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Inconsistent application isn't necessarily a negative
Whilst it is reported that different Government departments are applying the rules differently, this is similar to the private sector and isn't something that is necessarily that surprising.
For example, some firms who are savvy on employment law will insist that all workers are given service based contracts and that they must be treated as external suppliers (so, clearly outside IR35). This strategy might be to mitigate any future Employment claims, and also because they might actually want the security of having a service provided, irrespective of who provides it.
Others will hire contractors and want personal service - they will want to move them from one project to another, telling them how and and what to work on and blend in and act the same as their own employees with no different treatement (so, clearly inside IR35).
So the fact that different departments decide to act differently isn't a big deal. The problem is a little more subtle than that.... It's where departments actually want to hire people on service based contracts but insist they pay tax as though they are employees. That is clearly bonkers and contractors who are in high demand and have work offers elsewhere are either unlikely to work for Government, or will increase their fees accordingly, costing Government and tax payers more money.
Dave Chaplin
CEO, ContractorCalculator
A couple of anecdotal cases
A couple of my contractor clients who work for the public sector had to jump through these hoops.
One works for local councils as a consultant and he got his main contract reviewed by HMRC right at the start. They gave him a clean bill of health despite some features indicative of employment (indeed he used to be an employee of one of the councils but took redundancy) so he got a result.
The second works for the NHS and his manager just asked for a letter from his accountant confirming that he was paying tax. No mention of paying tax on his fees as employment income. I just did him a letter stating that he was paying VAT, corporation tax and PAYE above the relevant thresholds.
I got the impression that his management just wanted to get it out of the way with as little fuss as possible. They clearly know it is just the latest political stunt to pacify the media, and want to get on with the main priority of managing their service properly without interference from a load of politicians and civil servants who know next to nothing about how a business actually works.
Government departments are probably being leant on much more than other public sector bodies, so they don't have the luxury of giving them short shrift. They tend to have more box-ticking [***]-covering types on their staff too, so little surprise they are being so heavy handed.
Silly really - all they've got to do is make sure the guys at the top like Ed Lester don't work through service companies. How hard can that be?