The death of Public Sector contracting

[TheFaQQer]

I'd imagine the Public Sector Body decide, in consultation with QDOS for example. They (PSB) shouldn't care whether the contract is actually inside or outside, but whether or not the contractor has that absolutely nailed on and confirmed.

But the liability lies with the agency, so they are the one's on the hook - can't see them being happy if there is an assessment done by someone else which is then challenged by HMRC and they lose and have to pay out because of it.

Assessment is likely to end up being through HMRC's ESI tool anyway - no doubt the consultation will clarify how to appeal the decision if it turns out to be "wrong"

[LondonManc]

But the liability lies with the agency, so they are the one's on the hook - can't see them being happy if there is an assessment done by someone else which is then challenged by HMRC and they lose and have to pay out because of it.

Assessment is likely to end up being through HMRC's ESI tool anyway - no doubt the consultation will clarify how to appeal the decision if it turns out to be "wrong"

I suppose it very much depends when the assessment is done too; if the public sector decide that the role has to be assessed as part of it being funded before it is advertised, it makes it much simpler.

[sharky]

All most all public sector bodies use contractors to get around a number of Issue from Unions and Worker Rights, Restrictive Pay Banding and to address skills shortages.

Bit of NIC-avoiding was maybe not the top of the list for public sector bodies.

Only thing this will do is move some public sector contracts placements for the Likes of IT/PM work to with Direct Fixed-term contracts with Tulip pay / T&C's.

How this will impact the likes of the NHS who have real problems with getting the right people for roles with it's restrictive Low Pay and Union Issues. the NHS has seen a rise in the use of Limited company "locum" doctors and nurses who may have just been hit by Gideon as favor to Jeremy the hutt.

[2uk]

What is this about, there will be no Personal Services companies in Public sector allowed ?

[TheFaQQer]

What is this about, there will be no Personal Services companies in Public sector allowed ?

https://www.gov.uk/government/upload...FINAL_V3_0.pdf

HTHBIDI

[sharky]

https://www.gov.uk/government/upload...FINAL_V3_0.pdf

HTHBIDI

this HMRC Example Grace

1 Gov dept just paid up the employer NIC not Grace. ER public sector budget over spend coming in 2018 <<<
2 Why would Grace have the payroll that already been taxed paid to a PSC if it's been taxed at source it goes to straight to personal bank accounts right ? why pay corporation tax on £££ already been taxed as PAYE ???


Example 1 – Central Government – rules apply
Grace works through her own PSC and is appointed as a at the Ministry
when the post holder leaves. She is a locum appointed to a project for 5 months while the
job is advertised. Human Resources uses HMRC’s online tool to see that Grace is
working in the same way as an employee and the new off-payroll tax rules apply. Payroll
are informed and tax and NICs are deducted from payments made to Grace’s PSC. The
Ministry pays the secondary NICs and accounts for the tax and NICs liabilities under RTI.
Grace’s PSC invoices the Ministry monthly for £2400, which includes £400 VAT. The
Ministry treats £2000 as Grace’s earnings and deducts £223 tax and £159 employee NICs,
which it pays to HMRC via RTI with £183 employer NICs. The Ministry pays Grace’s
company £1618.*
Because Grace has paid income tax on income going into the PSC, she receives a credit
against employment and dividend income drawn out of her PSC so she does not pay tax
twice. The corporation tax liabilities of Grace’s PSC will remain unchanged by the
measure.

[LandRover]

this HMRC Example Grace

1 Gov dept just paid up the employer NIC not Grace. ER public sector budget over spend coming in 2018 <<<
2 Why would Grace have the payroll that already been taxed paid to a PSC if it's been taxed at source it goes to straight to personal bank accounts right ? why pay corporation tax on £££ already been taxed as PAYE ???


Example 1 – Central Government – rules apply
Grace works through her own PSC and is appointed as a at the Ministry
when the post holder leaves. She is a locum appointed to a project for 5 months while the
job is advertised. Human Resources uses HMRC’s online tool to see that Grace is
working in the same way as an employee and the new off-payroll tax rules apply. Payroll
are informed and tax and NICs are deducted from payments made to Grace’s PSC. The
Ministry pays the secondary NICs and accounts for the tax and NICs liabilities under RTI.
Grace’s PSC invoices the Ministry monthly for £2400, which includes £400 VAT. The
Ministry treats £2000 as Grace’s earnings and deducts £223 tax and £159 employee NICs,
which it pays to HMRC via RTI with £183 employer NICs. The Ministry pays Grace’s
company £1618.*
Because Grace has paid income tax on income going into the PSC, she receives a credit
against employment and dividend income drawn out of her PSC so she does not pay tax
twice. The corporation tax liabilities of Grace’s PSC will remain unchanged by the
measure.

Unbelievable, they actually think people are going to pay corporation tax too?

This is the end of public sector contracting. Watch the public sector crumble over the next few years!

[SueEllen]

Unbelievable, they actually think people are going to pay corporation tax too?

This is the end of public sector contracting. Watch the public sector crumble over the next few years!

All that will happen is when they realise they can't get contractors in 12 months time they will up the rate then change all the contracts so people are outside IR35.

[mudskipper]

Unbelievable, they actually think people are going to pay corporation tax too?

This is the end of public sector contracting. Watch the public sector crumble over the next few years!

No, because Grace will take all the already taxed money as salary and get credit for the tax already paid. So corp tax on that money will be zero.

[Lewis]

I'm fortunately not affected by this, but curious how it might work.

I thought I read somewhere, where an agency is involved they must make the assessment - will the agency make the deductions and pay the employers NI or the public sector body? If the agency, then the employers NI will come out of the contract rate as the agency is not going to pay it for you.

Adjusting your salary to match receipts, to avoid corporation tax, sounds like a right pain and with the potential for a mistake to be costly (failing to take enough salary at the right time resulting in company profit).

If someone is paying employers NI would that make it reasonably to fight for employee rights?