Discussion document on IR35 published

[DaveB]

So does the panel think that the end client (if held liable under debt transfer) would just say, without consideration of circumstances, that everyone was under SDC just to mitigate risk??

Why wouldnt they if there was no downside for them?

It mitigates their risk in a way that costs them nothing.

[LisaContractorUmbrella]

Why wouldnt they if there was no downside for them?

It mitigates their risk in a way that costs them nothing.

I think that you're right but just wondered if that was the general consensus - I'd put up a poll but I don't know how

[TestMangler]

So does the panel think that the end client (if held liable under debt transfer) would just say, without consideration of circumstances, that everyone was under SDC just to mitigate risk??

I certainly do. In the same way the 'opt out' has become compulsory with a lot of clients (yes I know it's not allowed to be before some smart arse tells me).

Clients won't want the hassle or worry. It'll be pay up of we'll get a cheaper option that doesn't give us this issue. (ICT, offshore etc).

The whole combination of dividend tax, expenses, IR35 review etc will turn out to be a giant nail in the coffin of UK contracting and it is one I believe we'll all lose from, including the exchequer, but at least it will show 'fairness' as the governments seem to like to call it.

[jamesbrown]

It mitigates their risk in a way that costs them nothing.

Assuming that contractors would either suck it up en masse or rapidly transition to other arrangements (such as large consultancies) en masse. Any such transition could be quite ugly for clients in the short-term, and experience elsewhere (e.g. the IPS in Australia) appears to suggest some long-term damage to the flexible workforce. So, "costs them nothing" might be overstating it, but it's perhaps easier for clients that rely on generalists to offshore etc. For overseas clients with no UK presence, there's no mechanism for enforcement or transfer of liability (obviously not relevant to everyone, but I dare say a significant minority).

[Contreras]

But it doesn't - and the consultation makes it clear that it is not attempting to modify employment law.

The worst case is that clients adopt the safety first approach and assume that everyone is inside IR35. And why wouldn't they do that?

That is exactly what I see as the end result of proposed T&S changes and IR35 consultation.

Penalties on the 'employer' if a contractor is found to be under SDC and this hasn't been reported*.

*Reporting means collecting the NI numbers of all contractors that the client considers to be under SDC. It could be as simple as an extension to RTI. Clients will blanket declare all contractors under SDC, why not?

Further along the line a new corporate entity, call it FLC, will be created and will be exempt from reporting. Client response is to engage only FLC contractors.

[psychocandy]

Assuming that contractors would either suck it up en masse or rapidly transition to other arrangements (such as large consultancies) en masse. Any such transition could be quite ugly for clients in the short-term, and experience elsewhere (e.g. the IPS in Australia) appears to suggest some long-term damage to the flexible workforce. So, "costs them nothing" might be overstating it, but it's perhaps easier for clients that rely on generalists to offshore etc. For overseas clients with no UK presence, there's no mechanism for enforcement or transfer of liability (obviously not relevant to everyone, but I dare say a significant minority).

Yes but an individual client is not going to sit there and think "hmmm if I do this Im helping to kill contracting and I might be stuffed in 12 months time".

No they're going to think. Need someone now. Bugger that IR35 thing - well they'll have to sign because I can't be bothered with the hassle.

[psychocandy]

One other thing this is going to cause - A massive freakish overreaction from the agencies to make absolutely sure they're not in line for any of the fallout from this.

[Beggs1985]

Intermediary reporting

That is exactly what I see as the end result of proposed T&S changes and IR35 consultation.

Penalties on the 'employer' if a contractor is found to be under SDC and this hasn't been reported*.

*Reporting means collecting the NI numbers of all contractors that the client considers to be under SDC. It could be as simple as an extension to RTI. Clients will blanket declare all contractors under SDC, why not?

Further along the line a new corporate entity, call it FLC, will be created and will be exempt from reporting. Client response is to engage only FLC contractors.

From 6 April 2015 all employment intermediaries are required to submit a quarterly report detailing all payments made to workers (Ltd Co or soletrader) where they are not operating PAYE.

By the time changes to T&S and IR35 changes are introduced next April HMRC will have (in theory) data on all PSC's engaged through an intermediary.

[The Spartan]

One other thing this is going to cause - A massive freakish overreaction from the agencies to make absolutely sure they're not in line for any of the fallout from this.

You've got that right, I had enough problems with them wrongly interpreting the intermediaries reporting legislation.

[Danglekt]

+1. This has always been a pet hate when people quote the high level of tax they pay..

You are assuming that everyone is the same as you and that we are all contracting with a business that can pass the VAT, I work a lot (not always) supporting the public sector with temporary projects using temporary funding - they can't pass the VAT on anywhere.

So I am 100% correct to state that I generate ~14% extra income in the form of VAT.