Public sector IR35 consultation launched

[bobspud]

So when they started this whole fiasco back in 2012 I was on a small site in the west country. I pointed out the whole payroll issue was coming to bite them and the Senior Civil servant at time sat in a programme board and said "Don't worry, Im sure we will just find more people willing to take our permanent roles..." At which point I said ok stand up if you have a green badge (3 of them) now the rest of us with green badges (20 odd) now stay standing if you want a permanent role 0

You can guess why I neither wanted a renewal or got one :icmc:

But the point was while those poor sods were bending over to screw their own delivery team and get everyone to flee. The place up the road were offering fixed price contracts with no day rates and just payment milestones and it would have been a real b2b contract and past all the issues that they were trying to sort out.

This is basically a case of someone having a grand vision and everyone else saying great lets follow your idea to the letter and see how badly it goes wrong.

But just like last time some departments will be more equal than others when it comes to taking orders...

[youngguy]

2) is never going to work. Why do people suggest this?

That depends on the contractor market. IF (and it is a big if I know) the public sector contractors all walk overnight and state they won't work for x, then it will cause the need for a rethink. Eg gov dept changes rate to retain contractors. Another option is those contractors sub to big consultancies (contractor is still caught but the day rates are higher for contractor).

As a business I can set my rate....whether the prospective client accepts it is of course another matter.

[youngguy]

Oh, but that's exactly what they want. Have cake, will eat. Still have cake.

That isn't how it will end, of course, but that's their starting position.

This for me. If you wanna tax me like an employee, give me the rights and safety of an employee. Why tax me like an employee when I am a business?

[youngguy]

How does this work with corp tax? If we are taxed at point of invoice and expenses are limited to 5% (did I get that right?) Then what are we taxed on com corp time?

[jamesbrown]

How does this work with corp tax? If we are taxed at point of invoice and expenses are limited to 5% (did I get that right?) Then what are we taxed on com corp time?

You and YourCo will get a credit for all taxes deducted upfront. This will be used to offset all other taxes that would otherwise apply. In practice, what this means is that you'll either extract all (taxed) income as salary or as a dividend and no further tax will be due (whether CT or PAYE/NI taxes or dividend taxes). Other sources of company and personal income will be taxed as normal (VAT FRS profit, other contracts, interest income etc.)

[bobspud]

That depends on the contractor market. IF (and it is a big if I know) the public sector contractors all walk overnight and state they won't work for x, then it will cause the need for a rethink. Eg gov dept changes rate to retain contractors. Another option is those contractors sub to big consultancies (contractor is still caught but the day rates are higher for contractor).

As a business I can set my rate....whether the prospective client accepts it is of course another matter.

Don't worry. There is a finite number of people that have the clearances. when they realise that everyone to a dog has fled and no-one with an SC will go near them they will quickly find a way to say sorry and drop it. just like the whole PSC mess a few years back...

[eek]

You and YourCo will get a credit for all taxes deducted upfront. This will be used to offset all other taxes that would otherwise apply. In practice, what this means is that you'll either extract all (taxed) income as salary or as a dividend and no further tax will be due (whether CT or PAYE/NI taxes or dividend taxes). Other sources of company and personal income will be taxed as normal (VAT FRS profit, other contracts, interest income etc.)

Thinking about this. Look at all the fundamental changes HMRC are making. Do you believe the impact of those is really just £500,000

[jamesbrown]

Thinking about this. Look at all the fundamental changes HMRC are making. Do you believe the impact of those is really just £500,000

No way. Aside from whatever it costs them, think about the cost in trying to link up procurement/contracts and payroll/HR databases (for the PS body, agent or consultant nearest to the PSC). I mean, purely from an IT POV, let alone the employment law minefield. It isn't going to be easy, and why would anyone bother unless PS work was keeping them afloat? They think this will be sorted in 12 months One more reason to not bother with contractors at all and just shift to FTC. Like I said, forgive them, for they know not what they've done (as usual).

[GB9]

Haven't had time for a proper response yet but the one thing that did make me laugh is the 5% blanket expense allowance currently available within ir35. In short, the document states they weren't sure if it should be kept because they didn't want to put an administrative burden on the psc. Yet at the same time they want to use a convoluted tax at source which then gets paid to Ltd Co which then gets a tax credit. And please keep collecting the VAT for us. Talk about disingenuous.

[flamel]

Talk about disingenuous.

It's HMRC you're talking about - did you expect anything less?

I've already moved out of public sector so I've got private sector experience on my CV before the mass exodus.

I've never seen a FTC that was of any benefit to a contractor compared with going permanent and in my experience, gov't departments have struggled to get people on FTCs - and the same for advertising contract roles at less than the market rate, which they seem to do frequently.

The only way it's going to work for these departments is to re-hire the big consultancy firms, which will cost them a lot.

HMRC will not care a bit about that. The Gov't will not care either. Neither will care about the talent drain.

They will care about their own PR "... Gov't clobbers greedy contractors..." etc. We can then see the machine working in the thread "I read in the Daily Mail"