Ir35 2020

[BlueSharp]

Interesting times.

It will force permie-tractors to pay the correct tax and corporations to put the relevant safeguards in place, which is the point of the change. Large corporations know they have been complicit in keeping permie-tractors on on to save employers NI and the benefits of having people in house who have no employment rights. They need to clear the decks. We don't know what happens if a client declares outside but HMRC disagree and win a tribunal. Who pays the back tax?
the BBC are in all sorts of a mess with this.

It won't be long before clients look at a project and see they have no resource to deliver them and some bright-spark says lets get contractors in to deliver only this project and get our working practices aligned to deliver it 10%-15% cheaper than blanket putting all contractors inside for this project. At this point tax won't be our concern but the size of the talent pool who will wan't to work on the project with no expenses available will be an issue for the client.

Working back from April if you are caught in an outside >> inside transition. 30 days payment terms means last working month will February. Notice handed in at the end of Jan. IMO HMRC will be looking for all those who have transitioned at the same client and will be asking for back tax as it's easy pickings.

[webberg]

Yup. For anyone with a longer than average payment cycle, the deadline will be some time in the early NY, perhaps even late this CY to be safe. I don't expect this to differ for the private sector rollout but, like webberg says, we'll have a better sense on 11 July. For the PS rollout, there were very few changes to the initial draft of ch 10, IIRC.

I take the point about delay between the time the money is earned; the point at which the contractor has an entitlement to it; the date it is paid.

"Payment" is very inexact date and would give tremendous scope for abuse in the hands of the unscrupulous and you have to wonder if the simple "date it hit the bank account" is actually what is meant. Perhaps it is?

Usually in tax matters however "payment" tends to be "the point at which entitlement to be paid is established". In the case of contractors, that is perhaps the date at which the work giving rise to the payment is reached.

It's perhaps also the case that the private sector is a little quicker at payment (flinches in anticipation of being told it's not) and therefore the actual date is within a few weeks of the trigger date?

We don't know yet.

[webberg]

Interesting times.

We don't know what happens if a client declares outside but HMRC disagree and win a tribunal. Who pays the back tax?

Almost certainly going to be the fee payer - not the end client.

That fee payer though will be doing their best to push that liability upwards or downwards via clauses in the contracts.

[jamesbrown]

"Payment" is very inexact date and would give tremendous scope for abuse in the hands of the unscrupulous and you have to wonder if the simple "date it hit the bank account" is actually what is meant. Perhaps it is?

You can look at 2(10) of the ITEPA for the PS rules. IIRC, it's the date the deemed payment is made by the fee payer, not the date it hits a bank account. Again, it makes no difference when the services were actually performed, only when the payment is made by the fee payer. Obviously, this may or may not apply to the new legislation.

[BlueSharp]

I take the point about delay between the time the money is earned; the point at which the contractor has an entitlement to it; the date it is paid.

"Payment" is very inexact date and would give tremendous scope for abuse in the hands of the unscrupulous and you have to wonder if the simple "date it hit the bank account" is actually what is meant. Perhaps it is?

Usually in tax matters however "payment" tends to be "the point at which entitlement to be paid is established". In the case of contractors, that is perhaps the date at which the work giving rise to the payment is reached.

It's perhaps also the case that the private sector is a little quicker at payment (flinches in anticipation of being told it's not) and therefore the actual date is within a few weeks of the trigger date?

We don't know yet.

That raises an interesting question. Payment to who? If the client is deducting deemed payments then the money paid to the agency may fall after that payment to the contractor has been made (most agencies pay on 30 day but receive money from client 90 days after) -with no deemed payment and the agency is out of pocket. Obviously this is not an issue if the agency is paying the taxes. In that case the switch to inside may be even earlier than the payment date.

[jamesbrown]

That raises an interesting question. Payment to who? If the client is deducting deemed payments then the money paid to the agency may fall after that payment to the contractor has been made (most agencies pay on 30 day but receive money from client 90 days after) -with no deemed payment and the agency is out of pocket. Obviously this is not an issue if the agency is paying the taxes. In that case the switch to inside may be even earlier than the payment date.

What matters, first, is the identity of the fee payer and, second, the date of the deemed payment by the fee payer, not when the fee payer received any money that supports their deemed payment.

Bottom line, yes, if a deemed payment (by the fee payer) is made on or after 6 April 2020, it will likely be within the new rules, even if the services were performed way before April 6 (but we await the draft legislation).

[eek]

It's not known at the moment, but we are beginning to get an idea...





I'll be posting a sticky around October time to give people a heads-up regarding what may be coming down the line in this area.

Hmm - I wonder who pointed that out before all this began but was chased off this site.

[eek]

What matters, first, is the identity of the fee payer and, second, the date of the deemed payment by the fee payer, not when the fee payer received any money that supports their deemed payment.

Bottom line, yes, if a deemed payment (by the fee payer) is made on or after 6 April 2020, it will likely be within the new rules, even if the services were performed way before April 6 (but we await the draft legislation).

Well that was what occurred the last time around so don't expect things to be different this time around.

Hope everyone has plan b or d prepared and ready to go...

[BR14]

Hmm - I wonder who pointed that out before all this began but was chased off this site.

[cojak]

Yes, that was unfortunate and we respected your wishes to remove your posts regarding IR35.

Fortunately TheFAQQer stepped into the breech and so information was still available to those who needed it.