Treasury response to "Don't extend IR35 reforms to Private sector" petition (no news)

[MrMarkyMark]

But what Brillo is saying is correct - why on earth do you think it'l make a difference? Tory, Labour, Lib Dem, whoever gets in, will all bow down to HMRC. You'd be just as well going into the ballot box and drawing a phallus on your paper as a protest vote.

The bigger issue is the country has a massive deficit and needs to collect additional tax revenue. HMRC cannot be bothered to go after large enterprises paying minimal amounts of tax in this country because that costs them money, and is too difficult (and all the HMRC permies like their 3pm finish on a Friday and other such cushy permie perks). So instead of going after these large corps, they elect to raise revenue through the only means they know how; via small businesses - easy, defenseless targets. By voting away from Tory you're effectively voting Corbyn in, and he's already said he wants to increase corp tax. So you can kiss your divi thresholds goodbye too, because they will be next.

Unfortunately, a vote for Tory leads to increased taxation, and a vote away from Tory leads to even further increased taxation. It's a lose lose.

Personally, I shall by practicing my best Phallic drawing with my favourite colour of Crayola.

HTH

[LondonManc]

There is a difference between "improving compliance" and "increased tax revenue".

Even if every contract was assessed as outside, there would still be improved compliance because there is more evidence that people are making the decisions based on the situation. Improved compliance is easy to claim. Increased tax revenue (the main reason to do this) is a different matter.

Well in that case, we've gone from 100% compliance to 100% compliance - all contracts were and are declared inside or outside so your statement makes no sense. They see compliance as "you will comply" and you will be taxed like a permie with none of the benefits; the fact that it increases tax revenue is both the important part and the irrelevant part in their twisted world.

[BrilloPad]

But what Brillo is saying is correct - why on earth do you think it'l make a difference? Tory, Labour, Lib Dem, whoever gets in, will all bow down to HMRC. You'd be just as well going into the ballot box and drawing a phallus on your paper as a protest vote.

The bigger issue is the country has a massive deficit and needs to collect additional tax revenue. HMRC cannot be bothered to go after large enterprises paying minimal amounts of tax in this country because that costs them money, and is too difficult (and all the HMRC permies like their 3pm finish on a Friday and other such cushy permie perks). So instead of going after these large corps, they elect to raise revenue through the only means they know how; via small businesses - easy, defenseless targets. By voting away from Tory you're effectively voting Corbyn in, and he's already said he wants to increase corp tax. So you can kiss your divi thresholds goodbye too, because they will be next.

Unfortunately, a vote for Tory leads to increased taxation, and a vote away from Tory leads to even further increased taxation. It's a lose lose.

Personally, I shall by practicing my best Phallic drawing with my favourite colour of Crayola.

I agree with you entirely. And I have no better way forward. Very frustrating....

[TheFaQQer]

Well in that case, we've gone from 100% compliance to 100% compliance - all contracts were and are declared inside or outside so your statement makes no sense.

Did every public sector engagement actually make a status check? How many people actually did that compared with the number of people who weren't making any declaration at all, but were operating as outside? I'd suggest that there were a high number of people working in the public sector who were completely ignorant of IR35, and therefore they were not actually making any declaration at all, they were merely operating in one particular way.

The moment that shifts to someone with (theoretically at least) more knowledge, actively making a determination, then someone could argue that there are more people complying with the legislation - the number of people who are ignorant of IR35 (from the contractor perspective at least!) tails off dramatically, therefore there are more people making checks, therefore more people are compliant.

[mattfx]

HTH

You got almost all my favourite colours of Crayola in there MarkyMark! And who said political / IR35 threads couldn't be funny?!

[LondonManc]

Did every public sector engagement actually make a status check? How many people actually did that compared with the number of people who weren't making any declaration at all, but were operating as outside? I'd suggest that there were a high number of people working in the public sector who were completely ignorant of IR35, and therefore they were not actually making any declaration at all, they were merely operating in one particular way.

