Discussion
Eric Mc said:
I don't think the status checks/tests will be any different - although the interpretations may be stricter.
From my limited understanding it will be the PSB that will determine the contractor's / worker's status and force agencies to deduct PAYE, NI etc..........not sure how many in house IR35 experts PSB's employ so assume they would err on the safe side but I am not sure how a ‘genuine’ contractor would prove that they fall outside IR35 if incorrectly assessed.bigandclever said:
AIUI the rules haven't changed. What's changed is that, in the Public Sector, the onus has moved from the contractor declaring his IR35 compliance to HMRC, to the end-client (be that a recruitment agency or HM Gov) having to be satisfied of the contractor's IR35 status. Which possibly means public sector clients will probably just say "sod it, too much hard work, they're all IR35 caught", and recruitment agencies will say "sod it, too much hard work, they have to operate under a brolly". There is only one rule that will automatically catch a contractor and that's the 'operating as an officer' one.
Anyway, you're asking about the ESS Employment Status Service which isn't available yet. Latest release date is end of March, which is handy for the April changes.
Thanks Anyway, you're asking about the ESS Employment Status Service which isn't available yet. Latest release date is end of March, which is handy for the April changes.
Alex said:
Will read in depth later thanks.Could mean rates going up or sticking to private sector only if someone in a PSB takes the easy option.
jammy-git said:
Alex said:
I think all contractors should refuse PSB contracts until HMRC drop the idea. I wonder how long they would last...
The contractors or HMRC? 
daemon said:
Mines coming up as a pass. Not that it matters as the agency i am working for have blanket deemed us all IN IR35, so unless that stance changes i will be jumping ship come 17th March (i'm paid weekly)
From the limited research I have done I think there are various options, notwithstanding certain factors not being covered by the test that could be argued, if included, would support a claim of being outside IR35 (which we genuinely think we are IMO).Also have the added option of not doing Public sector work at all but existing contracts require 28days notice so need to decide where we go before 5th March.
Definitely won't be shutting Ltd co down to work via an umbrella company as has been suggested (not on here).
Countdown said:
The main thing that's changed....
Previously if the Contractor fell into certain category (earning over £220/day, employed for longer than 6 months) then he would have to provide assurances to the PSB that he was going to pay the same tax/NI on his earnings from the PSB as if he had been on their payroll.
The obvious flaw with this was that nobody actually checked whether the Contractor paid or not.
From 1st April - if the Contractor meets the criteria - the PSB deduct tax and NI from his invoice and pay him net,
I note the "employed for longer than 6 months"Previously if the Contractor fell into certain category (earning over £220/day, employed for longer than 6 months) then he would have to provide assurances to the PSB that he was going to pay the same tax/NI on his earnings from the PSB as if he had been on their payroll.
The obvious flaw with this was that nobody actually checked whether the Contractor paid or not.
From 1st April - if the Contractor meets the criteria - the PSB deduct tax and NI from his invoice and pay him net,
We only ever undertake 3 months interim contracts whilst full time employees are recruited or specific problems rectified.......without fail they are unable to recruit and extend, sometimes up to a year, or they extend to cover issues not included in the original contract......
For example 3 month interim contract started in Nov, no suitable applicants....fail to appoint.....extend until May....ironically today already asking if prepared to extend for a further 3 months.... unfortunately if not resolved then 28 days notice will be served to end contract prior to 6th April and take up non public sector options.
Posts overlapped..........yes Invoice post April already discussed and they have agreed to pay weekly (without a discount) so will ensure that last invoice / date of work goes in in due time.
Many thanks for your replies.........much appreciated.
Also messes up VAT Flat Rate scheme as well....just all a pain in the backside TBH.
Many thanks for your replies.........much appreciated.
Also messes up VAT Flat Rate scheme as well....just all a pain in the backside TBH.
Edited by alfie2244 on Monday 6th February 22:43
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
https://www.ir35testing.co.uk/
Eric Mc said:
alfie2244 said:
Little update....this test asked more detailed questions and gave a solid pass.
https://www.ir35testing.co.uk/
Don't think that just because you "pass a test" on the HMRC website means you REALLY are clear of IR35.https://www.ir35testing.co.uk/
HMRC will make their own judgement if necessary.
