back to article HMRC emits IR35 tax calculator onto the web for UK contractors

UK's taxmen HMRC has unveiled its tax calculator for contractors to determine whether they should cough up more cash in its freelancer tax clampdown next month. A public beta of HMRC's Employment Status Service Tool was released yesterday to determine the IR35 status of public sector contractors. The changes have long been …

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  1. Dwarf Silver badge

    bool checkIR35State() {

    return true;

    }

    1. billse10

      well, yes, but it's not really a true / false is it? It's more like "true" or "false for now but we may change our mind later without telling anyone, without asking for a parliamentary vote, and without consulting those who will be affected rather than only consulting politicians, journalists, and lobbyists" ...

    2. Daniel von Asmuth Bronze badge
      Flame

      hardware is everything

      If a flame erupt from the device, that shall indicate you're fired.

  2. Anonymous Coward
    Anonymous Coward

    There's one huge, gargantuan, omission on this: a statement that says the output of the tool is the outcome, and unless it says "unknown", it is binding on all parties - the worker, the agency/employer, and HMRC itself.

    Instead, the rules still give HMRC the ability to have cake, eat cake, demand more cake & claim cake not handed over properly (and at the same time, there is no sanction if details of bakers left on train, or wrong recipe given to worker by an HMRC employee).

    1. Hans Neeson-Bumpsadese Silver badge

      The cake is a lie

      1. cambsukguy

        What you have to remember is... There is no cake

      2. Anonymous Coward
        Anonymous Coward

        > The cake is a lie

        Cake is a made up drug!

        1. Anonymous Coward
          Anonymous Coward

          Watch out for the bomb dogs.

    2. Roland6 Silver badge

      re: "There's one huge, gargantuan, omission on this: a statement that says the output of the tool is the outcome"

      I think the way to cover yourself will be to append the output from the tool to any contract, so that they become part of the agreed contractual terms. Also ensure that any statements about supply are consistent with the answers given to the tool.

      Whilst this doesn't prevent HMRC from changing their minds, it does provide evidence that your legal team can use to challenge HMRC and show you were acting in good faith...

      1. P. Lee Silver badge

        >the way to cover yourself will be to append the output from the tool to any contract

        Indeed, though, relying on HMRC's *web* application which could be updated at any time and in any unknown manner and not under your control, seems like a poor plan.

        (I see you there, Windows 10!)

        1. Roland6 Silver badge

          @P.Lee - I agree.

          I was disappointed (but perhaps it was to be expected) that the final verdict webpage didn't include the questionnaire and your answers - like the option they give when you submit an annual tax return. Also they could give the option for your run to be saved along with a unique reference identifier, just as they do with VAT returns.

          So yes, as things stand, you will really need to take a copy of each question, the answer choices and your selection. This would at least mean you have in your agreement key statements that gave you reason to believe the engagement was outside (or inside) IR35.

    3. Roland6 Silver badge

      re: There's one huge, gargantuan, omission on this...

      re: There's one huge, gargantuan, omission on this...

      Instead, the rules still give HMRC the ability to have cake, eat cake, demand more cake & claim cake not handed over properly

      Played around with the tool and it would seem that the Pimlico Plumbers idea of 'self-employment' still gets a green light ie. the relevant questions aren't asked. I'm a little surprised given the findings of the court case. [ See for summary https://www.employeebenefits.co.uk/issues/february-online-2017/court-appeal-agrees-worker-status-plumber/ and https://www.judiciary.gov.uk/judgments/pimlico-plumbers-v-gary-smith/ for full legal details. ]

      So in some ways it is good that HMRC leave some wiggle room, but I'm sure they could have tightened the criteria so that Ts&Cs that effectively require a self-employed person to be exclusively 'employed' by the client to fail the test..

  3. Kevin Johnston Silver badge

    Tax calculations

    The Two Ronnies had this covered many years ago with an HMRC planned 2 point form..

