Reply to: And the first leg is removed

[SueEllen]

Interesting - I've never come across that before.

The first agency who told me about it 6 years back said it was how they operated in Germany. However I turned down that contract as the client refused to remove my name from it as one of the parties. Since then I've had a contract like that in the UK and have been offered some others.

Clients in the UK do it so they know exactly how much they are paying and can ensure you get the money. However you generally get paid slower than through the agency.

[DaveB]

Below is directly off the gov.co.uk website (https://www.gov.uk/guidance/ir35-find-out-if-it-applies). Seems based on these rules we are all already inside IR35 ... i.e. we all work through an intermediary (our own limited company). So, taking this on face value, aren't we all already compliant? My ltd pays me a salary and I pay tax and NI on this. My company also pays employers NI to the legal value based on the salary I take. Each year I take a divi from the company and this is taxed as legally required. The fact that my company does not pay me the full amount it takes from the client each year is irrelevant to the IR35 rule as written below ... it only talks about my 'salary' not my company's 'revenue'.

I know this isn't what the AS has suggested will happen, but reading the below which is a direct quote off the gov website aren't we all OK? This was last updated Aug 2016. Clearly more to it than just this ... but on face value ...!

Uber is a different kettle of fish - it becomes the intermediary and it is liable for the PAYE, NI etc for the drivers so their situation changes completely.

Maybe to limit agency risk they will no longer take a % of day rate but take an introducers fee up from from the end client ... and we invoice client directly. There would then be no other intermediary and it is a clear relationship between myco and the end client. Just then need to prove that there is no SDC and the contract has been reviewed and compliant.


"Who’s affected by IR35
IR35 is also known as ‘intermediaries legislation’. It’s a set of rules that affect your tax and National Insurance if you’re contracted to work for a client through an intermediary. You may need to follow IR35 if you work for a client through an intermediary.

The intermediary can be:

your own limited company
a service or personal service company
a partnership

If IR35 applies then the intermediary has to operate PAYE and National Insurance contributions on any salary or wages it pays to you during the tax year.

The rules are designed to make sure that the right rate of tax and National Insurance is paid for you.

IR35 may also apply if you’re working through an intermediary and you:

or your intermediary, or client are abroad
work in the construction industry
are an office-holder
work with your partner or spouse
are working, through an intermediary, for a charitable organisation
IR35 doesn’t apply if you work for a client through a Managed Service Company (MSC) or agency, for example an employment agency."

What you are missing there is that under IR35 any payments made to your co are treated as "Deemed payments" and should be taxed as personal income under PAYE by your co before paying anything to you.

When IR35 applies, the earnings of your intermediary (your personal service company, limited company or partnership) for that engagement are deemed to be the income of the worker. This is called the deemed employment payment.

https://www.gov.uk/guidance/ir35-wha...-if-it-applies

[Whorty]

Some agencies do this already.

Interesting - I've never come across that before.

[SueEllen]

Below is directly off the gov.co.uk website (https://www.gov.uk/guidance/ir35-find-out-if-it-applies). Seems based on these rules we are all already inside IR35 ... i.e. we all work through an intermediary (our own limited company). So, taking this on face value, aren't we all already compliant? My ltd pays me a salary and I pay tax and NI on this. My company also pays employers NI to the legal value based on the salary I take. Each year I take a divi from the company and this is taxed as legally required. The fact that my company does not pay me the full amount it takes from the client each year is irrelevant to the IR35 rule as written below ... it only talks about my 'salary' not my company's 'revenue'.

I know this isn't what the AS has suggested will happen, but reading the below which is a direct quote off the gov website aren't we all OK? This was last updated Aug 2016. Clearly more to it than just this ... but on face value ...!

Uber is a different kettle of fish - it becomes the intermediary and it is liable for the PAYE, NI etc for the drivers so their situation changes completely.

Maybe to limit agency risk they will no longer take a % of day rate but take an introducers fee up from from the end client ... and we invoice client directly. There would then be no other intermediary and it is a clear relationship between myco and the end client. Just then need to prove that there is no SDC and the contract has been reviewed and compliant.


