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IR35: Why status determination statements will play a pivotal role

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30th Jul 2019
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The revised IR35 rules that apply from 2020/21 will require the engager to issue a status determination statement and allow contractors to challenge it.

The production of the status determination statement and what happens to it after it is issued plays a pivotal role in deciding who is liable for any IR35 tax and NIC.

What is the SDS?

Under the revised form of IR35, the engager (referred in the law to as the ‘end client’) will decide whether a worker is caught by IR35 or not. However, only engagers who are themselves not ‘small businesses’ will have to do this, as Rebecca Seeley Harris explained in her analysis of the off-payroll working rules.

The engager must notify the worker of its decision about the worker’s status in a status determination statement (SDS). The SDS must explain the reasons for the decision and the engager must take reasonable care in reaching the decision. It is clearly envisaged that the SDS will be a written document.

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Replies (55)

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the sea otter
By memyself-eye
30th Jul 2019 15:17

SDS....Another 3 letter acronym to add to the one that's been exercising our minds recently.

It's the end of the (contracting) world as we know it.

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By johnjenkins
31st Jul 2019 09:10

What a load of codswallop. This IR35 farce just gets stupider and stupider. A "contract for services" covering all points and strictly adhered to from both parties will see off any HMRC challenge. Why? Because IR35 is a wrong concept and hopefully the new regime will see it as such.

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By G Webber CTA
31st Jul 2019 09:15

The above is an admirably clear description of the need for an end client to make the SDS and what happens to it and the liability for tax thereafter. Inevitably however, given the word count limit, it cannot convey the commercial and personal implications that will play a part here.

Many contractors, contrary to common perception, stay at one end client for reasonable periods, say a couple of years or more. Periods in excess of 10 years are not uncommon.

Before we all jump to the conclusion that "it's obvious that they are employees", often in the world of IT, these people are moving from project to project and in the majority of cases remain genuine contractors. It si also the fact that the length of time in a role is NOT a test found in determining status.

Under this new system though, the end client will make that obvious leap above and for that and other reasons - mainly to control risk - they will be inclined to make "inside IR35" blanket decisions. In other words all contractors in certain roles are inside IR35 regardless of circumstance.

We already see major banks saying this in public.

HMRC knew when they put this in place that this would happen and had refused to say that such blanket decisions are not within the rules. Instead they want contractors and end clients to clash on this.

I say clash, but in reality this is a short conversation. Contractor prepares and puts up a considered case as to why they are outside the IR35 rules. End client says "are you willing to indemnify me if you are wrong?" Contractor says, no and the law says you are liable. End client says, "too risky - do you want the job or not"?

End of debate.

Even if the dispute resolution fails to satisfy the contractor, he/she has nowhere to go to appeal. HMRC are not interested and the tax system does not permit any appeal.

Not the death of contracting perhaps but a deep and significant wound.

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Replying to G Webber CTA:
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By johnjenkins
31st Jul 2019 09:49

"it's obvious that they are employees".
There is no law that says you are an employee or self-employed. It is a decision between the work giver and the work doer. Gordon Brown thought he could raise loads a money to pay for his ineptness, hence an attack on the self-employed. When the self-employed went Limited, IR35 was born. It didn't help when the EU decided that there was a "worker", whether self-employed or not and was entitled to holiday pay.
I hope this Government actually start looking at employment status and take HMRC out of the equation. If they want more money put up the basic rate, then we can actually see what value we are getting from the Government of the day.

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Replying to johnjenkins:
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By G Webber CTA
31st Jul 2019 10:30

johnjenkins wrote:

There is no law that says you are an employee or self-employed. It is a decision between the work giver and the work doer. Gordon Brown thought he could raise loads a money to pay for his ineptness, hence an attack on the self-employed. When the self-employed went Limited, IR35 was born. .
.


