back to article IT contractors behind IR35 calculator to leave HMRC... because of IR35

The IT contractors who built the UK tax collectors' IR35 tool to determine whether freelancers are in the scope of the new tax clampdown have themselves been ruled within the scope of IR35. According to sources, the IT software consultancy responsible for building HMRC's Employment Status Service Tool had a total of 250 …

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Big Brother

Take Footgun

And shoot yourself you know where.

Doh!

Almost as crazy as Ivanka Trump learing to code??????

The mind boggles at both.

Shakes head and heads for fallout shelter.

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Re: Take Footgun

>Almost as crazy as Ivanka Trump learning to code

Let's face it if you are rich enough you pay someone else to do it and go off scuba diving from your yacht.

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Anonymous Coward

Re: Take Footgun

https://developers.slashdot.org/story/17/03/30/0355223/ivanka-trump-to-take-coding-class-with-5-year-old-daughter

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Headmaster

changing opinion

From the FA :

"One contractor, who had previously worked for the Intellectual Property Office, said all its IT freelancers had been deemed within the scope of the legislation. That is despite having initially been found to fall outside by HMRC's self-assessment calculator."

From the HMRC tool result :

"HMRC will stand by the result given unless a compliance check finds the information provided isn’t accurate.

HMRC won’t stand by results achieved through contrived arrangements designed to get a particular outcome from the service. This would be treated as evidence of deliberate non-compliance with associated higher penalties."

So how does that work, then ?

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Re: changing opinion

- There are ways of telling whether she is a witch.

- Are there? What are they? Tell us. - Do they hurt?

- Tell me, what do you do with witches?

- Burn them!

- And what do you burn, apart from witches?

- More witches! - Wood!

- So why do witches burn?

- 'Cause they're made of wood? - Good!

- How do we tell if she is made of wood? - Build a bridge out of her.

- But can you not also make bridges out of stone?

- Oh, yeah.

- Does wood sink in water?

- No, it floats. - Throw her into the pond!

- What also floats in water?

- Bread. - Apples.

- Very small rocks. - Cider! Great gravy.

- Cherries. Mud. - Churches.

- Lead. - A duck!

- Exactly.

- So, logically--

- If she weighs the same as a duck...

- she's made of wood.

- And therefore?

- A witch!

- A duck! A duck! - Here's a duck.

- We shaIl use my largest scales.

- Burn the witch !

- Remove the supports!

- A witch!

- It's a fair cop.

- Who are you, who are so wise in the ways of science?

- I am Arthur, king of the Britons.

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Anonymous Coward

Re: changing opinion

Am I the only one?

Whenever I read the word "Witch" now, there is an immediate association/recall of Theresa May in my head. Is this a problem I should openly admit to? or am I normal within the group of El Reg readers.

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Re: changing opinion

I am reminded of the old PC Game Megarace, which was well renowned for the fake prizes contestants could win after races.

One of them was "Light the Bonfire", the sure-fire witch test. It's tagline was "If they don't die, those babes are guilty as hell."

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Re: changing opinion

Is this a problem I should openly admit to? or am I normal within the group of El Reg readers.

This is obviously some strange usage of the word "normal" that I hadn't previously been aware of.

(With apologies to the late Douglas Adams.)

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Megaphone

"Departments have been told to arbitrarily rule that far more are inside IR35."

Has there been just one too many Old Etonians and PPE graduates getting jobs in government meaning a tipping point has been reached, and now it's just an shower of incompetence everywhere you look?

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Re: "Departments have been told to arbitrarily rule that far more are inside IR35."

You have to wonder as to what is the motivation...

HMRC previously engaged contractors, so has paid them service company (aka agency) contract rate plus VAT, of which it got a proportion back via various taxes paid by the service company, the contractor's company and by the contractor (employee of contractor's company). It has now decided that the individual contractor is inside IR35 and so will now incur NI and PAYE on the monies paid to the service company.

Now two obvious questions: Firstly is NI and PAYE due on the VAT inclusive invoice total ie. actual monies paid out or on the invoice before VAT. Secondly, whilst in the case of HMRC this payout is simply a transfer of monies from one account to another, all it has done is to inflate the department's costs at a time when talk is of cutbacks, so what is the real purpose of this - increase costs so that departments are forced to cutback more than they actually need to, whilst at the same time boosting NI and PAYE tax receipts to HMRC?

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Re: "Departments have been told to arbitrarily rule that far more are inside IR35."

in government ... a tipping point has been reached, and now it's just an shower of incompetence everywhere you look

Aren't you confusing government with human society here?

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Re: "Departments have been told to arbitrarily rule that far more are inside IR35."

If HMRC thinks IR35 applies, are they implying that they are, to all intents and purposes, the employer?

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FAIL

Support? We've heard of it.

HMRC: "Customers who use our online services should not be affected by these reforms."

Umm, who's going to be writing the software for those, then? You do know it's software, don't you? Tell me you know what software is ... oh, help.

