Contractors: IR35 & general discussion

Contractors: IR35 & general discussion

Author
Discussion

98elise

26,761 posts

162 months

Saturday 9th November 2019
quotequote all
PSB1 said:
98elise said:
anonymous said:
[redacted]
Any sensible contractor should have enough of a cash buffer in the business to continue paying themselves for at least 3 months.
3 months absolute minimum required to ward off the sleepless nights - more like 6 minimum given the need to find another contract and then get back into step with invoicing and payment schedules.

And crucially, this is in addition to the money ring-fenced for corporation and other taxes.
Agreed. 3 months was a bare minimum. Personally I keep a years salary as a buffer, which ties in nicely with me finishing with contracting in January, aged 54. I can coast to 55 and pick up my pension.

krisdelta

4,566 posts

202 months

Saturday 9th November 2019
quotequote all
98elise said:
PSB1 said:
98elise said:
anonymous said:
[redacted]
Any sensible contractor should have enough of a cash buffer in the business to continue paying themselves for at least 3 months.
3 months absolute minimum required to ward off the sleepless nights - more like 6 minimum given the need to find another contract and then get back into step with invoicing and payment schedules.

And crucially, this is in addition to the money ring-fenced for corporation and other taxes.
Agreed. 3 months was a bare minimum. Personally I keep a years salary as a buffer, which ties in nicely with me finishing with contracting in January, aged 54. I can coast to 55 and pick up my pension.
Very nicely done! I have ringfenced just over a years money now, don’t like squeaky bum living. I know a few people running small businesses living hand to mouth, terrifying given these up coming changes.

Gazzab

21,115 posts

283 months

Saturday 9th November 2019
quotequote all
I finished up in July and haven’t got myself a new contract yet. My role is a relatively small marketplace but all of the FS umbrellas, brexit, tightening of purse strings etc mean I might be out for a few more months. Whilst I can afford to be between contracts for a relatively long period I suspect that such a luxury might be harder to maintain in the future ie with less work, higher taxes, lower rates etc then it will be harder to replenish the war chest.
The banking contractors eg developers, BAs etc will have a different challenge to me but I don’t envy their pending decision making re ‘should I stay or should I go’. Leave might mean being out for a while and trying to look for work in a dead market, staying might mean attracting hmrc retrospective taxes (hmrc WILL target such contractors).

Bluedot

3,601 posts

108 months

Saturday 9th November 2019
quotequote all
Gazzab said:
I finished up in July and haven’t got myself a new contract yet. My role is a relatively small marketplace but all of the FS umbrellas, brexit, tightening of purse strings etc mean I might be out for a few more months. Whilst I can afford to be between contracts for a relatively long period I suspect that such a luxury might be harder to maintain in the future ie with less work, higher taxes, lower rates etc then it will be harder to replenish the war chest.
The banking contractors eg developers, BAs etc will have a different challenge to me but I don’t envy their pending decision making re ‘should I stay or should I go’. Leave might mean being out for a while and trying to look for work in a dead market, staying might mean attracting hmrc retrospective taxes (hmrc WILL target such contractors).
Trying to be a bit more positive about things but I think new roles will open up as contractors leave early next year refusing to go through umbrellas or go perm.
I'm also not sure that HMRC will target contractors going from PSC to umbrella/perm. As I've said before, if no individual assessment has been carried out and you are currently happy you are working Outside IR35 then I don't really see what has changed come April 20.

worsy

5,834 posts

176 months

Saturday 9th November 2019
quotequote all
Been offered a decent salary to go perm (not current gig) which I've decided to take. Based from home with expensed travel, and as I live in the sticks this would be a huge financial hit in an inside IR35 role.

vindaloo79

965 posts

81 months

Thursday 14th November 2019
quotequote all
worsy said:
Been offered a decent salary to go perm (not current gig) which I've decided to take. Based from home with expensed travel, and as I live in the sticks this would be a huge financial hit in an inside IR35 role.
I have been giving serious thought to taking the offer of perm this week. Expenses paid with 90% at home. I am struggling to provide my salary expectations and keep asking them to give me the salary band first. Hopefully we can find a figure that isn't too much of a pittance.

The one factor I am worrying about now is whether the current Agency will pursue for a finders fee, and how much it will be, and who is liable. I'm pretty sure the boss (who is based overseas) hasn't thought about this angle.

Will HR be factoring this in to any offer? It is pretty apparent from the contract they use they will pursue fees for six months following termination, and they have 20+ contractors all likely to be using same template for years.

A further question, is it likely I can negotiate the holidays up from the meagre number offered? Range is 22 in year one, 30 in year six I think.

