Contractors: IR35 & general discussion

[CaptainSlow]

Mr Pointy said:

CaptainSlow said:

Thanks, would there be a way to make the ltd company the fee payer so the ssip could still be used?

After April the term fee payer has the specific definition of being the last entity in the chain before the PSC, ie the one that actually pays the PSC. This may well not be the end client of course.

Ok thanks

[Countdown]

theboss said:

If it comes in and I stay where I am, then I’d try and argue for some exceptional status for 6 months as I’m instrumental to a project delivery with no prospect of extension after completion late next year, I’m totally detached from BAU and work remotely and autonomously. If that fails I’d have to weigh up staying “inside” vs securing a contract which is outside. The WFH is a big attraction so it would have to be something fairly compelling.

In terms of retrospective determination - not worried in the slightest. I’ve just lost my shirt in a divorce so HMRC would be doing me a favour bankrupting me as I have absolutely nothing to offer them.

If you’re essential/irreplaceable they’ll increase your day rate to compensate for any IR35-related issues.

[Shaoxter]

Well the game is up at HSBC. All new contracts going forward will be on PAYE and contractors on existing contracts will need to convert by Jan 2020. Must be a huge operation as there's a massive army of contractors here.

[Guvernator]

Companies including HSBC are obviously not understanding the rules and the vindictiveness of HMRC against contractors. Asking your contractors to go blanket inside when you were previously declared outside is just asking for trouble. Are they really expecting hundreds of contractors to do that or do they just want them to leave?

If they are smart, hundreds of contractors will be out of there on Jan 2020 leaving HSBC and any other company who goes this route with a big resourcing hole because any who stay on will be painting a big target on their backs.

[Gazzab]

I suspect that 99% of Hsbc’s contractors will just roll over and convert to umbrella. I suspect they will fear being out of contract in what is a very difficult marketplace and so will take the ‘risk’.
I can’t see how hmrc will be able to resist going after them....hmrc will have the data, will know what a typical hmrc contract looks like and so maybe they will do a GSK style threatening letter hoping that they can cash in on the high number of, for example, developers that sit in ‘platform teams’ for year on end. This will then likely go to court and we’ll see a CEST, MOO etc fight.

[worsy]

HSBC, Tesco Bank, Barclays, RBS have all made a policy decision to not engage via PSC. Very clever as it sidesteps the issue of being reasonable when determining. It does suggest there will not be exceptions but we'll have to see if that turns out to be the case.

I'd be interested to know if current contractors will be suffering a rate cut in lieu of Employer NI or whether the banks are taking that on the chin (as per the rules)

[Guvernator]

anonymous said:

[redacted]

I'm not saying they'll all move to outside roles, they can move to an inside role if they so wish but moving from outside to inside at the same company is a big no no in my book. If my current client decides to blanket inside me, I'll leave and so should anyone else with any common sense.

This will lead in the short term at least to resource shortages as everyone shuffles around. I'm not sure what percentage they are expecting to just stay on and whether HSBC and the like think they'll just be able to carry on with their projects uninterrupted but I expect they may be in for bit of a rude awakening if people are clued up.

That is a big IF of course as a lot of contractors I meet are blindly oblivious to this stuff.

[Guvernator]

worsy said:

HSBC, Tesco Bank, Barclays, RBS have all made a policy decision to not engage via PSC. Very clever as it sidesteps the issue of being reasonable when determining. It does suggest there will not be exceptions but we'll have to see if that turns out to be the case.

I'd be interested to know if current contractors will be suffering a rate cut in lieu of Employer NI or whether the banks are taking that on the chin (as per the rules)

One of the big advantages for large companies using contractors is that they avoid paying 13.8% Employers NI. Technically in the new inside IR35 world they should be paying this now but I very much doubt they will want to do that after so many years of not so this cost will more than likely be passed onto the contractor. In fact we are already seeing this happen in the public sector.

This effectively means under IR35, a contractor will be paying 13.8% more tax than the equivalent permie while getting none of the employment benefits and this is the governments idea of making tax "fairer".

[Shaoxter]

Guvernator said:

That is a big IF of course as a lot of contractors I meet are blindly oblivious to this stuff.

As are pretty much all of the hiring managers.
Much like Brexit, I just don't know how this will all get done in such a short time frame.

[krisdelta]

Shaoxter said:

Guvernator said:

That is a big IF of course as a lot of contractors I meet are blindly oblivious to this stuff.

As are pretty much all of the hiring managers.
Much like Brexit, I just don't know how this will all get done in such a short time frame.

It is interesting, many of the contractors I know don't seem to have their head around this at all and seem to think carrying on outside to inside is not a problem, easy pickings (reasonably so) for HMRC in my view.

Lets hope the budget this week delays / cancels this.

[worsy]

krisdelta said:

Shaoxter said:

Guvernator said:

That is a big IF of course as a lot of contractors I meet are blindly oblivious to this stuff.

As are pretty much all of the hiring managers.
Much like Brexit, I just don't know how this will all get done in such a short time frame.

It is interesting, many of the contractors I know don't seem to have their head around this at all and seem to think carrying on outside to inside is not a problem, easy pickings (reasonably so) for HMRC in my view.

Lets hope the budget this week delays / cancels this.

What budget?

