This is the end of contracting...
Discussion
Right. I'm no legal eagle (or accountant), merely a humble IT contractor. I've been in contract (3 month renewals) for over 2 years and generally since I've been contracting (10 years) all my contracts have been similar. I'm outside IR35.
Is the current status quo about to fly out the window?
Is the current status quo about to fly out the window?
hornetrider said:
Right. I'm no legal eagle (or accountant), merely a humble IT contractor. I've been in contract (3 month renewals) for over 2 years and generally since I've been contracting (10 years) all my contracts have been similar. I'm outside IR35.
Is the current status quo about to fly out the window?
You state categorically that you are outside IR35. How do you know that, for sure?Is the current status quo about to fly out the window?
The "tests" as to whether a contract (note it's the CONTRACT that determines IR35, not the "contractor")have not changed since they first came in. Indeed, the tests that are applied have their roots in a series of tests that are decades old and came into being many, many years before IR35 was even thought of.
The tests in place are there to ascertain if the relationship is a proper trading/business relationship or an employment relationship.
All any "changes" will do will be to perhaps tighten up the criteria used to determine whether the relationship is a business relationship or an employment relationship. Overall, the same factors will always have to be looked at.
hornetrider said:
My contract is checked for IR35 compliance by an IR35 specialist. So I'm outside of IR35 for the purposes of this discussion.
This "checked for IR35 compliance" is a bit of a red-herring I'm afraid. No IR35 "specialist" can look at a contract and tell if you are in or out, only your working practices can determine that. In fact if you understand the testing requirements for IR35, you'd realise it would probably catch about 80% of people contracting if they were all honest. The problem is the test isn't strictly enforced and it's self regulated, i.e. people decide to opt-out (with good reason) when in reality they should be opted-in. The new rules will probably try to tighten up the requirements for testing so that less people are able to opt-out so easily.
Guvernator said:
This "checked for IR35 compliance" is a bit of a red-herring I'm afraid. No IR35 "specialist" can look at a contract and tell if you are in or out, only your working practices can determine that. In fact if you understand the testing requirements for IR35, you'd realise it would probably catch about 80% of people contracting if they were all honest.
The problem is the test isn't strictly enforced and it's self regulated, i.e. people decide to opt-out (with good reason) when in reality they should be opted-in. The new rules will probably try to tighten up the requirements for testing so that less people are able to opt-out so easily.
This. I'm expecting a tightening of the testing requirements to attempt to determine that more contractors fall into IR35. It will be interesting to see both what form that takes and how enforcable (and actually enforced) it is. The problem is the test isn't strictly enforced and it's self regulated, i.e. people decide to opt-out (with good reason) when in reality they should be opted-in. The new rules will probably try to tighten up the requirements for testing so that less people are able to opt-out so easily.
As ever with personal and business finances, the underlying tax regime can change and new decisions need to be made about the individual and company prefered structure and behaviour.
hornetrider said:
My contract is checked for IR35 compliance by an IR35 specialist. So I'm outside of IR35 for the purposes of this discussion. So... could we take my statement of "I'm outside of IR35" at face value and answer the question? 
Checking the terms and conditions of the contract is only a small part of the overall checking process. HMRC has been able to show in at least one case where the contract seemed to show that IR35 didn't apply but that the ACTUAL practices being pursued by the two parties involved meant that IR35 DID apply.As a person who will probably be directly impacted by any changes, I am not taking any sides, just stating the facts. My own personal viewpoint is that the whole IR35, testing the working relationship spiel is all crap. The real crux of the problem is that businesses need the ability to be able to bring in temporary skilled workers quickly and efficiently, currently their isn't any easy solution to do this so the current best fit is the Ltd company scenario but even that is flawed.
Instead of trying to force people to use PAYE and in the process probably kill that market which WILL effect big businesses ability to turn out big projects\changes rapidly, they should make an effort to come up with a solution that makes contracting a viable choice for all parties concerned.
Instead of trying to force people to use PAYE and in the process probably kill that market which WILL effect big businesses ability to turn out big projects\changes rapidly, they should make an effort to come up with a solution that makes contracting a viable choice for all parties concerned.
Does anyone know of any cases where the working practises included the contractor setting their own work hours, locations, methods of working, not being paid PAYE, not receiving any other benefits from the client except remuneration and still being caught by IR35?
From what I've read of it, as long as the client tells you what they need, but then let you get on with it in the manner you see fit, you should be fine.
From what I've read of it, as long as the client tells you what they need, but then let you get on with it in the manner you see fit, you should be fine.
HR, have a look at this IR35 'calculator' from Crunch: https://www.crunch.co.uk/calculators/ir35-calculat...
Guvernator said:
As a person who will probably be directly impacted by any changes, I am not taking any sides, just stating the facts. My own personal viewpoint is that the whole IR35, testing the working relationship spiel is all crap. The real crux of the problem is that businesses need the ability to be able to bring in temporary skilled workers quickly and efficiently, currently their isn't any easy solution to do this so the current best fit is the Ltd company scenario but even that is flawed.
Instead of trying to force people to use PAYE and in the process probably kill that market which WILL effect big businesses ability to turn out big projects\changes rapidly, they should make an effort to come up with a solution that makes contracting a viable choice for all parties concerned.
Exactly and I'm also someone who is likely to be directly impacted by the changes. I don't see the market dying as such, but I do see it becoming more expensive for the big businesses/public sector organisations if contractors are forced into a PAYE scenario - either rates go up or the client pays NI/Pension/Sick/Holiday directly.Instead of trying to force people to use PAYE and in the process probably kill that market which WILL effect big businesses ability to turn out big projects\changes rapidly, they should make an effort to come up with a solution that makes contracting a viable choice for all parties concerned.
jammy_basturd said:
HR, have a look at this IR35 'calculator' from Crunch: https://www.crunch.co.uk/calculators/ir35-calculat...
Yes have done that, as mentioned, I'm outside.hornetrider said:
Guvernator said:
People have tried to answer you HN, it's a shame you don't seem to like the answer.
All I can see is people not answering the question at face value, whilst insisting I am probably inside IR35. Do excuse me if I'm wrong.If you behave like an employee and are treated like an employee, you are caught by IR35.
The written contract is of limited help in determining which camp you fall into.
Is that a simple enough explanation?
hornetrider said:
All I can see is people not answering the question at face value, whilst insisting I am probably inside IR35. Do excuse me if I'm wrong.
That's because at "face value" most people contracting should probably already be caught by IR35, that was the whole point of it in the first place and what the answers above were trying to point out, however they left it up to the individual to self declare and in the name of financial self interest, most people don't. HMRC will be trying to make it much harder not to declare it in future.Eric Mc said:
If you behave like a business and are treated like a business - you are outside IR35.
If you behave like an employee and are treated like an employee, you are caught by IR35.
The written contract is of limited help in determining which camp you fall into.
Is that a simple enough explanation?
Not really, I've already stated that in the curent rules I'm outside IR35. Apologies if I'm repeating the obvious.If you behave like an employee and are treated like an employee, you are caught by IR35.
The written contract is of limited help in determining which camp you fall into.
Is that a simple enough explanation?
This thread is about potential changes to how the govt will be treating PSC's. My question was related to how those mooted changes will impact your typical IT contractor who falls outside of current IR35 legislation. Apologies if that wasn't clear.
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