Hammond plans tax crackdown on 'synthetic self-employed'

[edison]

The other option that clients are already using is to outsource to large consultancies to supply the resource in an attempt to offload all risk and responsibility. Some clients may even think it will save them money and be no less efficient in terms of quality, the other clients will accept the increased cost as the fee for doing business this way.

I wonder if the consultancies will sub contract to us instead of getting cheaper foreign labour to fill the 'skills shortage'.

Should still be clients out there that have already been burned by potentially lower quality resource at inflated consultancy prices that are willing to engage contractors via the established channels.

Exactly this.

A friend of mine owns and runs an IT recruitment company specialising in financial services. Over the summer he had a large number of vacancies due to the likes of Wipro and Infosys hoovering up contractors to fulfil contracts at large banks. It's certainly an increasingly common model in some sectors.

[sira]

I just used CEST and the tool said 'We're unable to determine the tax status of this engagement'. And yet they want to extend it...

[ChimpMaster]

I just used CEST and the tool said 'We're unable to determine the tax status of this engagement'. And yet they want to extend it...

Had a bash at it for fun and it's heavily centred around the Substitution and Working Schedule questions. Seems that everything else is pretty much irrelevant. Another case of HMRC skewing the rules to make it almost impossible to avoid IR35.

[sira]

If it passes parliament, does anyone think HMRC will try to collect back-taxes from private sector contractors?

I heard that HMRC are trying to do that in the public sector at the moment (or will do it).

[cmscotland]

If it passes parliament, does anyone think HMRC will try to collect back-taxes from private sector contractors?

I heard that HMRC are trying to do that in the public sector at the moment (or will do it).

Of course they will if they think they can make a few quid.

[sira]

In my view, I think it will be announced in the budget. Keep hearing stories from friends and others about how HMRC has become increasingly aggressive in tax collection. One example, my friend runs a clinic, and he had underpaid on some taxes for a few months (genuine error) and HMRC gave him no payment plan option and demanded the money within 14 days, and threatened to send bailiffs.

From an article today - "Mel Stride, the Financial Secretary to the Treasury, in an interview with Accountancy Age earlier in the year, stated that he felt it was only fair to extend the rules into the private sector, so everybody was dealt with on a similar basis." Is IR35 a ticking time bomb for the accounting profession? - Accountancy Age

No matter how many flaws there are with CEST or IR35, if theres a chance that it will boost coffers, then Hammond will put it through. And for every headline/case you hear of people winning against HMRC; there will be thousands more who silently suffer from a HMRC tax grab.

All what will happen is, many companies (not all) will shift to FTC's, as it will be difficult to justify many roles as being outside IR35. This year, I've already seen a huge increase in FTC's and numerous large recruitment agencies have also reported the trends in their bi-annual and quarterly reports. Extract from one report "Another trend noticed in the past quarter was firms looking to hire people on Fixed Term Contracts rather than on a daily rate. Whilst daily rates would normally make up 75-80% of the market, its swung to an even 50% split."

[jamesbrown]

All what will happen is, many companies (not all) will shift to FTC's, as it will be difficult to justify many roles as being outside IR35. This year, I've already seen a huge increase in FTC's and numerous large recruitment agencies have also reported the trends in their bi-annual and quarterly reports. Extract from one report "Another trend noticed in the past quarter was firms looking to hire people on Fixed Term Contracts rather than on a daily rate. Whilst daily rates would normally make up 75-80% of the market, its swung to an even 50% split."

Agree that it will be in the budget, either for April 2019 or April 2020. Agree that the above will be something to look for - thanks for the quote, interesting.

[Hobosapien]

I presume FTCs are typically at permie rate rather than contract rate. So may as well go full permie if can't find suitable proper contracts.

This will end up with the inevitable call for further leniency on international skills import to fill the 'skills shortage'. i.e. a shortage of local people with the skills but unwilling or able to work at such low rates of pay. Try working on a FTC in central London where the daily commuting or local accommodation cost would eat most of it.

May as well go on 16 hour working week doing a couldn't care less job and claim all the bennies like those smart enough to play the system when it's so loaded against 'hard working families'. Too easy a tax target rather than the myriad of lawyered up multi-national tax dodgers that can afford to run rings around HMRC for years until a deal is done.

I feel a little better now but reality bites hard.

[cojak]

If you’re tired of the fight, it may be better to go permie,but be warned that you are running out of time for the luxury of a search for a good permie job with a decent salary and benefits.

There’s going to be a scramble for those kind of jobs, and if you make the decision to jump you don’t want to be at the back of the queue.

[Hobosapien]

Yes, I realise from my recent posts across various threads that the appeal of traditional contracting (piloting a freelance based Ltd company rather than pseudo-employee via a brolly) may be terminal with what is already happening or likely to in the near future.

As such I have a couple of months until my next contract renewal (with the potential there won't be one) to mull it over and decide what I'd like to do given the possible opportunities I could massage my CV into delivering, and sharpen up some recently lesser used skills via courses and targeted reading (books and online) where necessary.

Sometimes a new challenge is as good as a rest. Should be plenty of scope for a change given the IT skills shortage.