[worsy]

Guvernator said:

worsy said:

HSBC, Tesco Bank, Barclays, RBS have all made a policy decision to not engage via PSC. Very clever as it sidesteps the issue of being reasonable when determining. It does suggest there will not be exceptions but we'll have to see if that turns out to be the case.

I'd be interested to know if current contractors will be suffering a rate cut in lieu of Employer NI or whether the banks are taking that on the chin (as per the rules)

One of the big advantages for large companies using contractors is that they avoid paying 13.8% Employers NI. Technically in the new inside IR35 world they should be paying this now but I very much doubt they will want to do that after so many years of not so this cost will more than likely be passed onto the contractor. In fact we are already seeing this happen in the public sector.

This effectively means under IR35, a contractor will be paying 13.8% more tax than the equivalent permie while getting none of the employment benefits and this is the governments idea of making tax "fairer".

13.8% plus

Employee NI 0% (up to 166 a week) then 12% up to £962 then 2% thereafter.

Plus

Apprenticeship Levy @ 0.5%

Plus holiday pay deduction @ 12%

Eyes bleeding yet

[krisdelta]

worsy said:

krisdelta said:

Shaoxter said:

Guvernator said:

That is a big IF of course as a lot of contractors I meet are blindly oblivious to this stuff.

As are pretty much all of the hiring managers.
Much like Brexit, I just don't know how this will all get done in such a short time frame.

It is interesting, many of the contractors I know don't seem to have their head around this at all and seem to think carrying on outside to inside is not a problem, easy pickings (reasonably so) for HMRC in my view.

Lets hope the budget this week delays / cancels this.

What budget?

https://www.bbc.co.uk/news/business-50039207

This one, unless I'm misreading - which is entirely possible on a Monday!

[essayer]

krisdelta said:

https://www.bbc.co.uk/news/business-50039207

This one, unless I'm misreading - which is entirely possible on a Monday!

Parliament will be dissolved on Wednesday. Get ready to start reading the manifesto(s) to see if any promise IR35 reforms! (again)

[Guvernator]

Yep the Budgets been cancelled. I think many people including contractors and hirers have had their heads in the sand thinking there would be a last minute reprieve.

The contracting relationship was pretty simple till now and beneficial for both client and contractor, HMRC have just come in and added a massive layer of complication that no one wants or is ready for. As we have seen, a lot of companies just won't bother to do it properly as it's too much hard work and they don't have the time or the resource to do it.

My client engages most of their contractors through a 3rd party intermediary who aren't just a small recruitment agency but a proper big resourcing company who appear to be on the ball. Last I read they have offered to take on all the leg work around IR35 on behalf of the client, I can see this becoming more prevalent.

Larger consultancies and recruitment companies do all the donkey work and offer contractors as part of an agreed service. They structure working practices and contracts so there contractors fall outside the rules and they take on the risk. They also offer Umbrella services for those who are definitely inside

Almost everyone else goes Umbrella\PAYE either direct with the client or through a smaller intermediary. Over the next year or so, who pays Employers NI, employment rights and rates will all work themselves out over time, some through court cases.

There will be a few exclusions where the client may want to take on the risk of putting the contractor outside but these will be few and far between.

[krisdelta]

essayer said:

krisdelta said:

https://www.bbc.co.uk/news/business-50039207

This one, unless I'm misreading - which is entirely possible on a Monday!

Parliament will be dissolved on Wednesday. Get ready to start reading the manifesto(s) to see if any promise IR35 reforms! (again)

Bum, another can being kicked down the road then

[Guvernator]

worsy said:

13.8% plus

Employee NI 0% (up to 166 a week) then 12% up to £962 then 2% thereafter.

Plus

Apprenticeship Levy @ 0.5%

Plus holiday pay deduction @ 12%

Eyes bleeding yet

Normal PAYE employees already pay employee NI and holiday pay is part of their salary. HMRC's whole excuse for this IR35 charade was meant to be to make tax "fairer" so I was highlighting the bits an inside IR35 contractor pays over and above a normal PAYE employee which is effectively the Employers NI and the AL, 14.3% more tax than a permie. Sounds really fair to me.

[worsy]

krisdelta said:

essayer said:

krisdelta said:

https://www.bbc.co.uk/news/business-50039207

This one, unless I'm misreading - which is entirely possible on a Monday!

Parliament will be dissolved on Wednesday. Get ready to start reading the manifesto(s) to see if any promise IR35 reforms! (again)

Bum, another can being kicked down the road then

£5 says it will be under the guise of:

Ensuring gig works treated same as employees

or

For the many and not the few.

And will be part of first budget whether red or blue.

[worsy]

Guvernator said:

worsy said:

13.8% plus

Employee NI 0% (up to 166 a week) then 12% up to £962 then 2% thereafter.

Plus

Apprenticeship Levy @ 0.5%

Plus holiday pay deduction @ 12%

Eyes bleeding yet

Normal PAYE employees already pay employee NI and holiday pay is part of their salary. HMRC's whole excuse for this IR35 charade was meant to be to make tax "fairer" so I was highlighting the bits an inside IR35 contractor pays over and above a normal PAYE employee which is effectively the Employers NI and the AL, 14.3% more tax than a permie. Sounds really fair to me.

Gotcha.

[Guvernator]

Yep In the case of tax it's very much the tail wagging the dog, what HMRC want, they get no matter who is in power.