Reply to: Treasury response to "Don't extend IR35 reforms to Private sector" petition (no news)

[PurpleGorilla]

Yawn...

Say IR35 extension takes place in 2 years.

Is it fair that someone paying the same tax, has no holiday pay, pension, training, redundancy, job security and has to work longer Hours.....?

You actually pay MORE tax. How many employees pay there own Employers NI?

[BrilloPad]

Hahaha, yeah, sure the' big agencies' will educate their clients! Where have you been hiding since 2001!?

I dont know of a single agency, big or otherwise, who have educated their clients towards contractors in any respect never mind IR35. Good luck with that particular piece of blindness.

Where it earns the agents money, they will do whatever is necessary.

These HMRC reforms could kill off contract agencies entirely. I don't think they earn as mupart from where they earn money, I do agree with you.

[washed up contractor]

The larger agencies will spend their time educating their clients to ensure contractors don't end up inside IR35. Smaller agencies won't have that option but no doubt third parties such as QDOS will provide similar schemes.

Hahaha, yeah, sure the' big agencies' will educate their clients! Where have you been hiding since 2001!?

I dont know of a single agency, big or otherwise, who have educated their clients towards contractors in any respect never mind IR35. Good luck with that particular piece of blindness.

[BrilloPad]

This is one of the glorious stupidities that only government could devise -- the end client makes the determination but the liability falls on someone else.

HMRC devised it. They "won" Rangers but actually lost as liabilty falls on employer. So now they are trying to retrospectively change the rules so anyone HMRC choose is responsible.

Government issue is listening to everything HMRC say.

And today Government claimed they are ready for a Russia cyber attack. IT contractors are ready to fight the enemy. But its not Russia. Its HMRC....

[WordIsBond]

If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

This is one of the glorious stupidities that only government could devise -- the end client makes the determination but the liability falls on someone else.

[meanttobeworking]

Maybe HMRC should offer their own insurance policy, taking £300 a year from each contractor should increase their coffers nicely, and no need to do any enquiries as they’d only have to pay the bill themselves. Any any similarity to paying mafia protection money would be entirely coincidental :/

[BrilloPad]

If an end client has lots of contractors in similar roles and HMRC gets one on being inside IR35 then HMRC could easily argue the rest are also caught, after all they are likely to have the same end client to agency contract terms/working practices.

Don't see QDOS covering that liability.

Neither can I.

The HMRC idea is to bully employers into not offering contract roles.

[Acme Thunderer]

Regarding insurance, is it possible that QDOS and co can offer insurance that the contractor takes out that lets them indemnify the end client? I’m not sure if you can take insurance to cover someone else’s loss/liability. Just trying to find a way for contractors to make it a no brainer for clients to evaluate things fairly rather than go for a cautious inside assessment.

If an end client has lots of contractors in similar roles and HMRC gets one on being inside IR35 then HMRC could easily argue the rest are also caught, after all they are likely to have the same end client to agency contract terms/working practices.

Don't see QDOS covering that liability.

[meanttobeworking]

Regarding insurance, is it possible that QDOS and co can offer insurance that the contractor takes out that lets them indemnify the end client? I’m not sure if you can take insurance to cover someone else’s loss/liability. Just trying to find a way for contractors to make it a no brainer for clients to evaluate things fairly rather than go for a cautious inside assessment.

[Maslins]

Maslins,

I think the key to all that is the communication to the end client that life is easier and contractors will generally be better if the role is outside IR35. Without that, you're simply suggesting the version that has been push out on to the public sector.

For the contractors in demand, then normal economics of supply and demand should deal with it. The contractor prefers outside. Any end clients who are insistent all contractors are inside will suffer, assuming other end clients aren't so restrictive. The public sector has seen this to an extent, but there's far more choice in the private sector.

[eek]

If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

And if you are working through an agency who is not smart enough / geared up enough / prepared to take on the risk that their client might get it wrong and so they refuse to work with "difficult" contractors who will not operate via an umbrella if they believe the role to be outside IR35, then there is a problem for the "legitimate" contractor more than those who should always have been inside IR35.

