You're probably not going to like this - we certainly don't

[jamesbrown]

It's entirely possible that I'm missing something, though.

Yes, the consultation proposes that one of two preconditions must be passed before engagers conduct the online test. This is a de facto tightening. Working practices that might win a tribunal case will be screened, a priori, as a fail. So you see that, regardless of the word collage they present in this consultation, the reality is transparently different. Moreover, no one will ever know or care, because none of those false positives will make it to a tribunal.

[Yampy]

I am quite new to contracting so forgive me if this has been covered before. These proposed changes seem to be aimed at PSC's. The general definition of a PSC is 'a limited company that typically has a sole director, the contractor, who owns most or all of the shares'. Would it help the situation if the company business was diversified to include managing a few rental properties with my wife employed to manage them and made a director and shareholder. Would this mean, in effect, that the company would no longer be a PSC hence out of scope for public sector tax changes

[northernladuk]

I am quite new to contracting so forgive me if this has been covered before. These proposed changes seem to be aimed at PSC's. The general definition of a PSC is 'a limited company that typically has a sole director, the contractor, who owns most or all of the shares'. Would it help the situation if the company business was diversified to include managing a few rental properties with my wife employed to manage them and made a director and shareholder. Would this mean, in effect, that the company would no longer be a PSC hence out of scope for public sector tax changes

Erm.. If it were that easy do you think there would be such a long thread with IPSE and many other senior posters discussing it?

[Yampy]

Erm.. If it were that easy do you think there would be such a long thread with IPSE and many other senior posters discussing it?

I take that's a big fat no then

[jamesbrown]

I take that's a big fat no then

There's no legal definition of a PSC and there's no legislation, existing or proposed, that depends on one. Indeed, the whole point of IR35 (the Intermediaries legislation) is to look through any intermediaries to understand the "true" relationship between the contractor and end client.

[Hobosapien]

PSC's are required to be sole director/shareholder according to some agencies:

Taken from another thread:

‘XXXX have strict compliance policies and require all contractors operating through their own limited company to comply with applicable law. XXXX’ compliance department works alongside XXXX’ lawyers and tax advisors to set and enforce minimum standards which we expect all our own limited contractors to meet.

One of these minimum standards is that each own limited company contractor is the sole director and shareholder of their own limited company this is because multiple directors or shareholders may be an indicator that a contractor is operating a tax avoidance scheme. The correct amount of tax depends on whether the individual genuinely controls the limited company they offer their services through, if the individual is not the sole director or shareholder of the limited company then this suggests that they have split control over the company and should be paying a higher rate of tax (equivalent to that of an employee).

Tax debt transfer provisions under the Income Tax (Earnings and Pensions) Act (as amended) means that the tax authorities may try to recover the tax the limited company has failed to pay from XXXX in certain circumstances. This is not a risk that XXXX can afford to take which is why we have a sole shareholder and director requirement. ‘

So all this risk aversion by the agencies is easy to see that there won't even be a need for a new online assessment tool as it will never get that far and the agencies will default to this 'cannot take the risk' position and make all PS contracts fall within the new rules of PAYE/NI RTI and whatever other bollox is foisted upon them.

Avoiding the public sector from April 2017 is unlikely to be enough as it inevitably will only be a matter of time before it's also applied to the private sector, and maybe some agencies will do so ahead of actually being required to just to make their lives 'easier' and 'derisked' in their eyes, as seen by the MOD feedback.

Personally I'm considering my options for next year as far as non-contracting goes. Seems like a good time to go and do something totally different when my current contract ends soon. That or change my title from contractor to consultant, charge 5 times as much and go for government tenders like the rest of the troughers.

[fidot]

It's entirely possible that I'm missing something, though.

That they might be lying ?

[quackhandle]

Interesting thread - should be a sticky.

Come next April I think your going to have a number of clued up contractors (probably regular posters here, or have come via here) who will understand what is happening and walk (if they haven't already done so) and avoid PS gigs entirely.

Then you'll have the newbies who don't know tulip from tulipola or experienced ones who just can't be bothered with it all. (I've met a few, been contracting for many years but they just don't care about IR35). The noobies they'll go along blindly, think, "ah crap I'm paying more tax, oh well I'll just carry on then, I like working here, the career prospects are quite good, they have personal development plans and everything."

Big question is how many of each type you're going to get.

qh

[LondonManc]

Interesting thread - should be a sticky.

Come next April I think your going to have a number of clued up contractors (probably regular posters here, or have come via here) who will understand what is happening and walk (if they haven't already done so) and avoid PS gigs entirely.

Then you'll have the newbies who don't know tulip from tulipola or experienced ones who just can't be bothered with it all. (I've met a few, been contracting for many years but they just don't care about IR35). The noobies they'll go along blindly, think, "ah crap I'm paying more tax, oh well I'll just carry on then, I like working here, the career prospects are quite good, they have personal development plans and everything."

Big question is how many of each type you're going to get.

qh

A bit too polar that quackers.

You'll have those doing the psexit sooner who are clued up, then of the ones that don't realise, you'll have:
Some carry on and not realise and be left with a huge tax bill that they cannot afford
Some get to three months in, realise what their new tax bill is and Foxtrot Oscar.
Some carry on and go, ah well, it's still a job
Some convert to perm

[cojak]

If you see how many newbies complain after their proper umbrella has deducted the correct amount of tax, you'll get some idea of the nasty shock they'll get when they realise that being a contractor really isn't about the money anymore...