GT03ROB

13,325 posts

222 months

Friday 15th November 2019
quotequote all
vindaloo79 said:
A further question, is it likely I can negotiate the holidays up from the meagre number offered? Range is 22 in year one, 30 in year six I think.
This will depend on the size of company. The bigger the harder. Assuming that excludes public holidays it's quite good. If it includes public holidays then I see the problem. If you are coming in at a high enough level you may well be able to negotiate within their range. But outside their range it will probably be a no.


worsy

5,834 posts

176 months

Friday 15th November 2019
quotequote all
vindaloo79 said:
worsy said:
Been offered a decent salary to go perm (not current gig) which I've decided to take. Based from home with expensed travel, and as I live in the sticks this would be a huge financial hit in an inside IR35 role.
I have been giving serious thought to taking the offer of perm this week. Expenses paid with 90% at home. I am struggling to provide my salary expectations and keep asking them to give me the salary band first. Hopefully we can find a figure that isn't too much of a pittance.

The one factor I am worrying about now is whether the current Agency will pursue for a finders fee, and how much it will be, and who is liable. I'm pretty sure the boss (who is based overseas) hasn't thought about this angle.

Will HR be factoring this in to any offer? It is pretty apparent from the contract they use they will pursue fees for six months following termination, and they have 20+ contractors all likely to be using same template for years.

A further question, is it likely I can negotiate the holidays up from the meagre number offered? Range is 22 in year one, 30 in year six I think.
My offer was not from anywhere I worked previously. Was approached via Linkedin so no agency payment issues thankfully.

Salary wise, I simply took an honest look at what I really needed to live plus a reasonable saving buffer. Although contracting has been good to me, I do save quite a bit in the company for a rainy day that has never materialised and that will now go to pay down the mortgage to make the savings headroom slightly larger. It's funny how 10+years of contracting changes the mentality to ensure you can pay the bills for x months+.

The other obvious thing to do is to look on jobserve for salary ranges and see whether you can cozy up to the permies for advice.



Shaoxter

4,092 posts

125 months

Friday 15th November 2019
quotequote all
Contractors at my bank have been given a bit more clarity - everyone will be on PAYE as an employee of an intermediary recruitment company who will then bill the bank. The individual will receive the net amount after income tax and employees NI. There will be some holiday pay but not at the full day rate (not received full details on this yet) and the employer (the recruitment company) will match pension contributions although it will be pretty much the minimum amount.

What's not clear is if the bank will attempt to pass on the costs of the employers NI, pension and benefits onto the individual in the form of a reduced day rate. If my headline day rate stays the same, I'd happily continue as the reduction in take home pay is pretty minimal. Also hopefully this would negate any IR35 issues as you're effectively just moving into a perm role rather than from an outside to inside contract at the same place.

Gazzab

21,115 posts

283 months

Friday 15th November 2019
quotequote all
Shaoxter said:
Contractors at my bank have been given a bit more clarity - everyone will be on PAYE as an employee of an intermediary recruitment company who will then bill the bank. The individual will receive the net amount after income tax and employees NI. There will be some holiday pay but not at the full day rate (not received full details on this yet) and the employer (the recruitment company) will match pension contributions although it will be pretty much the minimum amount.

What's not clear is if the bank will attempt to pass on the costs of the employers NI, pension and benefits onto the individual in the form of a reduced day rate. If my headline day rate stays the same, I'd happily continue as the reduction in take home pay is pretty minimal. Also hopefully this would negate any IR35 issues as you're effectively just moving into a perm role rather than from an outside to inside contract at the same place.
I am not sure that hmrc will see it the same way you do. Despite their carefully worded statement re retrospectives. Why would they not Identify all the contractors who have switched to PAYE (ie same client and role as before) and ask them to provide evidence that they weren’t disguised employees before. Seems like a simple bit of data analysis for hmrc and then some easy fishing.

Bluedot

3,601 posts

108 months

Friday 15th November 2019
quotequote all
Gazzab said:
I am not sure that hmrc will see it the same way you do. Despite their carefully worded statement re retrospectives. Why would they not Identify all the contractors who have switched to PAYE (ie same client and role as before) and ask them to provide evidence that they weren’t disguised employees before. Seems like a simple bit of data analysis for hmrc and then some easy fishing.
Because no status assessments have been made, everyone has just been blanketed.

Gazzab

21,115 posts

283 months

Friday 15th November 2019
quotequote all
Bluedot said:
Gazzab said:
I am not sure that hmrc will see it the same way you do. Despite their carefully worded statement re retrospectives. Why would they not Identify all the contractors who have switched to PAYE (ie same client and role as before) and ask them to provide evidence that they weren’t disguised employees before. Seems like a simple bit of data analysis for hmrc and then some easy fishing.
Because no status assessments have been made, everyone has just been blanketed.
I stand by my post above regardless of status assessment. There are plenty of examples of retrospectives and more and more examples of ‘data’ based identification of people to threaten and investigate eg loan charge, GSK, BBC etc

Autopilot

1,301 posts

185 months

Friday 15th November 2019
quotequote all
...and we all know blanketing is a great idea.

https://www.contractoruk.com/news/0014323untanglin...


krisdelta

4,566 posts

202 months

Friday 15th November 2019
quotequote all
Gazzab said:
Bluedot said:
Gazzab said:
I am not sure that hmrc will see it the same way you do. Despite their carefully worded statement re retrospectives. Why would they not Identify all the contractors who have switched to PAYE (ie same client and role as before) and ask them to provide evidence that they weren’t disguised employees before. Seems like a simple bit of data analysis for hmrc and then some easy fishing.
Because no status assessments have been made, everyone has just been blanketed.
I stand by my post above regardless of status assessment. There are plenty of examples of retrospectives and more and more examples of ‘data’ based identification of people to threaten and investigate eg loan charge, GSK, BBC etc
It's a risk I wouldn't take with the same ultimate client, something would have to be demonstrably different to allow you to defend moving from outside to another status without sleepless nights. HMRC have form for fishing - if they send out 100,000 letters and 1000 just write a cheque to make it go away, it's worth it...

