I guess they're suggesting it as a substitute to blanket assumption of SDC but is getting the agency or even the end client to tick a box (and what if they don't tick it "correctly?) any better, especially given all the arguments they've put against the idea?

[jamesbrown]

Really good response but I am surprised that they suggested putting the tax liability with the agency, rather than the end client, in the even of non-compliance; surely the only party able to determine whether or not there will be SDC is the person who will be doing the S'ing, D'ing and C'ing?

To which response and paragraph number are you referring? I've only read the IR35 response so far, but I didn't see anything about that, only that it will be inherently difficult for the engager to determine the correct liability, especially with an agency in the chain...

[LisaContractorUmbrella]

This one also surprised me:



Don't see how agencies or even end clients would necessarily be well positioned to tick a box to that effect, especially given all the arguments made in the same piece against the feasibility of such a determination by the end client, nevermind the agency.

I suppose a box ticking exercise gives HMRC a place to start

[Zero Liability]

Really good response but I am surprised that they suggested putting the tax liability with the agency, rather than the end client, in the even of non-compliance; surely the only party able to determine whether or not there will be SDC is the person who will be doing the S'ing, D'ing and C'ing?

This one also surprised me:

23. We suggest that consideration be given to expanding the quarterly intermediaries reports to cover whether SDC is being exercised and, if feasible in the context of the arrangements, to
quantify travel and subsistence claims.

Don't see how agencies or even end clients would necessarily be well positioned to tick a box to that effect, especially given all the arguments made in the same piece against the feasibility of such a determination by the end client, nevermind the agency.

[LisaContractorUmbrella]

Really good response but I am surprised that they suggested putting the tax liability with the agency, rather than the end client, in the even of non-compliance; surely the only party able to determine whether or not there will be SDC is the person who will be doing the S'ing, D'ing and C'ing?

[Michael at BI Accountancy]

Thanks for the links. Probably better in "The Future of Contracting" subforum. One thing I noticed in their response to the IR35 discussion was the following:

"This response of 2 October 2015..."

I hope they cleared that w/ HMRC first The deadline was 30 September.

the date did not even cross my mind!

bar the date they have supplied, the points raised are really good.

ICAEW do also tend to have great pulling power when it comes to telling HMRC they are completely clueless!

[jamesbrown]

Yeah, just read it. Really great stuff. I'd go so far as to say that it leaves their entire case in tatters, but they can always choose to ignore. The problem, however, with doing that is that the ICAEW interfaces directly with big business and so is not likely to be so easy to simply brush aside. Lets hope the date isn't used as the pretext. I think with the responses put forward by Lisa et al, IPSE, AbbeyTax and ICAEW on both fronts virtually all major ground has been covered, with more sensible alternatives proposed and the problems of their current approach laid bare.

Yeah. It's definitely one of the best responses I've read, because it addresses some of the implementation details that should give HMRC serious cause for concern; and, yes, I do believe they're stupid enough to have put this out for discussion without proper consideration of their ability to implement something in practice.

[mudskipper]

Good stuff - thanks!