Reply to: Agency Legislation and SD or C

[TykeMerc]

£265 million may be a drop in the bucket, but it's damn good press to people that don't vaguely understand the economy (i.e. the UK population), it's also a complete fabrication like all HMRC numbers.

They are after a simple panacea, they will then deal with any fallout in the long run, not like a politician is even capable of considering a period past the next election anyway.
Odds are they've been advised that even if 30% (and I think that's an absurdly high guess) of existing contractors stop contracting due to the changes there will still be loads available to fill the roles, any shortfall can be obtained cheaply from the sub-continent with visa's.

[jamesbrown]

I don't think that £265 million is going to fill the tax gap somehow but I do think you're right about the 2 boxes - I wonder how much of all this has been driven by the Unions following the CIS debacle??

Yes, I'm not saying this is how a reasonable person would view things, but how I believe HMG are minded to view things in pursuit of reducing the deficit and to be seen to be reducing the deficit. I don't think they see £265 million in isolation, but as part of a collection of small/moderate savings; it's extremely short-sighted because HMRC have a long history of overestimating recoverable amounts and underestimating costs. A sensible person would legislate away the two specific boxes I mentioned, deal with any tax breaks for the self-employed more transparently and directly (e.g. through dividend taxation) and simultaneously abolish IR35.

[LisaContractorUmbrella]

Politicians like boxing things and they probably see two boxes w/r to tax-motivated incorporation, one being low paid workers that are being wrongly classified as self-employed at the behest of their employers and another concerning off-payroll arrangements by well-paid executives. They see these two boxes because they're both a visible risk in the mainstream media. To a variable degree, I think they also understand that there's something in the middle, but they want to eliminate both of these things and squeezing the middle is also expedient for tax/deficit reasons (an angle being pushed by civil servants in HMRC as a tax gap). Unfortunately, this is a powerful combination of things to fight against, and I think there's very little chance that we can reverse this in any meaningful way. In any case, we'll essentially have the final word on this at the Autumn Statement in around a month (25 Nov IIRC).

I don't think that £265 million is going to fill the tax gap somehow but I do think you're right about the 2 boxes - I wonder how much of all this has been driven by the Unions following the CIS debacle??

[LisaContractorUmbrella]

As I know you're aware that's the really tricky bit. Not only does that require pushing a thicker than pig excrement single braincelled politician into comprehension, but it requires overcoming their own political interest, namely raising taxes on the quiet and "tackling avoidance" in public.
Avoidance is great press and throw in knobbling employers exploiting the low paid it's even better.
Contractors to them are the HP. IBM, ATOS, CapGemini, Crapita, WiPro, Fujitsu's of the world, the fact that those companies tend to staff their projects with people that will be shafted by the proposals isn't even on their radars.

You're right, I know you're right but I am going to hope that one of those single brain cells will be a receptor for some common sense sometime before 25th November [sorry I can't find a suitable smiley for that sentiment]

[jamesbrown]

I think you're absolutely right and this is what we can't seem to get through to the powers that be - the politicians seem to think that it's in everyone's interests for contractors to become employees but that's simply not the case. What they do need to address is the number of workers who were employees who have been forced into working through PSC's or umbrella who really shouldn't be. The problem we have is making the distinction between the two in a way that the politicians will understand.

Politicians like boxing things and they probably see two boxes w/r to tax-motivated incorporation, one being low paid workers that are being wrongly classified as self-employed at the behest of their employers and another concerning off-payroll arrangements by well-paid executives. They see these two boxes because they're both a visible risk in the mainstream media. To a variable degree, I think they also understand that there's something in the middle, but they want to eliminate both of these things and squeezing the middle is also expedient for tax/deficit reasons (an angle being pushed by civil servants in HMRC as a tax gap). Unfortunately, this is a powerful combination of things to fight against, and I think there's very little chance that we can reverse this in any meaningful way. In any case, we'll essentially have the final word on this at the Autumn Statement in around a month (25 Nov IIRC).

[TykeMerc]

The problem we have is making the distinction between the two in a way that the politicians will understand.

As I know you're aware that's the really tricky bit. Not only does that require pushing a thicker than pig excrement single braincelled politician into comprehension, but it requires overcoming their own political interest, namely raising taxes on the quiet and "tackling avoidance" in public.
Avoidance is great press and throw in knobbling employers exploiting the low paid it's even better.
Contractors to them are the HP. IBM, ATOS, CapGemini, Crapita, WiPro, Fujitsu's of the world, the fact that those companies tend to staff their projects with people that will be shafted by the proposals isn't even on their radars.

[GB9]

Or do they understand but have another motive.

Having just read that there are 4 new ways to bring non EU IT workers into the country, it seems more like a wage restraint exercise than anything else.

[LisaContractorUmbrella]

Contractors get used to fill project roles where specialist skills are needed. The client doesn't want those skills in house simply because they don't have a day to day need for them. I think if you asked any contractor they would be quite happy to be seen as non-employees.

I think you're absolutely right and this is what we can't seem to get through to the powers that be - the politicians seem to think that it's in everyone's interests for contractors to become employees but that's simply not the case. What they do need to address is the number of workers who were employees who have been forced into working through PSC's or umbrella who really shouldn't be. The problem we have is making the distinction between the two in a way that the politicians will understand.

[BoredBloke]

Contractors get used to fill project roles where specialist skills are needed. The client doesn't want those skills in house simply because they don't have a day to day need for them. I think if you asked any contractor they would be quite happy to be seen as non-employees.

[GB9]

I reiterate that you would be surprised how many clients don't want contractors on their books.

For basic support roles where resources needs to be moved from one area to another on a daily basis, then yes. But for the specialist roles, I can't see why they would.

I've mentioned before one client that was sued by a contractor when they ended his contract after 15 years. After that they went out of their way to ensure contractors were seen as non employees. It would take a significant policy change to reverse that approach.

[TykeMerc]

.. and I suppose that's hassle for the Clientco and it's easier just to say yup, we had SDC

Clients will default to saying yes they have S, D OR C, they simply won't risk being dragged into IR35 cases. Client management staff will not be comfortable declaring they're not in charge of the expensive resource either.

[gables]

No, HMRC tend to be much more thorough than that if they suspect the right amount of tax hasn't been paid

.. and I suppose that's hassle for the Clientco and it's easier just to say yup, we had SDC

[LisaContractorUmbrella]

If it's in the contract I get, and 'the right of' is, as I've said, sneaky. But, like I said I don't know how\what HMRC ask for, assumed it was a questionnaire and that would be it.

No, HMRC tend to be much more thorough than that if they suspect the right amount of tax hasn't been paid

[gables]

Not if it says in the contract that Clientco retain a right to SDC or if they ask for work schedules and find that the contractor was being told what to do and when

If it's in the contract I get, and 'the right of' is, as I've said, sneaky. But, like I said I don't know how\what HMRC ask for, assumed it was a questionnaire and that would be it.

[LisaContractorUmbrella]

But who actual determines the final result? If HMRC ask ClientCo is a contractor under SDC, and they say no, isn't that it determined? I mean, HMRC can't then say, well we determine it differently. And if they can what is that based on?

Not if it says in the contract that Clientco retain a right to SDC or if they ask for work schedules and find that the contractor was being told what to do and when