I disagree.
There is employment law that determines your status for employment benefits (or not).
There is tax law that determines your status for tax purposes. This is modified by 70 years of tax cases that have explored certain situations.
IR35 did not force people into PSCs. Instead contractors were sold the myth that a PSC would "protect" them from inside IR35 status. Who sold this myth? Those whose business was forming, running and accounting for PSCs and agencies who wanted to continue offering outside IR35 contractors to business to keep their revenues flowing.
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Replying to G Webber CTA:
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By cereus77
31st Jul 2019 11:03

I’m not sure you are completely right about this.

More or less since the inception of the Internediaries legislation no UK agent or client will engage a contractor unless they have a limited company. I initially contacted as a sole trader direct with a client in Germany back in 2000 but since then any role which has involved a UK agent or client has mandated the use of a PSC. I tried to revert to sole trader status a few years ago when the dividend tax came out but my agent would have none of it. The contractor is just the weakest point here with almost zero leverage when dealing with these large companies and HMRC.

Unfortunately this latest development has far more at stake than the previous IR35 setup as my reading of the proposals is that it will be very difficult to claim any expenses in this scenario. From my perspective living in the North East and having to travel long distances for UK work this would rule out any UK assignments. This means that I will be focusing exclusively on European mainland opportunities from next year. Post Brexit this is likely to mean paying tax in the country where I am working from day one. If many others follow this approach, the consequences for HMRC would seem to involve a loss of revenue rather than the gain they are boasting about.

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Replying to cereus77:
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By G Webber CTA
31st Jul 2019 11:15

You are correct that the use of a limited company intermediary became the default for the end client but not for tax reasons. This intermediary gave the end client comfort on various employment law matters.

The agency went along with it because otherwise the end client would not use them.

Simple economic imperative.

There is not enough space here to discuss expenses, especially home to work. Where is your work? Are you travelling TO work or FOR work? Why is your job not one that starts WHEN you arrive at the office. Why should you get relief for a cost that an employee is unable to claim? Etc, etc.

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Replying to G Webber CTA:
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By cereus77
31st Jul 2019 12:27

Even HMRC understand that self employed people won’t move house for a short term contract.

I have worked all over Europe in the last 20 years on short term projects for large companies. I live in the North of England and these jobs usually involve travelling and living somewhere near the client for a period of time - generally three months upwards. These roles are nothing like employment. There are no benefits, no certainty and invariably there is a very short notice period. What starts as a three month contract might with luck eventually become a year or two but it is impossible to plan as the reason the clients want contract resources is for flexibility and specific skills which they don’t need all the time.

It can be quite frustrating when people who often know nothing of the sacrifices involved in this itinerant contracting lifestyle speak as though it’s just like a normal 9 to 5. It absolutely isn’t.

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Replying to cereus77:
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By G Webber CTA
31st Jul 2019 13:17

I'm not doubting the need to travel TO the place of work, but obtaining a contract and then living near the place of work is different.

Look at the tax case involving Tim Healy.

Self employed actor, living in Newcastle, gets a role in London, rents a place for the duration - relief refused.

As I said not enough space here for a debate on this and anyway - off topic.

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Replying to G Webber CTA:
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By johnjenkins
31st Jul 2019 11:04

Wrong. THERE IS NO LAW THAT DETERMINES EMPLOYMENT STATUS. There are guidelines and then the momentous, utterly ridiculous blue circle fiasco and of course tribunal cases thereafter, to reach our present, unacceptable state of affairs. There is no such thing as covert self employment. In fact IR35, which takes away Limited Company status (because you can't put a limited company onto PAYE) has to be illegal. Anyone wonder why it doesn't work whatever rules HMRC make up? Even the OTS said it should go. Hopefully this last ditch effort on behalf of HMRC will make sure it goes.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 12:26

Just to set the record straight, no individual has taken an inside IR35 judgement, for a specific engagement from the FTT, to the ET, let alone receive a different judgement. We are already seeing increased cases revolving around IR35 in the ET and the FTT, where HMRC's position was found to be wrong.