    1. How much did you make last year

    2. Send it to us

  4. Anonymous Coward
    Anonymous Coward

    Filled it our twice, ever-so slightly different inputs each time, and sure enough, duly got both an inside and then an outside result.

    And yet. I have had two independent legal bodies do their checks, and both say I'm outside. My agency says I'm outside.

    I should feel safe. And yet, seriously, I just KNOW they're going to f**k me. Or at least try.

    (Anonymous, because at least they can't immediately jump me.)

    1. Ledswinger Silver badge

      Anonymous, because at least they can't immediately jump me.

      Thinks you. Under RIPA they (HMRC) can compel the Reg to out you - and that's assuming they don't just get GCHQ to help themselves.

  5. Dwarf Silver badge

    Fuzzy logic

    Give the tool a poke, it doesn't ask for any sign up and claims to not keep a record of the transaction (if you believe that)

    It seems to be fairly easy with normal input to get it to give an answer that it can't determine the tax status of this engagement - so, that will help in clearing up all the confusion then.

    I wonder how long it will take until someone pokes the tool to find out what the deciding factors are and large swathes of contracts are updated accordingly..

    1. Phil W

      Re: Fuzzy logic

      "I wonder how long it will take until someone pokes the tool to find out what the deciding factors are and large swathes of contracts are updated accordingly.."

      I'm pretty sure you can find that out without poking the tool. I'm sure we don't yet live in a world where an online anonymous multiple choice quiz is the only way of finding out which tax rules apply to you.

      If that ever happens I'm moving to a world where my tax calculator says I owe "a suffusion of yellow".

    2. This post has been deleted by its author

    3. Anonymous Coward
      Anonymous Coward

      Re: Fuzzy logic

      Decision tree tables are here: https://github.com/hmrc/off-payroll-decision/tree/master/conf/tables/1.1.1-final

  6. philipstreet

    Bad CSRF!

    Select "The Worker".

    Click Continue button.

    The message "Bad CSRF token found in query String" is displayed.

    I suppose it is in beta...

    1. Anonymous Coward
      Anonymous Coward

      Re: Bad CSRF!

      Rats, you beat me,

      I got the same thing.

      I get it with ALL the buttons.

      I wonder if the IT contractor who did this was inside IR 35 or outside.

      1. Roland6 Silver badge

        Re: Bad CSRF!

        Don't see this with any of Chrome 56, IE11, Firefox 51 or Maxthon on Win7 x64.

        1. Anonymous Coward
          Anonymous Coward

          Re: Bad CSRF!

          Mmm. I still see it with Chome 55 Mac OS X but not Safari,

          Very odd.

          1. Roland6 Silver badge

            Re: Bad CSRF!

            Funnily enough, no problems on XP! ie. IE8, Chrome 49...

            So it would seem worth using the feedback form on the trial website.

      2. Anonymous Coward
        Anonymous Coward

        Re: Bad CSRF!

        >I wonder if the IT contractor who did this was inside IR 35 or outside.

        Employee - the contractor who fixes it will be inside but 25% more expensive than last year.

      3. Anonymous Coward
        Anonymous Coward

        Re: Bad CSRF!

        Seems they were inside! See El Reg front page today for more info.

  7. Anonymous Coward
    Anonymous Coward

    What items does the worker have to buy...

    One option is "Equipment - significant tools needed to do the work (not including items already owned by the worker's business)", so using items that the business owns doesn't count?

    Of course, "real" business buy new stuff for each job. Right?

    1. Dwarf Silver badge

      Re: What items does the worker have to buy...

      Most government projects require that you use their IT since you can't connect external stuff to their network - that tick box makes a lot of sense then.

      I expect that most electricians, plumbers, painters, etc would already own the significant tools they need to do the job, otherwise they are clearly not going to be very good at their job. If there is something specialist, like scaffolding, then they are more likely to hire it than buy it.