"Who’s affected by IR35
IR35 is also known as ‘intermediaries legislation’. It’s a set of rules that affect your tax and National Insurance if you’re contracted to work for a client through an intermediary. You may need to follow IR35 if you work for a client through an intermediary.

The intermediary can be:

your own limited company
a service or personal service company
a partnership

If IR35 applies then the intermediary has to operate PAYE and National Insurance contributions on any salary or wages it pays to you during the tax year.

The rules are designed to make sure that the right rate of tax and National Insurance is paid for you.

IR35 may also apply if you’re working through an intermediary and you:

or your intermediary, or client are abroad
work in the construction industry
are an office-holder
work with your partner or spouse
are working, through an intermediary, for a charitable organisation
IR35 doesn’t apply if you work for a client through a Managed Service Company (MSC) or agency, for example an employment agency."

Some agencies do this already.

[Whorty]

Below is directly off the gov.co.uk website (https://www.gov.uk/guidance/ir35-find-out-if-it-applies). Seems based on these rules we are all already inside IR35 ... i.e. we all work through an intermediary (our own limited company). So, taking this on face value, aren't we all already compliant? My ltd pays me a salary and I pay tax and NI on this. My company also pays employers NI to the legal value based on the salary I take. Each year I take a divi from the company and this is taxed as legally required. The fact that my company does not pay me the full amount it takes from the client each year is irrelevant to the IR35 rule as written below ... it only talks about my 'salary' not my company's 'revenue'.

I know this isn't what the AS has suggested will happen, but reading the below which is a direct quote off the gov website aren't we all OK? This was last updated Aug 2016. Clearly more to it than just this ... but on face value ...!

Uber is a different kettle of fish - it becomes the intermediary and it is liable for the PAYE, NI etc for the drivers so their situation changes completely.

Maybe to limit agency risk they will no longer take a % of day rate but take an introducers fee up from from the end client ... and we invoice client directly. There would then be no other intermediary and it is a clear relationship between myco and the end client. Just then need to prove that there is no SDC and the contract has been reviewed and compliant.


"Who’s affected by IR35
IR35 is also known as ‘intermediaries legislation’. It’s a set of rules that affect your tax and National Insurance if you’re contracted to work for a client through an intermediary. You may need to follow IR35 if you work for a client through an intermediary.

The intermediary can be:

your own limited company
a service or personal service company
a partnership

If IR35 applies then the intermediary has to operate PAYE and National Insurance contributions on any salary or wages it pays to you during the tax year.

The rules are designed to make sure that the right rate of tax and National Insurance is paid for you.

IR35 may also apply if you’re working through an intermediary and you:

or your intermediary, or client are abroad
work in the construction industry
are an office-holder
work with your partner or spouse
are working, through an intermediary, for a charitable organisation
IR35 doesn’t apply if you work for a client through a Managed Service Company (MSC) or agency, for example an employment agency."

[b r]

Will be time to claim that ~£70 per week.

I had exactly the same thought, if we're now PAYE then we'll need to act as a PAYE.

[MPwannadecentincome]

Bench periods will get harder with PAYE deductions too - you can get personal tax back as that evens out over the year, the employer/employee NI once deducted cannot be reclaimed. Will be time to claim that ~£70 per week.

[sal]

I can't see any dept head saying they will take the risk. Delivery and success is second to fear of being accountable for a decision in Gov. If they follow process no one moans...even if the process is flawed

This, unfortunately...

[youngguy]

unless the client is onside. .

In my experience ps ppl go with the easiest. I was once in A situation where I was below rate and the rules stated you could not have an increase.They wanted to keep me and recognised that if i left my replacement would cost MORE than giving me an increase.

But rules were rules and no one was gonna put their head above.

I can't see any dept head saying they will take the risk. Delivery and success is second to fear of being accountable for a decision in Gov. If they follow process no one moans...even if the process is flawed

[jamesbrown]

Hmm.. not sure. Last I looked the legal system was independent of Agencies/Clients so if we chose to contest an "inside IR35" position we have the legal right to do so. Obviously this could result in the Agency/Client saying "inside IR35" whilst at the same time a court agreeing with an "outside IR35" position. Then what? A mess is what.

