IR35 - Back to first principles....

[eek]

Ermm, sorry? The original RMC decision was based on all three needing to be present to determine an employee relationship, not any one of the three, and that hasn't changed.



And I suggest those tests really need to be outside the determination of the client and not dependent on the contractual requirements of the work, else you are doing nothing to counter abuse of the system. YMMV...

You had better reread the proposals then. Especially the detail carefully hidden in the middle of paragraphs (in such a way that its not clear)..

You of all people should remember what Andy commented on from the 7th... Read that comment again and then revisit the discussion document to identify where that statement from HMRC is hidden within it. (Its there you just have to find all the hidden (within paragraphs) clues...

Finally given that the end client is going to be jointly liable for (at least some) of the tax with the added joy of being named and shamed in a tribunal do you really think any client is ever going to say outside unless HMRC provides fairly clear cut guidance to allow them to decide that work is outside....

[malvolio]

You had better reread the proposals then. Especially the detail carefully hidden in the middle of paragraphs (in such a way that its not clear)..

You of all people should remember what Andy commented on from the 7th... Read that comment again and then revisit the discussion document to identify where that statement from HMRC is hidden within it. (Its there you just have to find all the hidden (within paragraphs) clues...

Finally given that the end client is going to be jointly liable for (at least some) of the tax with the added joy of being named and shamed in a tribunal do you really think any client is ever going to say outside unless HMRC provides fairly clear cut guidance to allow them to decide that work is outside....

I know the proposal fairly well, thanks. In a small way I helped create it. It is also a work in progress and may well change as a result of the on-going consultation, removing some of the current inconsistencies.

It still all hinges on who determines that a given worker - not a single contract - is in business and therefore outside IR35 (and, not coincidentally, therefore entitled to T&S expenses as part of their trade) and also not pretending to be a contractor because their ex-employer s looking to save themselves some money.

[eek]

I know the proposal fairly well, thanks. In a small way I helped create it. It is also a work in progress and may well change as a result of the on-going consultation, removing some of the current inconsistencies.

It still all hinges on who determines that a given worker - not a single contract - is in business and therefore outside IR35 (and, not coincidentally, therefore entitled to T&S expenses as part of their trade) and also not pretending to be a contractor because their ex-employer s looking to save themselves some money.

The problem is not that the contractor may be pretending because his ex-employer wants to save money, its that his ex-employer is pretending that the contractor is self employed when that person would prefer not to be... And as the FCSA (who are they by the way) says its more likely that this is an issue for lower paid workers forced into it as their industry fights a race to the bottom (you can watch it play out in the care industry at the moment)..

That is an angle HMRC are very happy to emphasis at the moment and I think we'll have a very good idea tomorrow night as too how much they want to emphasis it...

[Danglekt]

The part and parcel test might be easy to apply for certain roles, but not others. Especially more senior ones.

I provide support similar to how large consultancies do, its always on a project, but often the client doesn't know what the project is, let alone have clear deliverables etc to neatly pop my name against - it's exactly these ambiguous poorly defined messes I get pulled into to sort out.

I am a project worker, am in situ for under a year, use my own kit, pick when and where I work, and define how I work and how others should interact with me - but I do attend their board meetings etc. to advise on progress and force some decisions to be made. I often seem to care more about getting the objectives done than the people who work there.

It's this ambiguous area where I wouldn't get very far if I through my hands up every 5 minutes shouting, "I'm a contractor, I can't do that!" They buy my time so I can solve problems, not make more. But I am 100% not part of their company.

[jamesbrown]

The part and parcel test might be easy to apply for certain roles, but not others. Especially more senior ones.

I provide support similar to how large consultancies do, its always on a project, but often the client doesn't know what the project is, let alone have clear deliverables etc to neatly pop my name against - it's exactly these ambiguous poorly defined messes I get pulled into to sort out.

I am a project worker, am in situ for under a year, use my own kit, pick when and where I work, and define how I work and how others should interact with me - but I do attend their board meetings etc. to advise on progress and force some decisions to be made. I often seem to care more about getting the objectives done than the people who work there.

