IR35 - Back to first principles....

[DaveB]

I have seen a plan which was:

Care company becomes multiple new care companies (each dealing with a subset of clients).
Care workers / clients are assigned in such a way that they work across a few of the new care companies.
Care workers instantly have multiple employers paying them..

Added benefit is that it allows a care company to pretend to be competition for itself...

Two big abusers of the current system are home care workers and delivery companies both are in a race to the bottom to minimise costs...

Similar to this one. I suspect HMRC will be looking for scams like this in future.

Recruitment firm Anderson Group facing HMRC crackdown over tax dodge scheme | This is Money

[TheFaQQer]

Multiple extensions beyond 2 years are not automatic indicators of business success, it just says that Client Co. can't be arsed to recruit a permie to replace you. Having multiple clients is an indicator of success, and that you are behaving more like a genuine business.

Likewise they are not automatic indicators of being part and parcel of the organisation.

[jamesbrown]

Yes you could, but the trade off here is that in return for the assumption that after 2 years you are automatically P&P, up until then is is assumed you are not.

What's the trade-off though? I can see how this would appeal to those who consistently operate contracts of less than two years, but that isn't a tradeoff in itself. There will be a large number of contracts less than two years that would be caught on other sensible measures. There will be a large number of contracts above two years that would not be caught on other sensible measures. So, what is the tradeoff? I don't think the aim is to offer "certainty" to a mixed subset of the overall population (mixed in terms of bearing the hallmarks of employment/self-employment). The aim is to better discriminate that mixed population while increasing tax take. I dare say that most of the potential tax take comes from contracts of less than two years (although I don't know this).

[DaveB]

Likewise they are not automatic indicators of being part and parcel of the organisation.

No, but as I said above, it's the trade off being made. Over 2 years, inside IR35. Under 2 years or having multiple clients, assumed outside.

Whetever they have said about IR35, the fact is that it has proven almost impossible to show people are actually caught unless they do something stupid.

It gives HMRC clear cut criteria that don't rely on interpretation of complicated rules against layers of contracts and working arrangements. It's currently far easier to defend an IR35 position than it is for HMRC to attack it. This helps solve that problem in a way that everyone can understand.

[jamesbrown]

I have seen a plan which was:

Care company becomes multiple new care companies (each dealing with a subset of clients).
Care workers / clients are assigned in such a way that they work across a few of the new care companies.
Care workers instantly have multiple employers paying them..

Added benefit is that it allows a care company to pretend to be competition for itself...

Two big abusers of the current system are home care workers and delivery companies both are in a race to the bottom to minimise costs...

A similar thing could happen for a time-based rule. This goes to the heart of why they are looking to adopt SDC as the main criteria and to have clients enforce it and be liable for that decision. It's FUD with a bigger stick.

[eek]

A similar thing could happen for a time-based rule. This goes to the heart of why they are looking to adopt SDC as the main criteria and to have clients enforce it and be liable for that decision. It's FUD with a bigger stick.

One thing that was pointed out to me yesterday is that tax liability can be passed back up the chain....

[jamesbrown]

What's the trade-off though? I can see how this would appeal to those who consistently operate contracts of less than two years, but that isn't a tradeoff in itself. There will be a large number of contracts less than two years that would be caught on other sensible measures. There will be a large number of contracts above two years that would not be caught on other sensible measures. So, what is the tradeoff? I don't think the aim is to offer "certainty" to a mixed subset of the overall population (mixed in terms of bearing the hallmarks of employment/self-employment). The aim is to better discriminate that mixed population while increasing tax take. I dare say that most of the potential tax take comes from contracts of less than two years (although I don't know this).

I just had a look at some of the PCG/IPSE benchmarking surveys, and around 20% of respondents (across several survey years) reported as being at the client site for more than 2 years. A relatively small fraction.

[jamesbrown]

One thing that was pointed out to me yesterday is that tax liability can be passed back up the chain....

This is the idea behind joint and several liability - it can be pursued anywhere in the chain.

[eek]

This is the idea behind joint and several liability - it can be pursued anywhere in the chain.

It becomes a different matter when you are asked to indemnify the other parties in the chain...

[DaveB]

I just had a look at some of the PCG/IPSE benchmarking surveys, and around 20% of respondents (across several survey years) reported as being at the client site for more than 2 years. A relatively small fraction.

Average tenure for permanent employees was around 9 years in 2011, according to

http://www.cipd.co.uk/binaries/megat...lowed-down.pdf

And is one of the lowest in Europe.

It is unlikely to have shifted dramatically since then. 2 years as a cut off for employment status seems reasonable based on that.