Contractors: IR35 & general discussion
Discussion
manracer said:
I've just renegotiated a contract extension on improved day rates, but as the hiring coming didn't have much wiggle room I put it on the agency, managed to squeeze them a little as I was aware that their charge rate allowed some improvement, so while we are all talking about how hiring companies may not improve the day rate to accommodate IR35 changes, at least half of the 'losses' can potentially be negated by skimming some of the margin from the agency. Why should they get £60/70 a day for me, for the duration of my contract?
In your case I’d be doing the legwork to get yourco onto the client’s PSL with the view that your contract could well be torn up and a new one created in April, and get the agent out of the picture. And you know full well why they get that cash, you just don’t like it 
wormus said:
My gut feel is we will see more contractors inside IR35 as most large companies decide it's too difficult to justify keeping them outside and the risk of a fine/tax liability from HMRC is too great.
Again you appear to be implying that you intend to make a blanket conservative position for the benefit of your employer, which is not legal.Stephen Barclay MP previously stated this regarding NHS contractors:
“However, as per the changes to the Income Taxes (Earnings and Pensions Act) 2003 outlined in the 2017 Finance bill, decisions as to whether or not contractors fall inside or outside of the IR35 rules should be made on an individual basis. Recent HM Revenue and Customs research has indicated that 91% of public bodies are making these decisions on an individual basis and we would expect all NHS bodies to be compliant with this legislation and not applying a blanket decision on IR35 to all their contractors.”
Olivera said:
Again you appear to be implying that you intend to make a blanket conservative position for the benefit of your employer, which is not legal.
Not at all, we already assess our contractors on an individual basis but by role. So if we deem a particular role on a project to be inside, everyone doing that role is inside. It's not to the benefit of the employer, it's adhering to tax legislation which we legally have to do. The other choice is to hire everyone through an umbrella company.manracer said:
hyphen said:
manracer said:
. Why should they get £60/70 a day for me, for the duration of my contract?
Because the client chose to use them, and pay them...The client can't be bothered to recruit a contractor themselves (several large banks for example do it inhouse).
If the client is happy to pay them, then it's their choice. They hired and engaged in a contract with them!
Countdown said:
SOL111 said:
Stupid question but for those deemed inside, who pays the employer's NI?
Assuming the Employer pays the Contractor net of Tax and Ees NI then the Employer pays the Ers NI.I thought this might be the case but have heard all manner of suggestions.
For my larger client, we've had an email explaining that the responsibility will fall on the employer to deduct PAYE and NI from the contractor's income, should their contracts be deemed inside.
So I guess clients will potentially be faced with some large employer NI liabilities come 2020.
SOL111 said:
Countdown said:
SOL111 said:
Stupid question but for those deemed inside, who pays the employer's NI?
Assuming the Employer pays the Contractor net of Tax and Ees NI then the Employer pays the Ers NI.I thought this might be the case but have heard all manner of suggestions.
For my larger client, we've had an email explaining that the responsibility will fall on the employer to deduct PAYE and NI from the contractor's income, should their contracts be deemed inside.
So I guess clients will potentially be faced with some large employer NI liabilities come 2020.
98elise said:
SOL111 said:
Countdown said:
SOL111 said:
Stupid question but for those deemed inside, who pays the employer's NI?
Assuming the Employer pays the Contractor net of Tax and Ees NI then the Employer pays the Ers NI.I thought this might be the case but have heard all manner of suggestions.
For my larger client, we've had an email explaining that the responsibility will fall on the employer to deduct PAYE and NI from the contractor's income, should their contracts be deemed inside.
So I guess clients will potentially be faced with some large employer NI liabilities come 2020.
if so, that's definitely not the case. The Client/Employer will be deducting Ees Ni and Tax but paying Ers NI out of their own pocket.
Countdown said:
98elise said:
SOL111 said:
Countdown said:
SOL111 said:
Stupid question but for those deemed inside, who pays the employer's NI?