This question needs to be answered to clarify the issues -

What aspects of an engagement would the FTT consider when bringing its judgement which the ET would not consider, and vice versa?

I believe there are none, i.e. from an "employed" perspective, the aspects considered would be the same. So the conclusion would be that a determination in either court would hold in the other.

If anyone disagrees, then prove me wrong. To a certain extent I've proven that a judgement in the EAT is likely to affect whether or not HMRC will challenge an individual's status in the FTT.

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Replying to G Webber CTA:
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By kjevans
25th Aug 2019 21:42

There's no such entity in law as a PSC - it just a Limited Company. Many self-employed people set up LTDs long before IR35 for various reasons, not just tax. Why should small LTDs be treated differently from large ones? Why should anyone be taxed as an employee but not given employee benefits and protections. It makes no (moral) sense. If a company wants to treat someone as an employee it should employee them as one with all the benefits of that status - and should be fined if the "employee" doesn't get them.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 09:59

"I say clash, but in reality this is a short conversation. Contractor prepares and puts up a considered case as to why they are outside the IR35 rules. End client says "are you willing to indemnify me if you are wrong?" Contractor says, no and the law says you are liable. End client says, "too risky - do you want the job or not"?

End of debate.

Even if the dispute resolution fails to satisfy the contractor, he/she has nowhere to go to appeal. HMRC are not interested and the tax system does not permit any appeal.
"

wrong, the contractor can sue for employment rights in the ET and there are two such cases being heard now in the ET.

As has been posted elsewhere, the risks to the engager of wrongly classing and insisting that a contract is caught by the IR35 rules, are immeasurably higher than the risks of classing a contract is not caught by the rules , especially if the caught determination is disputed by the contractor, with supporting evidence.

Any contractor who has been with a client for some time is likely to win an ET case by providing an inside SDS determination given by the client.

Contracting isn't dead, there will just be chaos in the ET/EAT.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 10:33

I disagree.

The fact that a role is outside or inside IR35 is not directly relevant to the granting of employment rights.

Whilst an employment tribunal may find that a role was a de facto employment and therefore the encumbent is entitled to benefits, this is not binding on a tax tribunal.

There is not one case in which there is a direct read actoss.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 11:17

Completely agree that anybody can go to an employment tribunal and claim employment benefits.

What I said was that your tax status DOES NOT determine whether you will be successful in the claim.

There is no read across.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 12:42

This approach hasn't been adopted in the past as IR35 investigations tended to be historical and outside of the time limit for lodging a case in the ET.

However, from next April, the situation will change. Many contractors, who currently work outside of IR35, and can provide supporting evidence, will be classed as subject to the regulations by their client, probably by using the much discredited CEST tool.

Any contractor who finds themselves in this position and who has been with their client for some time, is likely to immediately lodge a claim in the ET, which would not be out of time.

As I've posted elsewhere, the risks to the client of classing someone inside the rules when they are not, are considerably higher than classing a contract as outside.

This has got to be the message to clients.

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Replying to IANTO:
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By flightdeck
31st Jul 2019 21:16

Can you please give some examples of why CREST is discredited? I have had a little play with it and it seems to ask reasonable questions in order to base a conclusion. I am curious to know the situations when this tool gets it wrong?

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Replying to IANTO:
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By dstickl
31st Jul 2019 12:08

Wonderful stuff, Ianto - and maybe a moderate move towards reciprocity between decisions by Tax and Employment Tribunals !

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Replying to dstickl:
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By IANTO
31st Jul 2019 12:30

Well, the Taylor report, which HMG didn't accept, recommended normalisation between the FTT and the ET. However, see my other post regarding what aspects are considered by each of the courts.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 13:23

Ah, just worked out who you are.

We've had this debate elsewhere.

In that place I acknowledged that in a very specific set of circumstances - yours in fact from a long time ago and which are not really current - the link between tax and employment tribunals and the potential for one to influence another was a small element in the situation.

