Will contracting go out with a bang or a whimper?

[jamesbrown]

No, it is defined both by HMRC and in case law but it would be a commercial risk for the business (as there are financial penalties for getting it wrong) and most businesses are risk averse especially if they would be taking that risk on behalf of someone else i.e. a contractor. It may be that some will take it on if it looks like they are getting a substantial rate cut but, with the proposed changes to T&S to be taken into consideration, I can only see rates going up and not coming down.

This is what it comes down to.

[LisaContractorUmbrella]

Presumably because you're expecting Tesco to be telling you what shelves to stack, but if the contract detailed the shelves to be stacked up front i.e. the deliverables then you were left to get on with it would this not show lack of SDC?

No because, in reality, if you stacked the baked beans with aubergines you'd be told to re-do it which is then direction

[LisaContractorUmbrella]

I mostly agree, although the current test for control is established in case law as the right to control, and it's whether the right applies in practice, not whether it's stated (or not) in the contract. Working practices can indeed establish whether a right exists, as it may be unspecified in the contract (e.g. Talentcore, where there was no SDC in practice because the managers were never there, but the right existed and was sufficient). In this context, you should read "working practices" as "the reality of the situation". However, I agree with your central point that the client won't want to sign away a right to SDC, especially when it implies a financial liability.

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

[gables]

No, it is defined both by HMRC and in case law but it would be a commercial risk for the business (as there are financial penalties for getting it wrong) and most businesses are risk averse especially if they would be taking that risk on behalf of someone else i.e. a contractor. It may be that some will take it on if it looks like they are getting a substantial rate cut but, with the proposed changes to T&S to be taken into consideration, I can only see rates going up and not coming down.

Ah, and I get the risk averse bit too.

But if it so defined how come then on here we have different views on what SDC is?

[LisaContractorUmbrella]

Ah, and I get the risk averse bit too.

But if it so defined how come then on here we have different views on what SDC is?

Because HMRC's opinion is just that and the examples that they've given to illustrate their understanding are not realistic and, in case law, I don't believe that there's ever been a case that's been decided purely on SDC (I could be wrong on this but that's my understanding)

[dynamicsaxcontractor]

Ah, and I get the risk averse bit too.

But if it so defined how come then on here we have different views on what SDC is?

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.

[gables]

Because HMRC's opinion is just that and the examples that they've given to illustrate their understanding are not realistic and, in case law, I don't believe that there's ever been a case that's been decided purely on SDC (I could be wrong on this but that's my understanding)

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..

[gables]

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.

Absolutely

[Pherlopolus]

What would be a better test is seeing how many of this list we are entitled to:

https://www.citizensadvice.org.uk/wo...ights-at-work/

I would say that where those rights originate from would be a good test, if from own LTD company outside of IR35, from clientco/agency then inside.

[Bexie]

As a Swiss contractor...

How did this affect the contracting market in Switzerland do you know?
I do think contracting will continue it just wont be as lucrative.

There are quite a lot of differences between the UK and Swiss market that affect the changes, firstly most of the large companies that hire contractors have drastically reduced their rates so that the marginal difference from perm to contract in most cases is about 1:1.3 if you include expected bonuses.

My understanding is that the Swiss were/ are concerned at a number of levels,

first and foremost that the correct tax and social insurance was being taken. The Swiss have compulsary insurance for a number of different things including unemployment and accident insurance. The former is important since for the 1st 18 months it is worth around 70% of the maximum or 120k per year.

second, they enforce vacation payments. Pay is clipped at 8% up until 50 and then 10.1% to repay during vacation periods. Contractors are forced to take their time off.

third, the tax is quite a lot more complex. Interest is deductible from earnings, and there is an allowance for "not working from home" ie commuting for everyone. It is also cheaper. For example a married person with single income and two kids on 140k CHF per year will pay c. 23k in tax a single person about 29k.( you get punished for being single in Switzerland)(https://en.comparis.ch/steuern/steue...vergleich.aspx)

Finally, under Swiss law, with rare exceptions, requires that contractors are hired by the agency. Similar in a way to umbrella companies, but real contracts of employment. No umbrellas or private companies.

Finally before you all rush to Switzerland. Bear in mind it is expensive. A colleague of mine moved back to Warsaw because although the pay was a lot less the quality of living was a lot better.

Footnote.

Please see also Tax advice for UK citizens moving to the Cayman Islands. The formalities associated with notifying HMRC that you are leaving. some of the best expatriate advice I have seen. Georgy Boy can make your life a misery if you go back...