Also, I thought HMRC had stated that they would stand by the Online Tool result which would remove all liability from all parties; so why would the Client/Agency even want to ignore this?

Too many unknowns I guess so I'll keep my powder dry until we know the details. Thanks for your thoughts.

Sure, there's a right of appeal but, again, you're going to be fighting a losing battle unless the client is onside. I don't fancy your chances when the client is saying that SDC and personal service are mandatory. Also, why would you stick around, being paid net of all PAYE/NIC taxes, on the offchance that your appeal is successful? The appeal could take months (years?).

Again, the online tool is irrelevant unless, fundamentally, the client/agent are willing to take the risk of assessing the situation incorrectly. If they are willing to take the risk, you're probably fine. Certainly, an agent won't be willing, because they have none of the information necessary to make the assessment properly.

[Gordon Ice]

The online tool is a red herring, I'm afraid. Unless the agent/client really wants a specialist resource and are prepared to formulate it within an appropriate framework, and take all associated risks of being wrong, they won't even bother with the online tool. Remember, there are two upfront questions before you get to that stage (one about personal service and one about control, with MoO being conveniently forgotten). Unless there is an absence of either personal service or control (or both), the online tool isn't used. In that sense, the content of the online tool is pretty irrelevant. All they need is the illusion of utility w/r to the online tool (i.e. spin).

Hmm.. not sure. Last I looked the legal system was independent of Agencies/Clients so if we chose to contest an "inside IR35" position we have the legal right to do so. Obviously this could result in the Agency/Client saying "inside IR35" whilst at the same time a court agreeing with an "outside IR35" position. Then what? A mess is what.

Also, I thought HMRC had stated that they would stand by the Online Tool result which would remove all liability from all parties; so why would the Client/Agency even want to ignore this?

Too many unknowns I guess so I'll keep my powder dry until we know the details. Thanks for your thoughts.

[jamesbrown]

So I guess everyone is royally shafted then until contractors work out how to consistently get a pass from the vapourware that is the IR35 Online Tool, and the first cases pass through court.

The online tool is a red herring, I'm afraid. Unless the agent/client really wants a specialist resource and are prepared to formulate it within an appropriate framework, and take all associated risks of being wrong, they won't even bother with the online tool. Remember, there are two upfront questions before you get to that stage (one about personal service and one about control, with MoO being conveniently forgotten). Unless there is an absence of either personal service or control (or both), the online tool isn't used. In that sense, the content of the online tool is pretty irrelevant. All they need is the illusion of utility w/r to the online tool (i.e. spin).

[Gordon Ice]

Quite a lot. To begin with, your indemnity clause is worth feck all to an agent or client as YourCo will fold at will, and no agency is going to expose itself to an indefinite loss. Also, there's joint and several liability, so HMG can pursue anyone in the chain, in any order. You can imagine who they'll start with. The agent is in business either way. Why would they both with this faff versus requiring you to operate inside IR35 or, better still, through an affiliated umbrella? Granted, this creates a problem for recruitment within the PS while the responsibility and liability remains unchanged in the private sector, but they'll correct that imbalance eventually.

So I guess everyone is royally shafted then until contractors work out how to consistently get a pass from the vapourware that is the IR35 Online Tool, and the first cases pass through court.

[northernladuk]

And why would and agency takenon the risk and liabilities of something it has no control over?

[jamesbrown]

So what am I missing?

Quite a lot. To begin with, your indemnity clause is worth feck all to an agent or client as YourCo will fold at will, and no agency is going to expose itself to an indefinite loss. Also, there's joint and several liability, so HMG can pursue anyone in the chain, in any order. You can imagine who they'll start with. The agent is in business either way. Why would they both with this faff versus requiring you to operate inside IR35 or, better still, through an affiliated umbrella? Granted, this creates a problem for recruitment within the PS while the responsibility and liability remains unchanged in the private sector, but they'll correct that imbalance eventually.