      Suggested solution to this box - just buy a new laptop / projector / for each contract and write it off at the end. Don't forget to up the rate to cover this loss.

      1. Natalie Gritpants

        Re: What items does the worker have to buy...

        My brain is the equipment in question, I transfer ownership from my PSC back to human me at the end of every contract and back again at the start of the next. I have the paperwork to prove it (or will have very soon, wikis are great).

        If you're going down the CE gadget route, I would say a mobile phone is better as they usually are allowed on the guest network of clients, You can use it for official work communications and leave your personal one at home/in back pocket. You don't even have to buy brand new.

        Of course you can have a shiny new laptop every contract if you want and this is a good reason to get it approved by the CFO.

  8. Anonymous Coward
    Anonymous Coward

    Is there an upside to this?

    If you ran your own limited company there used to be a rule that you could not get benefits like Jobseekers etc.

    Ok, it was a long time ago. but is this still the case?

    If HMRC regard you are a pukka employee then they can't at the same time deny you all the benefits that other worker drones are entitled to.

    I used to contract and paid myself well over the minimum wage as well as paying Tax + NI. I worked for 6 months a year and took the rest off. I wonder how HMRC will view that now? Before, they were ok as they got Tax and NI from me even though I wasn't actually employed. It suited me pefectly at the time. Then along came children so I went permie.

    1. Brewster's Angle Grinder Silver badge

      Re: Is there an upside to this?

      If you're not paying Class 1 NICs (i.e. are not an employee) then you won't get contributions-based Job Seekers Allowance (JSA). But if you're really skint, they'll still give you income-based JSA.

      1. This post has been deleted by its author

      2. Anonymous Coward
        Anonymous Coward

        Re: Is there an upside to this?

        "If you're not paying Class 1 NICs (i.e. are not an employee)" then as you've just said, you are not an employee and should not reasonably be expected to pay tax as such. When you get the benefits due to an employee (such as sick pay and holiday pay), then that should change.

        Actually, why am i bothering: they can't even be bothered to provide a tool that provides contractors with a definitive and binding answer, this isn't about fairness or treating the different types of employment in the twenty first century in a way that is appropriate for each (not just contractors, but also zero hours, or jobs that allow unfair expenses, etc), this is a plain old copy of that Two Ronnies sketch above. Grab as much money as they can, starting with one of the easy targets - people in the public sector but not in twentieth century employment contracts ....

        Funny how they haven't bothered going after tax-dodging newspaper owners over the years ;-)

  9. Graham Jordan

    Former public sector contractor

    Unable to determine the tax status of this engagement.

    So in a scenario where I still worked there, let me call them right now.

    "Hi it's x, working at y. Am I... oh why is there a Capita van pulling up outside.. oh why are they carrying guns... oh fuck!!"

    1. Anonymous Coward
      Anonymous Coward

      Re: Former public sector contractor

      What!?

      I want some of what you're smokin'

    2. Colabroad

      Re: Former public sector contractor

      If Capita start arming their goons then the safest place to be is right in front of them.

      Insert joke about missing targets, friendly fire, and shooting themselves in the foot.

      1. Anonymous Coward
        Anonymous Coward

        Re: Former public sector contractor

        "If Capita start arming their goons then the safest place to be is right in front of them."

        Recently came back from a biz trip Africa and concluded no one in a G4S (let alone Crapita) uniform should be allowed to carry an assault rifle. On more than one occasion, I found myself asking "Would you be kind enough to point that at someone else?"

  10. This post has been deleted by its author

  11. Christoph Silver badge

    Err?

    Have I got this right? The government is charging the contractors more tax, so the contractors are putting up the amount they charge the government to allow for this? So after including the amounts needed to pay the accountants to sort it all out, the government ends up worse off?

    1. Brewster's Angle Grinder Silver badge

      Re: Err?

      Yes, but most of the contractors are paid by local government and it's the national government that gets the money.

