Discussion document on IR35 published

[LisaContractorUmbrella]

https://www.gov.uk/government/consul...ssion-document

[northernladuk]

So much for the edict that IR35 tax issues have nothing to do with the client lol.

[jamesbrown]

One option which could meet the objectives for reform, and specifically tackle the challenges in enforcing compliance set out earlier in this document, would be for engagers to take on more of a role in ensuring that the right amount of employment taxes are paid.

One option could be to align the test with that used for temporary workers in the agency rules, which is based on supervision, direction or control. Another option could be to look again at some of the suggestions considered by the OTS, such as requiring an engagement to last a certain minimum amount of time to be considered one of employment.

Sure, it's a discussion document, so nothing is certain, but I think we can see where this is heading. I don't think the latter part of the last quote is going to hold water though (such simplistic rules have been demonstrated as unworkable in other jurisdictions, such as Oz, and there will be very strong representations against that).

[Unix]

They rule out abolishing it, but admit it's going to be very difficult to make it work as it.

[TestMangler]

From the doc.....

One option which could meet the objectives for reform, and specifically tackle the challenges in enforcing compliance set out earlier in this document, would be for engagers to take on more of a role in ensuring that the right amount of employment taxes are paid.

So, clients, via the agent, gets a signed document stating that the contractor PSC (yes, I know, it's not a legal term) is operating inside IR35 (i.e paying it in full, not getting a contract review and declaring themselves 'out'). Not willing ? Another contractor please Mr Agent. End of story, end of contracting in its current form for all but the few who currently operate concurrent clients or other more business like arrangements.

Stick any onus on the end client for compliance and every contract will become either inside IR35 or FTC. (Or outourced to a bob agent/consultancy).

[jamesbrown]

Stick any onus on the end client for compliance and every contract will become either inside IR35 or FTC. (Or outourced to a bob agent/consultancy).

Not necessarily. Remember, clients and agents want contractors for a reason (and it isn't tax, except at the very low end of the chain), so there will be a greater incentive to ensure that the working practices are squarely absent of SD&C (where possible, so admittedly some sectors may be impacted more than others). The alternative is they don't, and everyone loses (inc. the UK economy and hence the Exchequer in the longer term). Likely, they would make everyone in the chain (the client, agent and PSC) jointly and severally liable, so this would catch all types of relationships, not just agency contracts, but with PSCs themselves remaining the police in some cases (e.g. client overseas, no UK agency).

[tractor]

....

Any responses to this document are a complete waste of time with regards to making any IR35 changes more effective. From P5.

Whilst many PSCs would not fall within the legislation because the worker would properly be regarded as self-employed, the government would still expect to see a larger increase in the number of people paying tax and NICs under IR35. In 2011-12 around 10,000 people paid tax under IR35, an estimated 10% of those who should have paid tax on at least part of the income their PSC receives under the legislation

Until they determine unequivocally what the conditions for being 'properly regarded as self employed' any legislation can simply not be complied with. This has been their problem all along. This is why they introduced BETs and this is also why they scrapped them.

Of course, they will never, ever make that definition because in doing so, the hoops become clear and most people will be able to jump through them.

This is why it is a sham.

[jamesbrown]

Any responses to this document are a complete waste of time with regards to making any IR35 changes more effective. From P5.

I think we can put that to one side, as it will be determined by case law insofar as it involves employment status. As you say yourself, HMRC have a vested interest in casting the net wide, while increasing compliance, and these two things can probably only be reconciled through administration (i.e. indirectly, rather than new laws). Indeed, they note themselves that this is probably the angle to take w/r to a new role for policing by clients and agencies. Now, the only thing I'm unclear about is what the impacts of that might be. On the one hand, it could increase cooperation from clients and agents to properly understand employment status and to ensure that working practices are absent of any semblance of SD&C. On the other hand, large clients and agencies in some sectors may adopt a knee-jerk reaction.

[northernladuk]

One thing I'd like to know taking this and all the other changes. Exactly what does Mr Osborne think is a reasonable amount for us to earn. We aren't equivalent to permits. We take on risks they don't. That has to count for something. This flailing to bring us in to line is all OK but where is bench time, unpaid holidays and all that factor in to it? It's going to get to the stage where we get a one year contract and will end up earning less than a permie if he's not careful.

[LisaContractorUmbrella]

The T&S consultation document also refers to the 'engager' being severally liable but it's not clear whether the engager would be the agency or the client or possibly both