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Ultimately if you are in the 'talent' economy you drive up your rate to compensate.
It would be far better if this was fixed on the employment side, and that the hirer gets an employee if they hire an employee in an employee like fashion. No amount of intermediaries should allow businesses to evade their legal responsibilities.
The taxation then follows from that.
If the thrust of the article is correct, then I suspect HMRC see this as a "win" in their campaign against contractors.
Tax is collected and if there is no easy and simple way to appeal and correct the tax position, happy days for the agency.
Given that the "success" of this reform is already being toasted ahead of any independent measure, we will see the extension into the private sector soon. It is to be hoped that all of those in the chain of entities who benefit from the contractor's skill, will at least step up to their share of the additional costs.
Unfortunately that would be contrary to the history in this area where the person with the skills is usually also the target of HMRC action.
The deduction of the Employers NI is a really annoying one for my clients, argued until I was blue in the face with the agency and the agency accountants but they wouldn't have it, even when I pointed out the HMRC guidance (believe or not one of my clients was working for HMRC as well!)
The deduction of the Employers NI is a really annoying one for my clients, argued until I was blue in the face with the agency and the agency accountants but they wouldn't have it, even when I pointed out the HMRC guidance (believe or not one of my clients was working for HMRC as well!)
Yes very annoying. I know a few people who have been treated as "umbrella" employees, i.e. getting part paid as expenses to avoid the tax but having Employers NI deducted from them. I could name the paying agency involved but...hmm maybe not
Presumably it is impossible to detect who was actually using the CEST as it is meant to be an anonymous tool. My guess is that most of the people who've been using it are contractors or their advisors, curious to know if they should have been given a pass, not the client managers or the agencies. The latter are all busy people and simply don't have the time to assess people on it, nor indeed the inclination, as there is nothing to stop them imposing these blanket policies.
I don't get the comparison to a dodgy MOT though. For one thing, paper MOT certificates are a thing of the past (it's all done online now) but that aside, HMRC promised to stand by the CEST results if the answers given were correct. The results are not invalidated just because the CEST isn't fit for purpose. It is certainly not illegal like the dodgy MOTs used to be.
Moreover, that is not the reason the public sector bodies are ignoring it. They are ignoring it because it's too much time and trouble to assess people individually. In fact, if the CEST was fit for purpose, they would be even less inclined to use it, as it would inevitably require them to answer loads more questions.
The CEST is much maligned but are we not are looking a gift horse in the mouth here? After all, it does rule in your favour if you can honestly answer the control and substitution questions the right way. If anything it errs in favour of the contractor.
I know it doesn't mention MOO, but I don't think all that many contracts are free of MOO anyway, so it's a bit of a MOOt point really (couldn't resist that one).
Perhaps the issue here is that PSB don't have the expertise in tax law or the knowledge of the duties being undertaken to actually complete the CEST questions? Herein lies a key flaw.
Another is that projects using technology will morph and change over their life and it would be unusual for the original brief to be conducted exactly as described. Here is another flaw as HMRC has said that they will stand by the results "if the answers are correct". We're now a month after the first year end of this tool and I predict that in 6 months, we will see the first HMRC letters contesting the results.
This will be because either too many are coming back as genuinely self employed and/or because of the above variation of actual work to planned work.
Given the policy of HMRC over the past 15+ years towards contractors, which has burnt all trust between them, a lot of our clients see absolutely no point in using the CEST tool and many have left PSBs even where they have no private sector job to go to.