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"a fraudulent written statement from the worker that the IR35 conditions of liability mentioned above are not met results in a transfer of IR35 responsibility directly to the PSC. Bizarrely, given the absence of any appeal provision, in a case whereby an end-client makes an incorrect blanket decision that IR35 applies, providing a deliberately incorrect document and taking the IR35 responsibility back onto its own shoulders might be a PSCs best option to avoid the unwarranted deduction of PAYE."
Brilliant. You couldn't make it up. What a dog's dinner.
As you were then...
thanks for this, I was struggling to understand and thought "is it me?". Incidentally, I just rang the IR35 helpline when a result of the checklist came back as "unable to determine". I was cut off - twice. When I eventually spoke to someone, they told me I was cut off because they didn't have enough staff to cope with all the queries they were getting as a result of the new intermediaries legislation!! Perhaps they should contract out the service?!
We are finding this is all irrelevant. Pretty much all of our contractors working for PSB's have been told 'we won't work with contractors via their own limited companies after 1 April 2017'.
The agencies are feeding this info through to the 'contractors' and basically telling them you need to use this Umbrella company if you want to continue your work you have been doing. Some are offering a straight PAYE alternative.
Many of our clients are doing this as additional income and have decided they value their time more than the reduced rates so won't bother with the work anymore. Others are moving away from the PSB's and a couple will change to Umbrella/PAYE.
From my experience of our clients the government will not see an increased tax take. What they will see is even more of a shift of people away from PSB working and into the private sector.
"From my experience of our clients the government will not see an increased tax take. What they will see is even more of a shift of people away from PSB working and into the private sector."
Which is why you'll see an *attempt* to roll this out into the private sector next, and sooner rather than later (you know...to "level the playing field").
Rumor has it in contractor circles that HMRC is working "in secret" on such a project (using...contractors).
as a spin off I have had two clients effectively sacked from the various schools they have been working for, told not to come back after the Easter break as they are no longer using any contractors and blaming this legislation. they were not PSCs but self employed music and art teachers. would have been much more honest to say the schools are dropping the arts due to funding cuts.
On the basis that PSBs end up paying more Er's NIC and they receive funding from HMG, who is funded by the taxpayer, will this mean that the tax/Ni take increases, but so does the cost of the PSB by an equal amount?
No, because in many cases where an agency is involved, it would appear the PSB is not paying the employers NI. It is coming out the contractors daily rate.
Feedback I have had is that a large number are not renewing their contracts after 31 March 2017 unless the amount paid by the pSB is increased to take into account the additional deductions. It will therefore be interesting to see how the problem resolves itself.
HMRC could have done much better. IR35 has always been a challenge because in my view they deal with the perceived problem the wrong way round.
"A two-word response would technically suffice."
With the second one being "off" presumably?
Life would be so much simpler if NI were combined with tax, and all income was taxed equally, and all employers paid a notional employers' tax based on total payroll each month. Many people would want to be employed (as it gives them more rights), and they would still earn the same amount of money after tax whether they were employed or no. It would be cheaper for companies to pay the employment tax than fight cases through the employment courts, so all would be well in both the public and private sectors.
I thought the reason may businesses insisted their contractors trade via limited companies was to avoid the risk of getting stuck with the PAYE. Now that is happening anyway, won't they all go back to using self-employed contractors? Or is it about avoiding employment rights?
What I am experiencing
All the Government depts are doing is saying:
You are all employees, and we will run PAYE on all payments or you can have a direct zero hours contract and save yourself some admin.
The result is, as reported on sky news last night about locum doctors , that there is a huge pay cut.
The ones I know have been offered a 10% pay rise, go onto zero hours contracts and pick up holiday pay and other employee benefits and get money paid to pension under autoenrolement, so overall they are about level. Apparently the doctors are not as they have no alternative employer.... in the UK.
Tax Take
So HMRC get more paye but they then send it back to the departments to pay for the extra cost and all the money goes around in a circle.
The Future
BUT as has been highlighted on here they will expand this to the commercial sector next year. The result is that all contractors in savvy companies with FDs avoiding potential liabilites will be in the same boat, but probably with a pay cut as theres no more money available.
The result
90% of contractors will disappear ( the other 10% won't realise the rules have changed). Assuming there are 500,000 contractors in the UK theres 450,ooo less ltd companies being processed. An accountant can process maybe 100 clients a year so thats 4500 accountants with P45s.... down ward pressure on pay?
Some of the bigger agencies/ accountants where 95% of their work are consultants are going to close and all their admin support are out too.... 100 employees down to 2 partners a helper and a dog.
P45 Timeline
Assuming these come in 01/04/18 there will be the runoff through 18/19 of tying up the closure of all of the companies, so accountants P45s are set to be issued 31 January 19.
Savng Grace
We can live in hope that they introduce MTD for the year commencing 5/4/19 then the spare resources can go skiing in February and March 19 and on their return be reallocated from completing company accounts to dealing with bookkeeping for the self employed.
Mind you under MTD they will all bring their stuff in to be processed 10th July 19 for submission by 31st. So you will have no work for 3 months then an Everest to do in 2 weeks, need to think about monthly processing here somehow to remove peaks and troughs. Pity you can't stagger it like VAT returns that would be handy.
Not the same technically demanding work for all the ACCA ACA CA etc , but it gives the redundant accountants something to do....till they get bored .....
Apart from that, hows your day?
Happy New Year
Tom
I disagree. The private sector won't take this #### like the public sector. They will make the effort to assess all contracts properly and if any are inside they will change the contract and working arrangements to make them outside. They will coach managers to know what to say if HMRC start asking questions. The private sector is smart and resourceful unlike the public sector. They could also insist on an indemnity clause to ensure contractors pay any tax and penalties, perhaps insisting contractors have insurance. This will effectively put us back to where we started. All that investment from HMRC wasted, while the NHS etc continue to pay more for contractors than before.
Trebles all round numpties.