Public sector IR35 consultation launched

[youngguy]

Actually its the first step in taxing contractors who can't clearly demonstrate they are operating as independent businesses that will be caught. Another reason for concentrating on your terms of engagement. And, incidentally, for breaking the agency stranglehold on freelance recruitment.

Are you sure about that? I don't see that in the consultation doc personally.

Unless you are in a framework (impossible as a solo contractor ) I don't see any examples that allow contractors to demonstrate what you cite...happy for you to point me to the detail though.

[malvolio]

Are you sure about that? I don't see that in the consultation doc personally.

Unless you are in a framework (impossible as a solo contractor ) I don't see any examples that allow contractors to demonstrate what you cite...happy for you to point me to the detail though.

HMG have always been very clear that they are not after businesses, only disguised employees. So all you have to do is operate as a business and prove that you are doing so.

So, how do you go about doing that...? It's not easy, but if you don't like the alternative, then what choices do you have?

[gables]

HMG have always been very clear that they are not after businesses, only disguised employees. So all you have to do is operate as a business and prove that you are doing so.

So, how do you go about doing that...? It's not easy, but if you don't like the alternative, then what choices do you have?

Interesting you put it like that, but the HMRC tests (SDC) seem particularly narrow to me and don't determine whether you're a business vs 'disguised employee' <- hate that term.

Surely, if HMRC considered all the activities (accountant, insurances, paye\vat\ct returns, paying for our own training\skills development...) and employee benefits and activities (holidays, sickness, flexi, 1:1, job planning...) that we don't get\participate in from the client you're at, then the conclusion is that we're not employees disguised or otherwise.

Or am I missing something?

[jamesbrown]

HMG have always been very clear that they are not after businesses, only disguised employees. So all you have to do is operate as a business and prove that you are doing so.

So, how do you go about doing that...? It's not easy, but if you don't like the alternative, then what choices do you have?

I generally agree, but you need to bear in mind that HMRC are being driven by (or willfully using) very dubious statistics w/r to 90% non-compliance. If that's their starting point then, by definition, their view of what distinguishes a legitimate business from disguised employment is entirely different from our view or, more importantly, the legislation that they're using to make that distinction. This is precisely why they're attempting to circumvent the legislation. They have an outcome in mind, more than a process.

[westtester]

HMG have always been very clear that they are not after businesses, only disguised employees. So all you have to do is operate as a business and prove that you are doing so.

So, how do you go about doing that...? It's not easy, but if you don't like the alternative, then what choices do you have?

Well, one method would be to submit your working practices and contract to someone like QDos for review, who can then present a written confirmation of your business operating status. Unfortunately, at the MoD at least, this method of proving the way you operate is no longer acceptable as evidence.

Everyone has their own interpretation of what being a business means. It's persuading HMRC that's the problem. As IR35 to date has been unable to provide a simple in or out answer to this question, it seems that rather than providing rules which can be easily interpreted, it's easier for them to force everyone inside regardless of any other considerations.

[DotasScandal]

As IR35 to date has been unable to provide a simple in or out answer to this question, it seems that rather than providing rules which can be easily interpreted, it's easier for them to force everyone inside regardless of any other considerations.

HMRC: "We now need policies to fix our past policies which were the result of other policies". Lather rinse repeat.

[youngguy]

HMG have always been very clear that they are not after businesses, only disguised employees. So all you have to do is operate as a business and prove that you are doing so.

So, how do you go about doing that...? It's not easy, but if you don't like the alternative, then what choices do you have?

That depends on the definition of business. HMGs new definition doesn't appear to leave much room for a sole director now does it?

As I said, the consultation doc does not see what most of us currently are as businesses .

I think you not answering my Q actually does answer it......there is no Model for the majority of us going forward .

[LondonManc]

HMRC: "We now need policies to fix our past policies which were the result of other policies". Lather rinse repeat.

Surely it's better to, with scrapping IR35 in mind, establish what they ACTUALLY want to achieve and talk to the likes of IPSE in terms of how it affects limited company contractors.

What are the drivers? Things like too many big clientco's avoiding employer NICs for permietractors (pts), too many pts not behaving like businesses while paying business tax rates rather than inside IR35 rates.

If you want to use limited co route, as said earlier, demonstrate that you're a limited company.
If you want to use an umbrella, then you get forced down the full PAYE route BUT you still get the two year rule on the expenses, but only when staying away/travelling a significant distance - no lunches, daily commute under, say 50, miles, etc.

There's as much a market for pts as there is for genuine contractors and the tax structures should reflect that, rather than any ridiculous tests. It should simply be umbrella for pts and limited co for contractors.

[jamesbrown]

It's persuading HMRC that's the problem.

It's part of the problem but, ultimately, the courts decide how to apply legislation, not HMRC. Again, these recent changes are about circumventing legislation (narrowing definitions, avoiding court decisions), not about improving enforcement.

[youngguy]

Interesting you put it like that, but the HMRC tests (SDC) seem particularly narrow to me and don't determine whether you're a business vs 'disguised employee' <- hate that term.

Surely, if HMRC considered all the activities (accountant, insurances, paye\vat\ct returns, paying for our own training\skills development...) and employee benefits and activities (holidays, sickness, flexi, 1:1, job planning...) that we don't get\participate in from the client you're at, then the conclusion is that we're not employees disguised or otherwise.

Or am I missing something?

Exactly.

I have to do marketing , my own development and training. I have legal responsibilities as a Director. I set prices, negotiate terms and prices, do book keeping, pay professionals for parts, I run the risk of no work,I run the risk of being sent home today and my contract terminated.

I don't get any employee rights.

So why am I a disguised employee? That's rhetorical ....because what Malv slightly misses is the fact that HMG DO want to get more tax and contractors are an easy way of doing that. This has nothing to do with being a legitimate business . It is about HMG redefining that term to suit themselves .