The moment that shifts to someone with (theoretically at least) more knowledge, actively making a determination, then someone could argue that there are more people complying with the legislation - the number of people who are ignorant of IR35 (from the contractor perspective at least!) tails off dramatically, therefore there are more people making checks, therefore more people are compliant.

I don't disagree with what you're saying but what you're saying still points to each contract being operated one way or another.

I think what's missing in each case is the because clause.

A simple this contract is inside IR35 because we need to exercise full SD&C, there is MoO and they cannot substitute or this contract is outside IR35 because it requires a niche skill set and we are looking to this contractor to tell us what to do; they can similarly bring in an equally experienced business partner to substitute when they are unavailable because we want continuity.

[mattfx]

I don't disagree with what you're saying but what you're saying still points to each contract being operated one way or another.

I think what's missing in each case is the because clause.

A simple this contract is inside IR35 because we need to exercise full SD&C, there is MoO and they cannot substitute or this contract is outside IR35 because it requires a niche skill set and we are looking to this contractor to tell us what to do; they can similarly bring in an equally experienced business partner to substitute when they are unavailable because we want continuity.

^ This. In my opinion because the legislation around IR35 is so woolly it leaves a lot open to interpretation. If HMRC actually produced a proper set of guidelines that worked (because we all know CEST is tulip) with some actual real life examples of what was inside, and what was outside, I think people wouldn't be so upset about the whole situation.

[Maslins]

After giving it some thought, I think it will work fairly well, though of course interested in opposing viewpoints.

Yes, there will be quite a few "contractors" who will end up drifting away from the Ltd Co model. They will be ones who in reality always were inside IR35, they just perhaps didn't declare it. When the risk is on the end client, and the end client realises they wouldn't have a hope in hell of demonstrating outside IR35, it'll force some action.

It's in both the contractor & the end client's interest to make things outside IR35 where they can. As some public sector organisations have realised, if they blanketly opt for inside, and other organisations don't, then some contractors will vote with their feet. It's therefore a risk to them to insist on inside IR35.

I therefore think it will encourage end clients to actually care, and work with the contractor to demonstrate outside IR35. Up until this point the end client hasn't cared, so it's HMRC against the contractor, with end client not bothered either way. If the rules are transferred to the private sector, then it'll become HMRC against the contractor and end client teamed up. To my mind that will have a big impact (negatively for HMRC).

It will be a bit of a risk for end clients, but I imagine the likes of QDOS/Abbey Tax etc will get involved, giving suggested contracts to use combined with stipulations on certain working practices to ensure they do/don't do...and an insurance package to back it up.

So end result will maybe be a quarter of contractors drift to umbrella/PAYE, and life actually improves for the remainder. Reason being the contractor no longer has to worry about IR35 looming over their head, the client does. HMRC will consider it a "win", though perhaps a smaller win than they might have hoped.

[LondonManc]

Maslins,

I think the key to all that is the communication to the end client that life is easier and contractors will generally be better if the role is outside IR35. Without that, you're simply suggesting the version that has been push out on to the public sector.

[TheFaQQer]

So end result will maybe be a quarter of contractors drift to umbrella/PAYE, and life actually improves for the remainder. Reason being the contractor no longer has to worry about IR35 looming over their head, the client does. HMRC will consider it a "win", though perhaps a smaller win than they might have hoped.

If the same legislation is applied to the private sector then that's not the case - it's the fee payer who has it over their head.

And if you are working through an agency who is not smart enough / geared up enough / prepared to take on the risk that their client might get it wrong and so they refuse to work with "difficult" contractors who will not operate via an umbrella if they believe the role to be outside IR35, then there is a problem for the "legitimate" contractor more than those who should always have been inside IR35.

Some big agencies will be able to take the risk easily, because they have the resources to take that on. Smaller agencies won't be able to do that - and some of the smaller agencies are better to work with than the bigger ones who are more intent on claiming market share via Brylcreem salespeople, which means that the contractor and the client end up with a sub-optimal experience. And where does that leave the contractor (and the client)?