The Good Work report and the response make it clear that Government policy is NOT to have a link and therefore Judges in both will be mindful that whilst they can interpret law (and perhaps even make law in some cases), they cannot override Give't policy.

Being taxed at the same rate as an employee does not give you employment rights and going to an ET and claiming otherwise would be possible but unlikely to get you far.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 14:36

"Ah, just worked out who you are"
I've never concealed my identity even here.

"they cannot override Give't policy"
read this -
https://www.contractoruk.com/news/0014187why_government_ignored_your_202...

"Being taxed at the same rate as an employee does not give you employment rights and going to an ET and claiming otherwise would be possible but unlikely to get you far"

I've proven otherwise and if necessary, will do so again. I would have nothing to lose, should the opportunity present itself.

You should follow the Alcock case and watch for other cases in the pipeline.

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Replying to IANTO:
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By dstickl
31st Jul 2019 13:35

Time - high time - for more campaigning here, then, Ianto.

However, which specifically was the other post you refer to, please?

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Replying to dstickl:
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By IANTO
31st Jul 2019 14:45

"Time - high time - for more campaigning here, then, Ianto"

well, that's what I'm trying to do here. There seems to be too many with blinkered opinions who ignore reality.

What I've said in other posts, is that no one individual has taken an inside IR35 judgement for a specific engagement from the FTT to the ET, let alone receive a different judgement. So the statement that you can be taxed as an employee without receiving employee benefits is a fallacy. There is no case law to support this.

Additionally, I've asked the question, without receiving any answer from those who might be in a position to do so, as to what factors the FTT will consider in a case, that the ET would not, and vice versa. The silence on this is quite telling.

There are those that wish to perpetuate this myth and I can only deduce that these are sympathetic to HMRC's position, which clearly I'm not. I'll fight to the bitter end, if I'm provided with the opportunity. However, given the "political" interference in my EAT, I'd say I won't be given the opportunity to sink the boat.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 15:14

As I said we had this debate elsewhere but that led to nothing in face of a stubborn refusal to see that the world had moved on and that cases from years ago arising from very specific circumstances have been rendered irrelevant in the face of new legislation and policy.

Here we are trying to address the new reality. That si that the Gov't has decided that there is no place for a common definition of employment between tax and employment law. Trying to argue that there should be or that in the absence of any attempt to do that, your case is proven is akin to saying that "unless something is expressly prohibited, it is allowed". That is trite and as untrue as your statement.

The FTT has a certain path it follows in IR35 status enquiries. Read the cases. It will look at the role, the way the role is performed, the supervision, direction and control exercised. Issues such as whether permission has to be sought for absence, the use of employer supplied kit, the "fit" of a role within a format are all also included but carry much less weight. The FTT does not consider anything that might be a right arising from an employment (entitlement to holiday pay for example) because this is never part of the equation. They can't consider a nothing. Their job is to apply tax law to a given set of circumstances.

Far from a myth we have new reality. The legends of the past can be left undisturbed as not even their ghosts have any impact in a modern case.

As to the rather unworthy implication that I am sympathetic to HMRC, my record speaks for itself. I have a degree of respect for HMRC front line officers doing a job that is not easy. It is not easy because those making policy are truely bought in to the "maximise revenue" agrument. they are prepared to almost literally throw people under the bus so ling as the target is reached and they get their gong.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 15:28

Clearly, your have the right to hold an opinion and so have I. What I've always said is that HMRC cannot be trusted. You only have to see their conduct in the Alcock case.

However, irrespective of what our opinions are, however, opposed, there clearly will be an upsurge in ET claims after April 2020 and the issue of taxes v's employment rights could be decided then.

However, I believe that HMRC will try every trick in the book, as they have done in the Alcock case, to avoid any case law which would be to their disadvantage. You will remember they settled out of court in the Winchester case.

In the past, there was opposition by some representative organisations to involving the ET in IR35 disputes. But clearly opinions have now changed and ET cases are being supported. So time will tell who's opinion is the more accurate.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 15:44

""unless something is expressly prohibited, it is allowed". That is trite and as untrue as your statement."

tell the All Blacks that!