  12. DougS Silver badge

    I live in the US

    But for the heck of it I put in answers that apply to me on my contracts here at home. After playing 20 questions, it said I was covered under it, so I guess I'd have to pay more. What is it exactly that you're being made to pay - the equivalent of FICA in the US (for those who know both tax systems well enough) or something else?

    I pay myself a salary that falls a bit short of the maximum FICA level so I save maybe $5000 or so, taking the rest (larger than what I pay myself in salary) as a distribution from my S corp. I was audited over something else by the IRS about six or seven years ago and they asked about that arrangement but didn't have a problem with it at the salary level I was paying myself.

    It sounds like those not subject to IR35 would effectively be paying themselves a salary of $0 and taking the whole wad as a distribution - which would save me a further $13,000 or so were that permitted here - but I guess it is all or nothing there so you can't do a halfway thing like me to pay part as a salary and take the rest as "owner's income".

    I assume that if I diddled around I could figure out what I would need to change in my contracts to insure I fell outside it. So assuming I could get clients to agree to those terms, it wouldn't amount to much. But having never sought a contract in the UK, that might be more difficult than it appears.

    1. Anonymous Coward
      Anonymous Coward

      Re: I live in the US

      one of the issues is that this rule change is being brought in for people on existing contracts, with no co-ordination with the "employers". People could well be on a contract that does not necessarily have any mechanism for a rate review, yet the rules are being changed under them after they have agreed a rate. That would be one thing - but on top of that some "employers" are applying these rules across the board, even if they don't apply to specific contractors, and terminating people who ask questions (or who want to wait for the detailed rules). This is being done in (at least on case) purely based on a combination of feaer and a lack of info from HMRC - something handled so badly it can only be deliberate.

  13. h3nb45h3r

    A false sense of security

    Clearly they're just calming fears prior to launching the actual test and catching everyone and back dating the tax.

  14. This post has been deleted by its author

    1. d3vy Silver badge

      Re: Keep breathing & ....

      What the fuck are you on?

  15. Anonymous Coward
    Anonymous Coward

    YESSSS!

    Took the test, caviar and dom perignon back on the shopping list.

  16. h3nb45h3r
    Facepalm

    hmmm......

    Just did a search for the test and found this from HMRC's website from 2015, it appears to be the same thing, I do hope they're not paying an external contractor to produce the test....

    http://tools.hmrc.gov.uk/esi/screen/ESI/en-GB/summary?user=guest

  17. Joe Harrison Silver badge

    A decision at tax tribunal

    www.thompsonstradeunionlaw.co.uk/information-and-resources/lelr/weekly-510.htm#checklist_approach

    HMRC must avoid a "checklist approach" and look at the whole picture. Doesn't bode well for their checklist site then!

  18. Anonymous Coward
    Anonymous Coward

    Unfortunately no matter what the HMRC IR35 tool says to you the contractor, the end user can always find some way of spinning their responses so that it places you inside of IR35.

    My recent experience of this was around the substitution clause - my end user insists on putting in our contracts a substitution clause however when it comes to IR35 suddenly they don't like their own clause and have stated that I would not be able to substitute (even though they insist on it being in the contract) as in practice I have not substituted and if I was to try (because it's in my contract) then they would deny the substitution on the grounds that they are not vetted by them as the end user - without even considering who I would substitute myself with and whether this person would have already passed the vetting!

    1. Roland6 Silver badge

      Re: substitution clause

      So are you saying that your end user/client has decided your engagement now falls within IR35 and so have volunteered to pay NI and PAYE on the amounts you (or your agent) are invoicing them for?

      The real issue with substitution clauses for the typical IT contractor, ie. one-man company, is that in many of the exceptional situations where you would wish to invoke the substitution clause and so complete delivery of the contract, you will be indisposed to organise such substitutions. Obviously, contracting through an agency/intermediary puts the real onus on fulfilling the substitution clause on the agency...

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