Will IT contractors be considered permanent employees after one month on site?

[jamesbrown]

The reason it doesn't work is because there is plausible deniability when contractors get self-assessment wrong. Plausible deniability means there are no penalties. If status is so simple that there is no plausible deniability, then there are penalties for not complying, so then there is no compliance problem.

Again, you're missing the point. First, in my experience, a significant number of contractors don't self-assess (inaccurately or otherwise) because they're unaware of IR35 or have misunderstood its scope (e.g. confused it with the 24mo rule for T&S). Second, and more importantly, HMRC don't have the resources to police this, and that isn't going to improve. In my view, there's no outcome that doesn't involve engagers policing the situation, and HMG will have a strong preference for either eliminating the liability altogether (on payroll) or having engagers shoulder the liability from non-compliance, because they're much easier to pursue. It's absolutely this shift of responsibility towards engagers that will fundamentally change the situation. Regardless of the criteria used, engagers will take a conservative approach when faced with a liability and they will assume "on payroll" by default.

Finally, you're over-stating the simplicity of legislating strict deeming criteria. Quite obviously, it can be done, but they'll need to consider more than simply the timeframe (clear rules present clear targets for those trying to circumvent them; for example, by stringing together one-month contracts). However, with engagers policing the situation, this question of compliance largely disappears.

[LisaContractorUmbrella]

Clearly there are large consultancies that don't even have to think about status issues, so it must be possible to sufficiently resemble one so that an employee-owned one is in the same boat. The only question to be settled is what exactly "sufficiently" means. (And yes, I do recall that you and I have had this exact conversation before. )

Having said that, the issue of having to give up "your" income to the consultancy might well make it a commercial non-starter, due to contractors simply not being willing to do that.

I remember working at a client where the majority of other outside workers, more than 50, were supplied by a large consultancy. I recall my eyebrows shooting up when one of their people mentioned that they were a "charity". He could see the funny side of that description, when new graduates were being charged at multiples of what they themselves were being paid, and rapidly explained that their status was just a tax-related thing. Anyway, my insignificant point is that a legitimate large consultancy doesn't have to have external owners raking off a large proportion of the profits.

To be considered a consultancy under the terms of proposed legislation (T&S) you would have to prove that your main source of income was not supply of staff

[Fred Bloggs]

So, what exactly is the difference between supplying staff and supplying professional services?

[jamesbrown]

So, what exactly is the difference between supplying staff and supplying professional services?

The probability of securing a lucrative consultancy contract to supplement your constituency work.

[LondonManc]

Someone remind me where it is stated that the decision to ban T&S on contracts through intermediaries has been taken.

Why was that aimed at me? I was talking about something totally different.

[LisaContractorUmbrella]

So, what exactly is the difference between supplying staff and supplying professional services?

How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

[MrMarkyMark]

I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

I have been looking at the possibility of providing fixed price managed services.

Still through an agency, but, just utilising their PSL capability, as well as factoring invoices.

[GB9]

Why was that aimed at me? I was talking about something totally different.

Sorry. Wasn't aimed AT you. Iirc it was because of the Accounting Web (or whatever they call themselves) piece that you may have linked to. They stated that T&S would not be available as if it were a fact.

[Fred Bloggs]

How you get your revenue - the big 4 will primarily supply accountancy services, for instance, but they will also lend out staff as consultants. From IT contractors point of view, if you were to group together, you would have to supply something other than contractors (if you see what I mean) and I would think you'd have to do it without agencies securing contracts for you to avoid it being seen as a sham arrangement by HMRC

I see where you are coming from but I don't think it is quite so easy to characterise. I mainly contract to companies who run engineering projects. Think of KBR, CB&I, Jacobs, Costain etc... I don't really see any difference in what they do and what I do as a subcontractor. I don't really see why MyCo Ltd isn't supplying professional services?

[MicrosoftBob]

So, what exactly is the difference between supplying staff and supplying professional services?

Well with one your main source of income is supplying staff and the other your main source of income is supplying staff