Gazzab

21,115 posts

283 months

Friday 15th November 2019
quotequote all
Autopilot said:
...and we all know blanketing is a great idea.

https://www.contractoruk.com/news/0014323untanglin...
Yes it’s a problem. And it’s also a sham and has only happened to put the private sector on alert.
Banks moving people into PAYE schemes is not a blanket and so IR35 is irrelevant (from April onwards).

wombleh

1,802 posts

123 months

Friday 15th November 2019
quotequote all
It being a blanket decision would help in court.

The problem is the many years of painful and frustrating investigations before you get to court. Even if you ultimately win it's a whole load of time, effort and stress getting there.

Gazzab

21,115 posts

283 months

Friday 15th November 2019
quotequote all
wombleh said:
It being a blanket decision would help in court.

The problem is the many years of painful and frustrating investigations before you get to court. Even if you ultimately win it's a whole load of time, effort and stress getting there.
But it’s not a blanket assessment. It’s not an assessment at all. It’s contract cancelled and an offer of a PAYE contract. If you take it then you are flagging to hmrc that they might want to look at your previous contract(s) with that client. You will likely be doing the same role, in the same team, on the same project etc etc. What’s changed? Nothing except a move to PAYE plus you now get an appraisal.

PostHeads123

1,043 posts

136 months

Friday 15th November 2019
quotequote all
Gazzab said:
Bluedot said:
Gazzab said:
I am not sure that hmrc will see it the same way you do. Despite their carefully worded statement re retrospectives. Why would they not Identify all the contractors who have switched to PAYE (ie same client and role as before) and ask them to provide evidence that they weren’t disguised employees before. Seems like a simple bit of data analysis for hmrc and then some easy fishing.
Because no status assessments have been made, everyone has just been blanketed.
I stand by my post above regardless of status assessment. There are plenty of examples of retrospectives and more and more examples of ‘data’ based identification of people to threaten and investigate eg loan charge, GSK, BBC etc
I agree, don't trust a word HMRC say they have no legal duty of care to tax payers, I've seen there tricks close hand. I'm pretty sure HMRC already know anyway who was contracting via a PSC and who for, I thought agencies a few years back agencies became legally obliged to provide this info, on your tax returns as well you had to specify for a few years if you are PSC. I work in the data side of things machines learning, big data and AI and it would be pretty simple for HMRC to link it all up.

Gazzab

21,115 posts

283 months

Friday 15th November 2019
quotequote all
PostHeads123 said:
Gazzab said:
Bluedot said:
Gazzab said:
I am not sure that hmrc will see it the same way you do. Despite their carefully worded statement re retrospectives. Why would they not Identify all the contractors who have switched to PAYE (ie same client and role as before) and ask them to provide evidence that they weren’t disguised employees before. Seems like a simple bit of data analysis for hmrc and then some easy fishing.
Because no status assessments have been made, everyone has just been blanketed.
I stand by my post above regardless of status assessment. There are plenty of examples of retrospectives and more and more examples of ‘data’ based identification of people to threaten and investigate eg loan charge, GSK, BBC etc
I agree, don't trust a word HMRC say they have no legal duty of care to tax payers, I've seen there tricks close hand. I'm pretty sure HMRC already know anyway who was contracting via a PSC and who for, I thought agencies a few years back agencies became legally obliged to provide this info, on your tax returns as well you had to specify for a few years if you are PSC. I work in the data side of things machines learning, big data and AI and it would be pretty simple for HMRC to link it all up.
Yep i have headed up ‘big data’ teams. This sort of analysis takes seconds if you have the data (they have), if it’s clean (it will be clean enough) and if you can easily define your queries. It’s hardly going to be a huge bit of effort as they will have the machine programmed already to do this.

wombleh

1,802 posts

123 months

Saturday 16th November 2019
quotequote all
Gazzab said:
But it’s not a blanket assessment. It’s not an assessment at all. It’s contract cancelled and an offer of a PAYE contract. If you take it then you are flagging to hmrc that they might want to look at your previous contract(s) with that client. You will likely be doing the same role, in the same team, on the same project etc etc. What’s changed? Nothing except a move to PAYE plus you now get an appraisal.
Agreed, hence carefully worded it as "blanket decision" rather than "blanket assessment".

I've been offered 12 months with a big company who are likely to default to everyone being inside. Stupid situation to be in but I'm going to have to turn down a load of cash from a good client due to this legislation. Still I'm sure their outsourcer will do a great job of it and the customers can benefit from a cheaper and more effective service......ha!