Assuming the Employer pays the Contractor net of Tax and Ees NI then the Employer pays the Ers NI.I thought this might be the case but have heard all manner of suggestions.
For my larger client, we've had an email explaining that the responsibility will fall on the employer to deduct PAYE and NI from the contractor's income, should their contracts be deemed inside.
So I guess clients will potentially be faced with some large employer NI liabilities come 2020.
if so, that's definitely not the case. The Client/Employer will be deducting Ees Ni and Tax but paying Ers NI out of their own pocket.
So everyone loses due to poor initial management.
If contractors are disguised employees then fairs fair but it's going to cost a small fortune.
The employer's NI on a £100k contractor income is about £10k so not insignificant if you have large numbers of contractors inside IR35. I can see why these might cease to exist entirely, if the cost is less than an equivalent permanent resource.
It would be cheaper for clients to offer properly outside contracts surely?
If contractors are disguised employees then fairs fair but it's going to cost a small fortune.
The employer's NI on a £100k contractor income is about £10k so not insignificant if you have large numbers of contractors inside IR35. I can see why these might cease to exist entirely, if the cost is less than an equivalent permanent resource.
It would be cheaper for clients to offer properly outside contracts surely?
98elise said:
Most contractors are employed via agent. The agent will deduct it from the day rate.
So are you suggesting that the agent will deduct PAYE and both sets of NI? Interesting.If you're right, this will be the end of contracting for any client who classes their resource inside.
SOL111 said:
So everyone loses due to poor initial management.
If contractors are disguised employees then fairs fair but it's going to cost a small fortune.
The employer's NI on a £100k contractor income is about £10k so not insignificant if you have large numbers of contractors inside IR35. I can see why these might cease to exist entirely, if the cost is less than an equivalent permanent resource.
It would be cheaper for clients to offer properly outside contracts surely?
It's not only about the contract, it's about how you operate.If contractors are disguised employees then fairs fair but it's going to cost a small fortune.
The employer's NI on a £100k contractor income is about £10k so not insignificant if you have large numbers of contractors inside IR35. I can see why these might cease to exist entirely, if the cost is less than an equivalent permanent resource.
It would be cheaper for clients to offer properly outside contracts surely?
SOL111 said:
98elise said:
Most contractors are employed via agent. The agent will deduct it from the day rate.
So are you suggesting that the agent will deduct PAYE and both sets of NI? Interesting.If you're right, this will be the end of contracting for any client who classes their resource inside.
It won't end contracting, but it will change it.
98elise said:
It's not only about the contract, it's about how you operate.
Sorry, that's what I meant, I just didn't word it correctly.What I meant was that clients would be better off doing things properly and changing the way people operate to put them clearly outside (and a contract that reflects this).
If they don't want to lose a flexible workforce that is.
98elise said:
Most contractors are employed via agent. The agent will deduct it from the day rate.
Well they can but they'd be stupid to do it that way. The agencies we use add on Ers NI to the rate they charge to us. So (for example) their daily charge to us would be made up of the following;Day rate payable to Contractor
Ers NI
Holiday Pay
Ers pension
Agency commission
VAT
When the Agency then makes the payment to the Contractor via PAYE the Contractor gets tax, Ees NI, and pension deducted (assuming they haven't opted out). the Agency then adds on Ers NI and pension and pays these over to HMRC and whoever the pension provider is.
98elise said:
SOL111 said:
98elise said:
Most contractors are employed via agent. The agent will deduct it from the day rate.
So are you suggesting that the agent will deduct PAYE and both sets of NI? Interesting.If you're right, this will be the end of contracting for any client who classes their resource inside.
It won't end contracting, but it will change it.
For example, a £100k ltd contract would attract an extra £10k on top of PAYE and NI. If that were me, I'd walk, because I'd rather retire than get stiffed by an agent who would be acting immorally.
If you're right and the agent is the employer, then they should be paying, not the contractor. The key would be the term used in the paperwork.
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