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 15:48

"The FTT has a certain path it follows in IR35 status enquiries. Read the cases. It will look at the role, the way the role is performed, the supervision, direction and control exercised. Issues such as whether permission has to be sought for absence, the use of employer supplied kit, the "fit" of a role within a format are all also included but carry much less weight. The FTT does not consider anything that might be a right arising from an employment (entitlement to holiday pay for example) because this is never part of the equation. They can't consider a nothing. Their job is to apply tax law to a given set of circumstances."

and it is my contention that the ET will look at exactly the same set of circumstances and are unlikely to come to a different conclusion from the FTT and vice versa. And whatever your opinion, I've proven to my satisfaction that the vice versa holds.

We will soon see with the latest crop of ET cases.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 16:08

"they get their gong

and that is a situation I've long been opposed to.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 16:28

"get their gong"

perhaps the institutions of privilege need to be dismantled.

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Replying to IANTO:
By SteveHa
31st Jul 2019 15:44

IANTO wrote:

What I've said in other posts, is that no one individual has taken an inside IR35 judgement for a specific engagement from the FTT to the ET, let alone receive a different judgement. So the statement that you can be taxed as an employee without receiving employee benefits is a fallacy. There is no case law to support this.

Whilst not expressing a view one way or the other on your other points, on this you are looking at it the wrong way. There is nothing in law that compels the ET to follow a decision by the FTT (and in fact FTT decisions are non-binding, so there's nothing compelling the tax tribunals to follow their decisions, either), or vice versa.

Just because something has not been proven nor dis-proven doesn't render a fact.

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Replying to SteveHa:
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By IANTO
31st Jul 2019 15:51

I agree they are not binding. But I still contend that given the same facts, the one court is unlikely to draw a different conclusion from the other. It wouldn't be politic. And there are many on here who don't seem to accept that "politics" can influence all situations.

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Replying to dstickl:
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By IANTO
31st Jul 2019 14:21

Part of the problem as I see it, is that some representative organisations in the past did not see that the ET was a vehicle for challenging IR35. This is now changing, and should do, when the Taylor report's recommendations are taken into account.

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By InterimAccountant
31st Jul 2019 10:09

The simple solution for contractors caught up in this will be to request a Fixed Term Employment contract with the client. Given the skills shortage this shouldn't be so difficult.

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Replying to InterimAccountant:
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By G Webber CTA
31st Jul 2019 10:35

Why would a contractor enter a fixed term employment contract?

Where is the advantage?

He/she has a short term job and full PAYE deductions. No job security and less money.

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By martinhayward
31st Jul 2019 10:16

I might have missed something in this long running debate as I don't have many contactors these days. What if someone who had been engaged by the "employer" before this comes in doesn't challenge a SDS in April 2020 by that same employer that they are now a deemed employee.? Surely this is tantamount to admitting they have previously been evading tax by not applying the IR35 rules to their earlier engagement. Will HMRC now be trawling through these sudden status changes to get tax back.

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Replying to martinhayward:
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By G Webber CTA
31st Jul 2019 10:39

"Evading tax" is a criminal offence. I think nobody here is suggesting that engager or contractor are colluding for criminal intent?

I think you may mean that a contract found to be inside IR35 post April whereas the same post, same obligations, same conditions, etc pre April 2020 were outside IR35, may mean HMRC are interested in investigating?

If so, I agree.

HMRC has said that they will not run targetted campaigns in such circumstances. I asked a recent audience of some 400 contractors who trusted that statement from HMRC.

Not one hand went up.

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Replying to martinhayward:
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By Rgab1947
31st Jul 2019 14:37

Most likely

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By dmmarler
31st Jul 2019 10:54

Our colleague is correct - people were sold the myth that they could get away with paying less tax and NI by working through limited companies … the only people who gained were the agencies and accountants involved.
However, if successive Chancellors had abolished NI and said that individuals would pay the same percentage rates on all income whatever the source, we would not be in this mess. Nor would we be paying a host of civil servants (plus their pensions and employment costs, together with estate, software and other overheads) to maintain a separate NI collection system. It was "too difficult".