Some big agencies will be able to take the risk easily, because they have the resources to take that on. Smaller agencies won't be able to do that - and some of the smaller agencies are better to work with than the bigger ones who are more intent on claiming market share via Brylcreem salespeople, which means that the contractor and the client end up with a sub-optimal experience. And where does that leave the contractor (and the client)?

The larger agencies will spend their time educating their clients to ensure contractors don't end up inside IR35. Smaller agencies won't have that option but no doubt third parties such as QDOS will provide similar schemes.

The one big issue you have missing from your comment above is the need to ensure that were a fee payer (agency) to go bankrupt due to a false interpretation the client becomes responsible for the payment and the innocent contractor isn't made liable....

[TheFaQQer]

So end result will maybe be a quarter of contractors drift to umbrella/PAYE, and life actually improves for the remainder. Reason being the contractor no longer has to worry about IR35 looming over their head, the client does. HMRC will consider it a "win", though perhaps a smaller win than they might have hoped.

If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

And if you are working through an agency who is not smart enough / geared up enough / prepared to take on the risk that their client might get it wrong and so they refuse to work with "difficult" contractors who will not operate via an umbrella if they believe the role to be outside IR35, then there is a problem for the "legitimate" contractor more than those who should always have been inside IR35.

Some big agencies will be able to take the risk easily, because they have the resources to take that on. Smaller agencies won't be able to do that - and some of the smaller agencies are better to work with than the bigger ones who are more intent on claiming market share via Brylcreem salespeople, which means that the contractor and the client end up with a sub-optimal experience. And where does that leave the contractor (and the client)?

[LondonManc]

Maslins,

I think the key to all that is the communication to the end client that life is easier and contractors will generally be better if the role is outside IR35. Without that, you're simply suggesting the version that has been push out on to the public sector.

[Maslins]

After giving it some thought, I think it will work fairly well, though of course interested in opposing viewpoints.

Yes, there will be quite a few "contractors" who will end up drifting away from the Ltd Co model. They will be ones who in reality always were inside IR35, they just perhaps didn't declare it. When the risk is on the end client, and the end client realises they wouldn't have a hope in hell of demonstrating outside IR35, it'll force some action.

It's in both the contractor & the end client's interest to make things outside IR35 where they can. As some public sector organisations have realised, if they blanketly opt for inside, and other organisations don't, then some contractors will vote with their feet. It's therefore a risk to them to insist on inside IR35.

I therefore think it will encourage end clients to actually care, and work with the contractor to demonstrate outside IR35. Up until this point the end client hasn't cared, so it's HMRC against the contractor, with end client not bothered either way. If the rules are transferred to the private sector, then it'll become HMRC against the contractor and end client teamed up. To my mind that will have a big impact (negatively for HMRC).

It will be a bit of a risk for end clients, but I imagine the likes of QDOS/Abbey Tax etc will get involved, giving suggested contracts to use combined with stipulations on certain working practices to ensure they do/don't do...and an insurance package to back it up.

So end result will maybe be a quarter of contractors drift to umbrella/PAYE, and life actually improves for the remainder. Reason being the contractor no longer has to worry about IR35 looming over their head, the client does. HMRC will consider it a "win", though perhaps a smaller win than they might have hoped.

[mattfx]

I don't disagree with what you're saying but what you're saying still points to each contract being operated one way or another.

I think what's missing in each case is the because clause.

A simple this contract is inside IR35 because we need to exercise full SD&C, there is MoO and they cannot substitute or this contract is outside IR35 because it requires a niche skill set and we are looking to this contractor to tell us what to do; they can similarly bring in an equally experienced business partner to substitute when they are unavailable because we want continuity.

^ This. In my opinion because the legislation around IR35 is so woolly it leaves a lot open to interpretation. If HMRC actually produced a proper set of guidelines that worked (because we all know CEST is tulip) with some actual real life examples of what was inside, and what was outside, I think people wouldn't be so upset about the whole situation.