Eric Mc said:
I give way too much free advice on this forum.
What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
Sorry but, on here at least, you come across as a bit bristly but that may be me or the media used.What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
In circa 40 yrs of running companies or being S/E I have never fallen foul of HMRC, Customs & Excise, or my accountants so must have been doing something right.
I am 100% confident we are outside IR35 but as I understand it the decision will now be made by the PSB or Agency if used. In that scenario I guess they will rule everybody in to err on the easy / safe side.......I have not yet seen any info on the appeals process or how to reclaim deductions (tax / NI) if incorrectly deducted and very little time in which to resolve any queries as it goes live Apr 6th.
We don't wish the way we operate to be dictated by an agency or PSB (already tried to get us to dissolve Ltd Co and join their "recommended" umbrella company) so on that basis we shall stop doing PSB work and take up some of the private we are, increasingly, being asked to undertake although I do realise it could well be extended to this sector also.............a bridge we will cross when we come to it.
Eric Mc said:
The danger I'm pointing out is that relying on fairly simple tests does not ensure that a contractor can sleep certain in the knowledge that IR35 doesn't apply.
Not sure I have indicated relying solely on the simple test but thanks for the warning.Clearly I am doing my own research, have an appointment with our friendly accountant next week, will do the "test" and, if we stay outside and do PSB work (doubtful at the moment), will take out insurance which I assume is tax deductible.
Eric Mc said:
Perhaps not.
Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
Why else would we have business specific insurances? would probably be my flippant reply. (our professional accountant wouldn't let us claim it either if it wasn't)Is the insurance solely for the purpose of the trade?
I'm kind of joking - but just showing the lines of attack sometimes adopted by HMRC when they are trying it on.
A lot of this stuff is not cast in stone - despite the voluminous legislation. As someone mentioned earlier, it often takes court cases to establish what the law REALLY means.
We already carry Professional indemnity, Public Liability etc so will add this kind of thing:
https://www.qdoscontractor.com/insurance/tax-ir35-...
Edited by alfie2244 on Tuesday 7th February 18:20
Eric Mc said:
Even if the cost relates to the business, it doesn't relate directly to the TRADING activity of the business. In fact, it's an insurance against adverse tax decisions. HMRC could (and probably would if they were being bloody minded) that such insurance has no bearing on the trade and is purely a tax matter - which makes it ineligible for tax relief.
Of course, I would put it through as a business costs too - but I am aware as to how the HMRC mind can work if they are being nasty.
In my experience it always pays to deliberately leave things for inspector type people to find so they feel good about themselves and can justify their existence. Otherwise they will just keep looking deeper and deeper until they find / fabricate something anyway. Of course, I would put it through as a business costs too - but I am aware as to how the HMRC mind can work if they are being nasty.
arfur said:
Eric Mc said:
I give way too much free advice on this forum.
What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
All well and good, but from April it's of little point using any of those tools as it's no longer your decision, or indeed the agency's. If the public sector department says it's in ... its in and the engaging agency markets the role thus.What I am pointing out to you is that to use a rather simplistic piece of software on HMRC's own website is naive in the extreme - and could work out very expensive for you.
Read up on this case to see what happens when a person thought he had done all the "HMRC advised" things to check his IR35 status - and then failed when HMRC did their own checks on the situation.
http://www.contractoruk.com/ir35/why_dragonfly_got...
daemon said:
Yup. I have my resign date calculated out to work my weeks notice, get paid the following week and be off their books before 5th April. (Actually by 31st March)
I've a holiday booked to bugger off somewhere hot on the 1st April for a well earned break.
We turned a Private sector contract down last week due to being fully engaged in PSB contracts, one of which has just asked to extend for a 2nd time. (Currently due to expire mid May)I've a holiday booked to bugger off somewhere hot on the 1st April for a well earned break.
We have declined to extend due to the PSB not yet being able decide whether the contract falls within IR35 in their opinion, the middleman agency trying to maneuver us into an umbrella company and our concerns of not wishing to fall foul of IR35 rules..........we will probably soon be issuing a 28 day termination letter to finish and be paid by April 5th instead.
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