Opinions on IR35 and its impact on contractors?
Discussion
Clockwork Cupcake said:
Eric Mc said:
If you are using an agent between YOUR INTERMEDIARY and your hirer, then you should still be passing the money received through your intermediary bank account and not directly to your personal bank account.
Hirer - agency - intermediary - you, then that is an IR35 situation and money should initially go to the company bank account.
Hirer - agency - you, then that is not an IR35 situation as there is no intermediary. That is an agency worker situation as the agency has engaged YOU personally and not your intermediary limited company. Money CAN go directly to your personal bank account.
Exactly. Hirer - agency - intermediary - you, then that is an IR35 situation and money should initially go to the company bank account.
Hirer - agency - you, then that is not an IR35 situation as there is no intermediary. That is an agency worker situation as the agency has engaged YOU personally and not your intermediary limited company. Money CAN go directly to your personal bank account.
If your company is involved then the money has to go through your company.
If your company is not involved and the money is going direct to your personal bank account, then you are an agency worker.
There's nothing wrong with working that way, btw.
http://forums.contractoruk.com/public-sector-ir35/...
I've opted for their second preferred option after "Stop working for the Public Sector", which is "Work via an Umbrella" and dont use your LTD co.
daemon said:
Clockwork Cupcake said:
daemon said:
No, i'm not an agency worker. 
Sorry, I'm confused. You appeared to be saying that when working through REED under a contract caught by IR35, that you were employed by them, they deduct all taxes, and then give you net pay that you pay into your personal bank account. Just as if you were working for the agency like a temp. Surely that's the definition of an agency worker?
Thats not what i do and thats not the relationship i have with Reed. Its just an inside IR35 contract on this occasion.
The last 4 were with different agencies and outside IR35.
Clockwork Cupcake said:
If your company is involved then the money has to go through your company.
If your company is not involved and the money is going direct to your personal bank account, then you are an agency worker.
My scenario is via an Umbrella, so definitely not the former, but not sure if that makes me an agency worker as per the latter. If thats the terminology then fine.If your company is not involved and the money is going direct to your personal bank account, then you are an agency worker.
It just shows how convoluted and messy the whole situation has become - and all down to efforts by employers to avoid having to take on people as individuals.
The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
Eric Mc said:
It just shows how convoluted and messy the whole situation has become - and all down to efforts by employers to avoid having to take on people as individuals.
The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
True. But I can see why the Ltd Co is not involved in this now, and since it isn't involved the money is fine to go to the personal bank account. The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
Obviously it will have to all be accounted for on the Self Assessment tax return, as income separate from any from the Ltd Co.
Eric Mc said:
It just shows how convoluted and messy the whole situation has become - and all down to efforts by employers to avoid having to take on people as individuals.
The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
As i said, i always viewed an agency worker as someone who worked for an agency and went where they were told. Thats not what i do. However that might just be my mis understanding.The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
Effectively i'd have described myself as a "contractor working via an umbrella company".
Clockwork Cupcake said:
Eric Mc said:
It just shows how convoluted and messy the whole situation has become - and all down to efforts by employers to avoid having to take on people as individuals.
The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
True. But I can see why the Ltd Co is not involved in this now, and since it isn't involved the money is fine to go to the personal bank account. The fact that you are being paid AS AN INDIVIDUAL through the agency is to me, a strong indication that you are working as an agency worker. If that is the case, you are safe to bank what is effectively your net salary into your personal bank account. Being an agency worker does entitle you to some employee legal protections.
The main issue is that the chain of contracts between you and the ultimate organisation you are actually performing the work you do for is complex, messy and difficult to untangle in the event of any issues over your rights or compensation if anything goes wrong with your job or the work you do.
Obviously it will have to all be accounted for on the Self Assessment tax return, as income separate from any from the Ltd Co.
I'm a contract PM at a Government organisation running a large programme. I was in place there well before the April 06th legislation change.
The division I work in are heavily reliant on contractors and were well aware of the effects of blanket statements made by Guys and St Thomas's hospital and TfL so were completely on board from the beginning with giving us a fair trial and defended us from those up the chain and prevent everybody from running off!
The ESS tool was used to assess every contractor and we were all deemed to be outside. The HR dept were nervous and started to probe in to some of the questions. As I understand the legislation relatively well, I was the test bed for all further questioning. The biggest probe was around substitution and who would pay them. They initially said that although my contract states I can substitute, as I'm a one man band, I have nobody to substitute to so therefore am inside IR35. After explaining to them how it works...which they should understand, that is how they put me in place, they agreed I was outside.
Getting to this point was difficult as they were undoubtedly being influenced to put people inside. I was asked what would happen if I was deemed inside. I said I would leave. They said what if we increase your rate to cover losses? I said I would leave not because of the financial side of things, but there's no way I'd stay in a contract that I've been declaring myself outside of IR35 only to have the organisation that hire me to say I'm in, that's just asking for an investigation! HMRC said they wouldn't investigate cases where an IN decision was made, but I think we know that won't be the case and if your hiring organisation says you're in then it would be hard to argue that you haven't always been in for the duration of that contract.
Luckily where I'm based, they are fairly pragmatic. None of us are managed or directed in any way nor are we told where we need to be or what hours we work. My services are bought through a deliverables based G-Cloud framework and is reflected in my contract which states I'm there to deliver a 'XXXX Product / Result Names Goes Here XXXX'.
The division I work in are heavily reliant on contractors and were well aware of the effects of blanket statements made by Guys and St Thomas's hospital and TfL so were completely on board from the beginning with giving us a fair trial and defended us from those up the chain and prevent everybody from running off!
