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Well, HMRC only have themselves to blame. It is not like they couldn't have tested the changes internally before exposing the whole of the public sector. If HMRC don't get the corrections needed to their on-line self assessment return and its calculations as promised by October, they are going to have even more problems as people like me demand the repayment of tax that has been due since the start of this financial year.
Do you think HMRC really wanted to introduce this? They were probably forced into it by this public sector hating government. Now of course when work is put up for tender the public sector will find it harder to compete.
I truly hope all IT consultants leave government contracts very quickly
Of course HMRC wanted this. They are losing NIC by IR35 not being operated when they think it should but they have to enquire spearately into each contractor's PSC to challenge it. Now they check on one payer with hundreds of contractors (like with a PAYE audit) and, if they are doing it wrong, get the NIC and tax for all their contractors in one visit!
I've just had the situation where a client of mine has been offered a role and two things stand out.
1) The council have already decided that the role is IR35 regardless of the individual circumstances of the contractor. I can understand the approach to ease on the administration but not quite the letter of the law is it!?
2) The council have put up the day rate from £500/day to £800/day to compensate for it being "within IR35". Hence increasing it by more than the amount they'll end up collecting in tax anyway!!
The whole system is broke even before its barely started.
I've just had the situation where a client of mine has been offered a role...
2) The council have put up the day rate from £500/day to £800/day to compensate for it being "within IR35". Hence increasing it by more than the amount they'll end up collecting in tax anyway!!
The whole system is broke even before its barely started.
Leaving the local taxpayers to obediently foot the bill for the council & contractors effectively bypassing the whole purpose of the changes
I've got one on the NHS who either has to take a pay reduction using her own Ltd Co or get the same rate as before using an "umbrella" company. The whole IR35 has always and will always stink because it is artificial. You cannt take a legal entity away and expect nothing to happen.
Who is surprised though?
It really is time employment status was sorted out and the only way is for Government and HMRC to keep their noses out.
Have a client who has just closed down his LtdCo due to lack of freelance IT contracts ... instead he is now employed by a private company who uses him, along with a host of other ex IT-freelancers, to do exactly the same jobs as they had been doing prevoously ... but with one change ... whereas he had been charging this public sector company £800 per day, the company he now works for charges these guys out to the same company for £2,500 per day ... .............. Doh!
But they are all paying tax and NIC under PAYE and employer's NIC too so HMRC's figures and the "tax gap" improves!
True ... but the public sector company is paying c.£1600 per hour more for the job, and the government is having to fund that whilst only getting back a fraction in PAYE, NICs et al ... so it's a lose lose situation for everybody