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Replying to dmmarler:
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By IANTO
31st Jul 2019 12:35

There was no "myth" as you claim. The clients insisted on the structure in order to protect themselves from employment rights claims. Such a structure determined that I was not an employee of my client when I took my case to the EAT, to prove to HMRC that I was self employed.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 13:27

Happy to show you several hundred sets of materials in which the myth of using a PSC to protect against IR35 is stated as why you need to.

Have not seen one piece of marketing material that says you have to use a PSC to protecting the client from your claiming employment rights. If you have that, happy to do a swap.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 14:56

Long before IR35 was implemented, the clients had required contractors to work through their own Ltd. Co. This was to protect the clients from employment benefits claims. Also, and just as important, it allowed clients to engage individuals and control them like employees, whilst avoiding the EERS NIC. and the associated costs of an employee like relationship. Make no mistake, this was all engineered by the clients. Contractors naturally also took advantage of this structure.When I started contracting, this was a requirement that I had to satisfy to gain a contract. HMRC couldn't upset the clients, so they came after contractors with IR35. Yet, contractors didn't create the situation in the first place, but are the target for punishment.

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Replying to IANTO:
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By dstickl
31st Jul 2019 15:12

So IANTO: were you then actually an employee of said limited company ?

And here's some key question/s: Did you consider being a self-employed worker of "your" limited company and, if not, why not, please ?

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 15:43

So what in effect you are stating is that the accountancy profession advised clients on how to avoid taxes. The contracting community is now paying the price for this and the accountancy profession has suffered no punishment.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 15:57

I have said exactly that in this website and others and have attracted the approbation of my professional colleagues and been "warned" by a high ranking professional body that I need to have the evidence of negligent advice before continuing my campaign. I have not stopped saying that my colleagues have let down their clients and themselves.

I have every reason to believe that many naive people were pushed and cajoled into schemes and that the present proposals are a tax planners paradise and that we will see a repeat of the mess of the early 2000,s.

My role now, via my firm, is to protect as many people as possible from an enquiry in the future.

Unfortunately we are already seeing offers made to clients from people who can be described only as dishonest, saying that they can arrange a contract to be outside IR35 (regardless of the role) and that a fall back position if they are wrong is that the individual will qualify for all sorts of employee benefits.

As I said - dishonest.

Given the irrelevancy of ET rules in a FTT and vice versa, this will never happen.

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Replying to G Webber CTA:
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By IANTO
31st Jul 2019 16:18

Good to see someone in the Accountancy Profession who has some professional principles. And whatever you might think of me, I also have high principles. When HMG or any organisation engage in unjust if not illegal activities which disadvantage me, then I will use whatever legal means possible to fight my corner. However, given the behind the scenes skulduggery that I've observed, it's not an easy battle.

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Replying to IANTO:
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By G Webber CTA
31st Jul 2019 16:45

I have no opinion of you, good, bad or indifferent.

I would like to see all parties in these transactions abandon the thinking of the past, examine the situation today objectively and make plans and preparations based on realistic principles.

In a Utopian world employment and tax law would be aligned. Here in the real world it is not and presently the Gov't has no inclination to do that and the Courts cannot wear Parliament's clothing and make it so. Any ET making a decision binding on FTT or vice versa would be found to be acting outside its jurisdiction. As a result even if the Judges were to make simple and obvious connections, there is no validity to them.

Don'y fool yourself that being taxed as an employee means you are one.

I've wasted too much time here today and am tired or repeating myself.

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Replying to G Webber CTA:
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By IANTO
01st Aug 2019 09:11

"I have no opinion of you, good, bad or indifferent"

well, that's encouraging. I did praise you for your principles though, so I'm prepared to be magnanimous.