It's this ambiguous area where I wouldn't get very far if I through my hands up every 5 minutes shouting, "I'm a contractor, I can't do that!" They buy my time so I can solve problems, not make more. But I am 100% not part of their company.

But this all comes down to the specifics of how project-based work and P&P are defined. In your example, it seems to me that you would have a phased project. The first phase is gathering requirements. Obviously, one doesn't define deliverables upfront that are unknown, but these deliverables become known following some deeper specification. Unless you are performing an enduring role/job at the client (in which case, I think you are unfortunately a target), it should be possible to prescribe things under the umbrella of a discrete project, even if that discrete project cuts across several activities that the client is engaged with and requires you to attend high-level meetings.

Likewise, with P&P, it comes down to the details. For example:

Are you required to participate in generic training, meetings or team-bonding sessions that are unrelated to the project?
Are you subject to performance reviews or required to conduct performance reviews of client staff?
Do you perform an enduring role at the client or one that is performed by permanent staff; for example, are you covering for a permanent staff member on leave?

There are many other possibilities. They need to be objective, straightforward to evidence, and powerful in distinguishing.

We also need to be mindful of what HMRC are trying to do, namely to increase tax take, including from skilled professionals (not just the lower end of the market). We can either let HMRC prescribe things without our constructive feedback or we can do our best to capture the essence of what contracting is about for the majority of us. The advantage of having this debate is that we have a fairly broad range of industries and contractors represented here, so it should be possible to arrive at something that is broadly applicable. The analysis is very straightforward (including w/r to the bigger picture of tax simplification). The solution is difficult to arrive at and divisive.

[Danglekt]

I agree with all your points James, and thankfully in terms of the queries you raise - no - I don't personally do any of those things.

I was just adding to the conversation to make sure we don't end up focusing too heavily on IT project style roles where things may be a little more clear cut, at the expense of other freelancers/contractors/jack of all trades

[jamesbrown]

I agree with all your points James, and thankfully in terms of the queries you raise - no - I don't personally do any of those things.

I was just adding to the conversation to make sure we don't end up focusing too heavily on IT project style roles where things may be a little more clear cut, at the expense of other freelancers/contractors/jack of all trades

Totally agree. FWIW, I'm not in IT either. The more voices the better; it's very easy to lose sight of the bigger picture

[eek]

I know the proposal fairly well, thanks. In a small way I helped create it. It is also a work in progress and may well change as a result of the on-going consultation, removing some of the current inconsistencies.

It still all hinges on who determines that a given worker - not a single contract - is in business and therefore outside IR35 (and, not coincidentally, therefore entitled to T&S expenses as part of their trade) and also not pretending to be a contractor because their ex-employer s looking to save themselves some money.

I don't think it does or ever will hinge on a given worker. HMRC want to look at individual contracts and believe that every contract should be judged on the merit of that contract...

[WordIsBond]

I don't think it does or ever will hinge on a given worker. HMRC want to look at individual contracts and believe that every contract should be judged on the merit of that contract...

Are we sure that is what HMRC wants? They've looked at individual contracts on IR35, but when they put together the BETs, it was more focused on the individual worker and whether he could demonstrate that he was running a business.

I suspect, if they had their choice, they would rather NOT look at it on a contract by contract basis. They'd rather be able to say, "This guy's an employee," "that guy isn't," and act accordingly. Remember they want it simple to enforce. Having to look at each contract in isolation isn't simple to enforce.

[eek]

Are we sure that is what HMRC wants? They've looked at individual contracts on IR35, but when they put together the BETs, it was more focused on the individual worker and whether he could demonstrate that he was running a business.

I suspect, if they had their choice, they would rather NOT look at it on a contract by contract basis. They'd rather be able to say, "This guy's an employee," "that guy isn't," and act accordingly. Remember they want it simple to enforce. Having to look at each contract in isolation isn't simple to enforce.

If they do then the FLC has a chance. Looking at the examples though I wonder if its more these company's (the NHS trust, the law firm) are abusing the system / allowing the system to be abused and want to attack those companies...

Problem is that without clear guidance (and we haven't got any nor will we) we haven't a clue why HMRC are suggesting moving the responsibility from the contractor towards the end client / paying company...