HMRC off payroll decision service

[eek]

Here are the reader's comments:

Given the utter insanity of the example JSON files I've looked at I think its just gibberish for testing at the moment and doesn't match any real test...

[Andy Hallett]

I am the MD of my limited company. It will take something exceptional for me to fire myself.

Perhaps I should have phrased it differently. Along the lines will the contract be terminated for cause.

[meanttobeworking]

I know this is preaching to the converted, but surely if the department in charge of IR35, given the opportunity to ask *any questions they like* through this tool, can only give a High / Medium / Low result rather than a Yes / No, it's a clear demonstration that the whole thing is madness?

If they can't tell us, how are we meant to figure it out?

[BoredBloke]

I know this is preaching to the converted, but surely if the department in charge of IR35, given the opportunity to ask *any questions they like* through this tool, can only give a High / Medium / Low result rather than a Yes / No, it's a clear demonstration that the whole thing is madness?

If they can't tell us, how are we meant to figure it out?

I think HMRC are hoping that the conservative nature of the public sector will make all the contracts offered on an inside ir35 basis. That said, how many cases have HMRC won regarding IR35. I fail to see how a few yes/no questions can give a full status outcome given the amount of case law surrounding the subject. If IR35 was so clear cut HMRC wouldn't have lost so many cases.

What would happen if a contractor fought the inside decision and won...there would be a whole raft of contractors looking to recoup the tax incorrectly extracted.

[Andy Hallett]

I have heard a little rumour. Normally wait until I have two unconnected people confirm.

So one person from within government and one from within the accountancy profession tell me that the final draft legislation will move the financial liability fully to the Public Sector Body.

Whilst great news for us proper agencies who will have a level playing field against the ignorant and the criminal, I suspect any chance the chances of getting an outside IR35 determination will diminish IF this information is true.

[difficulttimes]

I have heard a little rumour. Normally wait until I have two unconnected people confirm.

So one person from within government and one from within the accountancy profession tell me that the final draft legislation will move the financial liability fully to the Public Sector Body.

Whilst great news for us proper agencies who will have a level playing field against the ignorant and the criminal, I suspect any chance the chances of getting an outside IR35 determination will diminish IF this information is true.

confused.com but wasn't that always the case that it was transferred from the agency to the PS body?
Why is it great news for proper agencies? Is this to do with dodgy brolly companies?

[Andy Hallett]

confused.com but wasn't that always the case that it was transferred from the agency to the PS body?
Why is it great news for proper agencies? Is this to do with dodgy brolly companies?

The draft legislation has it that determination is the Public Sector body. If they say it was outside IR35, and it later turns out not to be, the 'payer', is responsible for the Tax and NI.

We therefore have no responsibility for the decision but all the liability!

The cynic in me thinks that some agencies might use this lack of liability to convince psec organisation to take a punt on any old assignment, taking a calculated risk knowing full well that if the tax man comes knocking they will phoenix.

As a £400m listed business that's not really an option for us.

[difficulttimes]

The draft legislation has it that determination is the Public Sector body. If they say it was outside IR35, and it later turns out not to be, the 'payer', is responsible for the Tax and NI.

We therefore have no responsibility for the decision but all the liability!

The cynic in me thinks that some agencies might use this lack of liability to convince psec organisation to take a punt on any old assignment, taking a calculated risk knowing full well that if the tax man comes knocking they will phoenix.

As a £400m listed business that's not really an option for us.

Fair enough but I'm sure there would have been IR35 insurance packages offered for businesses as we all know that the likelihood of them coming back like that is very minimal. If it was that high why are there tens of thousands of Ltd. company contractors out there and they still sleep at night.

Are PS recruitment agencies not doomed then? If the end client makes the decision, all the responsibility etc. then why cant the PS body go out and recruit a contractor directly? Am I missing something?

[Andy Hallett]

Fair enough but I'm sure there would have been IR35 insurance packages offered for businesses as we all know that the likelihood of them coming back like that is very minimal. If it was that high why are there tens of thousands of Ltd. company contractors out there and they still sleep at night.

The likelihood is very high. An investigation into 1000 contractors at an agency will yield more, and be significantly more efficient than a thousand individual investigations. I'd imagine the revenue will start will the highest RTI reports and work backwards.

The uncomfortable truth is that the vast majority of contractors are inside IR35 but the sheer volume of contractors has made it impossible to police. IR35 has largely been ignored because of the fundamental lack of enforcement.

Think of it as one of those nice Attenborough films. Currently of the wildebeest make it past the lions with only the odd straggler being picked off. The vast majority of the herd just pile on oblivious to the danger.

By making agencies and the clients police it, they've corralled the herd.

[Andy Hallett]

Are PS recruitment agencies not doomed then? If the end client makes the decision, all the responsibility etc. then why cant the PS body go out and recruit a contractor directly? Am I missing something?

Not at all. The supply and demand is still there, £5bn interim spend in the NHS last year wasn't for fun.

Nothing to stop PSec hiring directly, they will have to do the deductions etc. I think this is where we will see an increase in our business by managing those currently direct.

1) will they want to take on the enhanced deemed employment risk? E.g. If they deem someone a disguised employee then do employment rights apply?

2) their payroll systems won't be able to cope with deemed payments, it's not the same as PAYE with legitimate deductions & VAT etc.