Will contracting go out with a bang or a whimper?

[LisaContractorUmbrella]

An international parallel, of sorts, for anyone interested (although heading in the opposite direction).

So the Americans decided that the direction and control tests didn't work and moved onto something more sensible..........hello!! HMRC........anyone reading this??????

[LondonManc]

The "among other things" is loss of employment rights, the tax advantage for most will be minor and incidental.

Might seem minor but cleaners living in zone 3 in London and working in zone 1 would disagree. If you're not earning a lot, every penny makes a difference. #usedtohaveatulipjob

[jamesbrown]

So the Americans decided that the direction and control tests didn't work and moved onto something more sensible..........hello!! HMRC........anyone reading this??????

As I understand it, these changes are primarily seeking to target the lower end of the spectrum, with Uber being a classic example of the limitations of existing approaches. The tests on direction and control work fine for highly skilled workers (in the sense that it's relatively easy to demonstrate that they don't apply ).

[rapid]

I've been reading through various threats on the new proposed changes to IR35 and have a question around those with multiple clients.. e.g. I am a 1 person LTD and I have 5 local clients that I provide IT support/services for, mostly BAU but also some architecture/project work as and when, would this change affect me? would I be inside IR35?

Thanks

[gables]

While D&C are used as barometers of employeedom, why not use the far more obvious differeniators? By that I mean:
Paid holidays
Paid sick leave
Paid training
No insurance costs

There are obviously others that could be used, but HMRC don't ever stop to look at the financial risks we face.

I agree, but surely the easiest question would be to ask HR\payroll if I am on their PAYE system as a PAYE employee - but then the answer would be no which they don't want as that would the same answer they'd get from those dubious employers forcing their staff on this route. So they come up with the insulting term 'disguised employee' measured by a small set of loose and ambiguous terms.

[jamesbrown]

I've been reading through various threats on the new proposed changes to IR35 and have a question around those with multiple clients.. e.g. I am a 1 person LTD and I have 5 local clients that I provide IT support/services for, mostly BAU but also some architecture/project work as and when, would this change affect me? would I be inside IR35?

Thanks

No one knows, because there are no changes, only a discussion document. Currently, IR35 applies on a contract by contract basis. If this persists, and the rules on SDC go through with assessment by the end-client (and some form of liability on them), the real question is: would each of those end clients agree to your working practices being not subject to the right of SDC?

[LisaContractorUmbrella]

As I understand it, these changes are primarily seeking to target the lower end of the spectrum, with Uber being a classic example of the limitations of existing approaches. The tests on direction and control work fine for highly skilled workers (in the sense that it's relatively easy to demonstrate that they don't apply ).

I agree that this is the intention but I think it will have unintended consequences. How would you demonstrate that the end client has no right to supervision or direction or control?

[gables]

I agree that this is the intention but I think it will have unintended consequences. How would you demonstrate that the end client has no right to supervision or direction or control?

Wouldn't it have to be written in the contract that they waive the right to supervision or direction or control?

[northernladuk]

Wouldn't it have to be written in the contract that they waive the right to supervision or direction or control?

a) It's highly unlikely an client will have this in the contract. We have a thread on the board right now where a client is refusing to that this put in for good reason.
b) Working practices are highly unlikely to match the contract and working practices win.

[jamesbrown]

I agree that this is the intention but I think it will have unintended consequences. How would you demonstrate that the end client has no right to supervision or direction or control?

How do you currently demonstrate that a client has no right to control (or, specifically, to dictate the manner in which the services are performed)? It needs to be demonstrated via the contract and the working practices. For example, my contracts will state that MyCo has complete discretion over the manner in which the services are performed; this isn't a problem for me, because I provide specialist services and the client has no capacity to control the manner in which those services are performed (i.e. backed by actuality). In any scenario where the services are highly specialized, it's unlikely that the right to SDC will exist and this should be stated in the contract.

However, two things give me serious cause for concern. First, depending on how a client reacts to this legislation and any associated liability (i.e. badly in many cases), there's a good chance that they won't entertain a contract that reflects reality, i.e. there will be wrongful employment (disguised unemployment? undisguised employment? ). It would be a brave contractor that decided to fight an IR35 case with a contract that explicitly stated a right to SDC. Second, many legitimate contractors do not provide highly specialized services and are subject to some degree of SDC or a right thereof. In these circumstances, the courts will need to decide whether the degree of SDC (or the right thereof) is sufficient to demonstrate employment. My concern is that many contractors will not accept this risk and instead move out of contracting or, much worse, consider aggressive avoidance schemes (as in IR35 Mk I).

In short, I wouldn't have any concerns about the right to SDC if the determination remained with MyCo or if the client were encouraged to produce a contract that reflected reality, but there's a good chance that neither of those two things will happen.