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The comment about there being no difference if you historically complied with the rules is not strictly correct. I have treated most of my contracts as being within IR35 but paid a high portion directly into my pension scheme reducing the Ers NI. Under the new rules I cannot do this and will loose out.
In some senses, there is clarity - if the CEST tool says non-IR35 and the client also says "outside IR35" - then the PSC employed has a clear statement on their position.
Remember that we have never had this opportunity before.
So if you are marginal, then this is where QDOS comes in.
The real problems of course will be where the CEST tool differs from the client's view (either way).
Also the CEST tool does need to cater for mutuality of obligation. I'm starting to come to the view that if there is a clear "No MOO" in the contract, then it may be reasonable to take the view that the CEST tool should not be used (in it's current form) as there is NO employment situation to consider and it cannot give a correct answer for any of the inputs.
- I should also point out that without MOO in the CEST tool, there is a high probability that the CEST tool will be destroyed by countless tribunal rulings post April 2020.
An unbiased article talking accurately about IR35. It shows a common sense approach and corrects so much of the nonsense being put out by contractors regarding the new rules. After all, the new rules effectively do no more than reflect the PAYE regulations that have been in place for payments to individuals, probably for 70 years.
I have always said and I still maintain the view that if the "contract for services" is drawn up properly and adhered to, then it should withstand any challenge from HMRC. Don't forget IR35 is creative taxation.
agree Johnjenkins - and the question arising regarding mutuality of obligation which exists in almost all contracts should simply ask if the contractor still works in his own interest, for his own gain and not solely for the benefit of the 'employer'.
And if the contractor cannot apply employment law to the terms of service then quite simply there is no employment because if it is not recognised in law as being employment, it is not employment.
"... these proposals are not around increasing the tax take.."
Excuse me for being a little sceptical about this manifestly HMRC propaganda phrase - they have ofttimes stated that the catalyst for these rules is to increase the tax take.
" ...but to introduce steps to ensure compliance with the rules..."
And change the rules as necessary to put people 'out of compliance' not only increasing the tax-take but also the opportunity for extra proxy tax in the form of fines - even worse, with a mendacious tendancy to retrospection.
totally agree. and the irony of an organisation that invented the IR35 rules then finds they cannot even win cases trying to prove that an entity fell under 'disguised employment'. How much tax has been lost in fighting cases and being unsuccessful - would be a good FOI request.
What will happen to companies like Accenture and Capita I wonder. will their employees become employees of their contractors companies. Why go for PSC and yet the huge outsourcing companies are not under question!
Surely there's sixth misunderstanding? When IR35 was introduced, the regulatory impact assessment had predicted £220m extra NIC and £80m extra income tax PER YEAR.
A FOI request revealed that between 2002/03 and 2007/08 IR 35 had raised £9.2m, a little short of the £1.5bn expected.
Another example of the government misunderstanding tax/NIC and its impact.
And the probability is that HMG had spent the £1.5bn it anticipated getting.
No wonder they are changing the rules. I wonder how much they expect to raise this time.