Will contracting go out with a bang or a whimper?

[jamesbrown]

But with Talentcore the worker was found not to be an employee as they had a right of substitution (even though it was not exercised in practice) which, to my mind, makes the idea of just using SDC as a determinant preposterous

Yes, I'm fully aware of that, but we're talking about SDC. It's clear that SDC is a much narrower test than what is currently established in case law for IR35 - that's the point - but the SDC component is nevertheless established in case law (and will be clarified further over time).

[LisaContractorUmbrella]

Yes, I'm fully aware of that, but we're talking about SDC. It's clear that SDC is a much narrower test than what is currently established in case law for IR35 - that's the point - but the SDC component is nevertheless established in case law (and will be clarified further over time).

It's not only narrower, it's also considered to be the least significant of all the tests by some - Lord Chief Justice Parker in Morren v Swinton stated: "Clearly superintendence and control cannot be the decisive test when one is dealing with a professional man or a man of some particular skill and experience. Instances of that have been given in the form of a master of a ship, an engine driver or a professional architect, or as in this case, a consulting engineer. In such cases there can be no question of the employer telling him how to do work; therefore the absence of control and direction in that sense can be of little, if any, use as a test”

[LisaContractorUmbrella]

Hmm, does explain a lot.

So does HMRC's opinion trump that of the ClientCo? Also, I don't know how working practices are determined, but presumably by HMRC asking the client, I can't then see how HMRC can determine a different outcome, maybe I'm being naïve?? Although 'the right of' is a sneaky thing and maybe the gotcha..

the proposed legislation means that clientco will have to prove that there is/was no SDC rather than HMRC having to prove that there isn't /wasn't (if you see what I mean) but no-one's opinion trumps anyone else's - that would be up to a Judge. The trouble is that going to Court against HMRC tends to work out pretty expensive and, 9 times out of 10, you won't get your costs back

[jamesbrown]

It's not only narrower, it's also considered to be the least significant of all the tests by some - Lord Chief Justice Parker in Morren v Swinton stated: "Clearly superintendence and control cannot be the decisive test when one is dealing with a professional man or a man of some particular skill and experience. Instances of that have been given in the form of a master of a ship, an engine driver or a professional architect, or as in this case, a consulting engineer. In such cases there can be no question of the employer telling him how to do work; therefore the absence of control and direction in that sense can be of little, if any, use as a test”

That's precisely one of the things I've been saying, repeatedly. When providing highly specialized services, SDC will generally not apply in principle, because there's no basis to control how the work is done, only to negotiate the outcomes (deliverables).

[LondonManc]

Could you imagine how much money would be saved on all sides if we could all just get on with our business instead of all of this. I am sure HMRC would get MORE money as we all would make MORE and pay MORE tax as well as all money SAVED on canning their IR35 department.

Correct. Like I've said before, you don't need a department, you have a simple definition. Employee benefits that contractors don't get are known to most - it would be simply to say that if you receive x, y and z, you're inside IR35 and need to be fully PAYE.

x, y and z being paid leave, sick leave, enforceable notice, redundancy, union rights, etc.

[MPwannadecentincome]

"Yep, it is different but it's your choice to live away and travel to presumbly better paid contracts. You can't expect HRMC and the rest of us to subsidized your choice so you can be better off than the rest of us."

for some people it's a case of a contract vs no contract at all

[d000hg]

Has anyone got a summary - or link to one - of what we currently think the changes will BE? There was a load of talk about dividend taxes (which IMO are not a massive deal as it stands) - and T&S (which could be though I don't know the details). Then I've seen mutterings about major IR35 changes too but have no idea if that's coming or not.

Sorry if it's already in this thread - I didn't trawl through so if it is just say and I'll go find it.

[jamesbrown]

Has anyone got a summary - or link to one - of what we currently think the changes will BE? There was a load of talk about dividend taxes (which IMO are not a massive deal as it stands) - and T&S (which could be though I don't know the details). Then I've seen mutterings about major IR35 changes too but have no idea if that's coming or not.

Sorry if it's already in this thread - I didn't trawl through so if it is just say and I'll go find it.

No, not really. Things should become clearer at the Autumn Statement on 25 Nov, at least w/r to the T&S. As it stands, there's a consultation (T&S) and a discussion (IR35), and even the T&S could change significantly (it certainly did between discussion and consultation). The dividend tax is not so much a game changer now as a starting point and, if they want to use it, a mechanism to render IR35 all but moot.

[vwdan]

This is what it means...

Employee based in London is sent to Manchester office for 3 months and has expenses paid by the business

Ltd company employee/consultant/scum/whatever based in London works at client site in Manchester for 3 months and can claim no expenses but pays for costs out of own personal pay packet.

Employee has sick, holiday, parental, grievance, pension, etc etc

Ltd co entrepreneur gets none of that unless they pay for it out the business. Which also pays accountant, insurance, business overheads etc

Comparing a freelancer's travel expenses with those of a generic permanent employee is comparing apples with oranges. The comparison that should be made is with the employees of the big consultancy firms, who, if I understand correctly, are somehow miraculously out of scope of this legislation.

Once again in that scenario the risk taker, entrepreneur, and independent businessman (a.k.a. The Ltd Co Contractor) loses out.

Exactly - this is why I'm feeling peeved about the whole thing. People seem to completely forget that permies can claim most of the expenses we can claim if they're working away from their normal place of work. For those of is in something resembling consultancy the contractor lifestyle isn't really that much different to the permie consulting one. The main differences being a contractor sets their own expenses policy, but it of course comes out of their own bottom line.

If they align the permie/consultancy expenses with contractor ones then fine. But as it stands, it's just straight up targeting small business.

I did a week last year that looked like this:

Mon - Thur (Client 1, Central London)
Fri - Mon (Client 2, Outer London)
Tue - Wed (Client 3, Hull)
Thur - Fri (Client 4, Northampton)

I stayed in three hotels and travelled most of the country - you're telling me that it's somehow unreasonable to claim tax relief on that travel?

[LisaContractorUmbrella]

Has anyone got a summary - or link to one - of what we currently think the changes will BE? There was a load of talk about dividend taxes (which IMO are not a massive deal as it stands) - and T&S (which could be though I don't know the details). Then I've seen mutterings about major IR35 changes too but have no idea if that's coming or not.

Sorry if it's already in this thread - I didn't trawl through so if it is just say and I'll go find it.

This is the consultation document that HMRC issued on T&S https://www.gov.uk/government/consul...nd-subsistence. All responses had to be in before the end of last month and HMRC are now reviewing them before telling us what the new legislation will be in the Autumn Statement on 25th November. There is an IR35 discussion document here https://www.gov.uk/government/consul...ssion-document - again the response deadline has passed and we should know more at some point in the future.