"I would like to see all parties in these transactions abandon the thinking of the past, examine the situation today objectively and make plans and preparations based on realistic principles."

Given HMRC's past and present behaviour, that is unlikely to happen.

"In a Utopian world employment and tax law would be aligned. Here in the real world it is not and presently the Gov't has no inclination to do that and the Courts cannot wear Parliament's clothing and make it so. Any ET making a decision binding on FTT or vice versa would be found to be acting outside its jurisdiction. As a result even if the Judges were to make simple and obvious connections, there is no validity to them."

I've never claimed that a decision in either court is binding on the other. What I have said is that if both courts examine the same facts and use the same criteria to judge the issue, then they are unlikely to come to a different conclusion. To do so would bring the legal system into disrepute and I guess the judges would want to avoid this. Politics play a great part in our legal system, even if there are those who won't accept this. Isn't the Lord Chancellor a political appointee?

I posted a link recently to an article which indicates that the judiciary are pressing for harmonisation of the two courts. However, given what I've said above, they have always had the ability to coordinate their judgements in the both courts.

You advised what issues the FTT will consider in judging a case, and I contend that the same issues will be considered by the ET. The main cornerstones of any judgement will be MOO and SDC, which both courts consider.

"Don'y fool yourself that being taxed as an employee means you are one"

I've never claimed that.

Yes, nothing is set in stone, but common sense and the desire to be consistent, i.e. the politics, will determine how the FTT and the ET will behave.

However, given my own personal experience, the behaviour of HMRC is very much dictated by what I would call "politics". With a judgement in the EAT, which set case law, they would have had a difficult job convincing the FTT that I was an employee for tax purposes.

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Replying to IANTO:
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By dstickl
31st Jul 2019 13:52

So Ianto: were you then actually an employee of said limited company ?

And here's some key question/s: Did you consider being a self-employed worker of "your" limited company and, if not, why not, please ?

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Replying to dstickl:
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By IANTO
02nd Aug 2019 09:35

I was required by my agency to set up a LTD. Co. before my cv could be presented to clients who might be interested in my skills. I became an employee of my own limited company and it was MyCo's responsibility for providing employee benefits.

With the advent of IR35, the situation changed. If the contract were to be judged inside IR35, then tax an NI would be deducted at source and those employee benefits that MyCo. was required to provide would be provided from nett income. Clearly this was a very unjust situation.

I studied the issues carefully and contended that if a contract were to be judged as inside by the Commissioners for Taxes (note the title, which has since been eradicated, not without reason) , then the arguments could be submitted to the ET and would be likely to result in a successful claim for employment benefits.

I had the opportunity to prove this in reverse. My client terminated my contract because, as stated by their manager, they didn't like my conversations with other contractors with regards to IR35. This gave me the opportunity to test my contentions.

I sued for employee benefits in the ET. In parallel to the case, HMRC had decided to investigate me under IR35, but were obliged to withdraw when I lost my ET.

There were so many holes in the ET judgement, that I applied for and won the right of appeal. Ultimately, the EAT clarified some issues to my benefit and declared that I could not be an employee of my client.

I have a copy of a letter from whom I believe was the area director, written to the inspector who was proposing to investigate me under IR35, that he should desist and not do so. This might have been prompted by the fact that I called Dawn Primarolo as a witness to present HMRC's case to the ET that I was a disguised employee of my client. The letter I received from the Parliamentary Solicitor was quite revealing.

However, although the outcome of the case and its costs, were to my advantage, I wasn't prepared for the "political" skulduggery that accompanied my case. I have provided details of this privately to some individuals as they cannot be published on a public forum.

I hope this answers your questions.

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Replying to IANTO:
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By dstickl
01st Aug 2019 21:27

Thanks, IANTO, for that very factual write up.

Turning to the hypothetical: In retrospect, could you changing your choice - next time perhaps - from (A) an employee of your Ltd Co, to (B) a self-employed worker of your Ltd Co, have had a beneficial effect for you?

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