The ESS tool was used to assess every contractor and we were all deemed to be outside. The HR dept were nervous and started to probe in to some of the questions. As I understand the legislation relatively well, I was the test bed for all further questioning. The biggest probe was around substitution and who would pay them. They initially said that although my contract states I can substitute, as I'm a one man band, I have nobody to substitute to so therefore am inside IR35. After explaining to them how it works...which they should understand, that is how they put me in place, they agreed I was outside.
Getting to this point was difficult as they were undoubtedly being influenced to put people inside. I was asked what would happen if I was deemed inside. I said I would leave. They said what if we increase your rate to cover losses? I said I would leave not because of the financial side of things, but there's no way I'd stay in a contract that I've been declaring myself outside of IR35 only to have the organisation that hire me to say I'm in, that's just asking for an investigation! HMRC said they wouldn't investigate cases where an IN decision was made, but I think we know that won't be the case and if your hiring organisation says you're in then it would be hard to argue that you haven't always been in for the duration of that contract.
Luckily where I'm based, they are fairly pragmatic. None of us are managed or directed in any way nor are we told where we need to be or what hours we work. My services are bought through a deliverables based G-Cloud framework and is reflected in my contract which states I'm there to deliver a 'XXXX Product / Result Names Goes Here XXXX'.
daemon said:
As i said, i always viewed an agency worker as someone who worked for an agency and went where they were told. Thats not what i do. However that might just be my mis understanding.
Effectively i'd have described myself as a "contractor working via an umbrella company".
Not sure if it makes any difference but do you have to submit 2 timesheets.....1 for the agency and 1 for the umbrella?Effectively i'd have described myself as a "contractor working via an umbrella company".
alfie2244 said:
daemon said:
As i said, i always viewed an agency worker as someone who worked for an agency and went where they were told. Thats not what i do. However that might just be my mis understanding.
Effectively i'd have described myself as a "contractor working via an umbrella company".
Not sure if it makes any difference but do you have to submit 2 timesheets.....1 for the agency and 1 for the umbrella?Effectively i'd have described myself as a "contractor working via an umbrella company".
daemon said:
Effectively i'd have described myself as a "contractor working via an umbrella company".
It's just terminology really. Yep, you're a contractor, but as far as your current assignment goes, you're an agency worker as far as the invoicing and payment mechanism goes, eg you get your 'Salary' minus deductions.Agency worker x 1,000.
Autopilot - that is all very interesting and absolutely spot on.
The elephant in the room is, how can a contract that was initially deemed outside by one party be deemed inside by another when there were no changes made to the terms of the contract?
It is asking HMRC to "come investigate".
Autopilot - that is all very interesting and absolutely spot on.
The elephant in the room is, how can a contract that was initially deemed outside by one party be deemed inside by another when there were no changes made to the terms of the contract?
It is asking HMRC to "come investigate".
Eric Mc said:
Agency worker x 1,000.
Autopilot - that is all very interesting and absolutely spot on.
The elephant in the room is, how can a contract that was initially deemed outside by one party be deemed inside by another when there were no changes made to the terms of the contract?
It is asking HMRC to "come investigate".
There is no elephant in the room. Thats not the scenario i am in.Autopilot - that is all very interesting and absolutely spot on.
The elephant in the room is, how can a contract that was initially deemed outside by one party be deemed inside by another when there were no changes made to the terms of the contract?
It is asking HMRC to "come investigate".
Different role, different contract. Also pre-April contract was QDOS verified.
Post April role is inside IR35 purely because the HR department applied a blanket approach.
I have correspondence from senior decision makers in the local authority deeming the role outside IR35, and correspondence subsequently saying there is a blanket approach deeming all roles inside IR35.
The post IR35 contract paperwork was also deemed outside IR35 by QDOS too. Not that that mattered a jot to said HR department
Edited by daemon on Monday 20th November 11:33
Yes - the second part of my comment was relating to Autopilot's description of the dangers of being recategorised "inside" IR35 when the original, assessment was "outside".
Nothing to do with your situation - which I think we all now understand clearly. I've nothing further to add regarding your situation.
Nothing to do with your situation - which I think we all now understand clearly. I've nothing further to add regarding your situation.
Autopilot said:
daemon said:
Effectively i'd have described myself as a "contractor working via an umbrella company".
It's just terminology really. Yep, you're a contractor, but as far as your current assignment goes, you're an agency worker as far as the invoicing and payment mechanism goes, eg you get your 'Salary' minus deductions.daemon said:
I have correspondence from senior decision makers in the local authority deeming the role outside IR35, and correspondence subsequently saying there is a blanket approach deeming all roles inside IR35.
Sorry for the slight O/T but were the senior decision makers working in Finance?Edited by daemon on Monday 20th November 11:33
If they weren't then unless they were equal to or above the FD then what they said can (and probably will if it's local or central govt) be overruled. The penalties for employing people off-payroll are massive. Far more than any benefits that the Employer might get, which means that FDs are erring on the side of super-caution and advising CEOs and Boards accordingly.
Another thing to mention which is specific to Public Sector ; the off payroll rules changed in April 2017.
Prior to this there was a 6 month cut-off period. Any contracts shorter than this didn't need to be assessed, it was only contracts that were going to last more than 6 months where assurances had to be obtained. With effect from this April the 6 month window disappeared and you had to apply the checks from day 1. That means that even if you were OK last year your Public Sector employer this year might insist you come onto the payroll (or provide evidence that your PS work is being taxed/NI'd on a PAYE basis somewhere down the line).
Prior to this there was a 6 month cut-off period. Any contracts shorter than this didn't need to be assessed, it was only contracts that were going to last more than 6 months where assurances had to be obtained. With effect from this April the 6 month window disappeared and you had to apply the checks from day 1. That means that even if you were OK last year your Public Sector employer this year might insist you come onto the payroll (or provide evidence that your PS work is being taxed/NI'd on a PAYE basis somewhere down the line).
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