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Anonymous Coward

Re: Support? We've heard of it.

Customers.... really?

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Anonymous Coward

Karma ... we all know what she is.

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Anonymous Coward

Karma ... we all know what she is.

Payback?

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Anonymous Coward

???

Jesus fucking christ how can it take 250 people to write a simple interview based webapp that runs through some rules and spits out an 'employed' or 'self-employed' answer?

I single handledly wrote an entire rules engine (with UI for both interview, and rules designer interface for a BA to input the rules) at my last job in a few months that would handle underwriting for life insurance policies. The FUCK are all these 250 people doing?

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Anonymous Coward

Re: ???

There are a few hundred people involved in the whole digital delivery side of things. It would have been one team out of 40 or 50 writing the employment status tool.

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Re: ???

"how can it take 250 people to write a simple interview based webapp that runs through some rules and spits out an 'employed' or 'self-employed' answer?"

FTFY

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Anonymous Coward

I have a question ..

Given that they need software to assess people to be "in" or "out", doesn't that suggests a somewhat mild conflict of interest for those creating the software?

:)

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Trollface

Re: I have a question ..

If you answer with "Up, up, down, down, left, right, left, right" it tells you that you owe no taxes, and HMRC will be posting you a check.

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Re: I have a question ..

-If you answer with "Up, up, down, down, left, right, left, right" -

Better yet, use 'IDDQD' and not only do you never pay taxws again, you get a peerage!

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"The Treasury says it hopes to raise £185m for the year 2017/18."

Which will partially fund the increased spending on contractors who have less experience.

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Less Experience?

ah, you mean the coding monkeys in places like Mumbai, Bangalore and Chennai?

Yep folks, HMRC will reduce its costs by engaging someone like TCS and get the work done in India at £5.00 per hour.

It will get delivered after the next election or maybe the one after that.

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Anonymous Coward

Re: Less Experience?

It will get delivered within the contract stipulation but won't work except for one set of test data specifically written so the tests would pass...

Ask me how I know this? :(

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Re: Less Experience?

Wrong.

They will be paid 5£, but HRMC will be charged 70-100£ at least.

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Re: Less Experience?

I assume that if they are based our of foreign shores, then they will be paid locally in their local currency, so presumably UK.Gov will not make a lot from taxes from them either.

Fantastic end-to-end thinking from them.

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Re: Less Experience?

Based on my experience of Indian software and consultancy companies working on Govt contracts it won't be delivered to time and will cost around 40 times as much as they originally.

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easy pickings

Contractors are easy pickings which is why they are being targetted, especially when you read articles this week about 2 consultancies who have taken billions from the government who have paid £0.00 corporation tax

Why not go after these companies instead and get the far richer pickings... Oh yeah, they can and will fight back where us the single contractor cannot do that

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Re: easy pickings

Because I think you'll find one or both of these reasons to be true: #1 The "mega-large-non-tax-paying consultancy" is a major donor to the Conservative party. #2 A conservative MP, peer or other party member, or a friend or relative of aforementioned MP or peer, is on the board of the "mega-large-non-tax-paying consultancy"

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Anonymous Coward

Re: easy pickings

That's pretty much my view.

Do I get paid more than a permie? Sure. I also don't get paid when I'm sick, have no employment rights vis-à-vis being fired or being made redundant, I pay for my own training and pension.

And, having already collected VAT for them (20K a year), given them corporation tax (25-30K a year), paid them 1K of NIC (employers and employees) and given them 15K of personal tax I take the "fairness" argument and "evasion" argument with a pinch of salt.

I do believe that they go after me because:

a) I have cash

b) I don't have enough cash to lawyer up and take them to court

c) I don't have enough cash to hire accountants to hide my money in interesting places or mask it with complex financial instruments

d) they're desperate for cash and don't believe they can get it from corporates or the rich.

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Re: easy pickings

"b) I don't have enough cash to lawyer up and take them to court"

Aren't the PCG or whatever it calls itself these days taking on defence cases or aren't you a member?

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Re: easy pickings

Because the whole purpose is to give the contracts to the non tax paying corporations!

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Re: easy pickings

>Oh yeah, they can and will fight back where us the single contractor cannot do that

Who do you think paid for all those lunches and campaign contributions?

Once the contractors leave, who do you think will pick up the work?

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Anonymous Coward

Re: easy pickings

Given how much you pay in VAT, Corporation Tax, NIC and personal tax, I can take a reasonable guess at what your company REVENUE is per year. Why you can't afford sick pay out that REVENUE is beyond me. This "I don't get paid sick pay" that every fucking contractor on here brings up is total bullshit. Tell you what, I'll forego sick pay and pension contributions (currently paid into a pretty hopeless scheme but it's the only way to get the company contributions), take a 30% pay hike and sort my own affairs out - no sick pay, no holiday pay, no pension contributions.

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Anonymous Coward

Re: easy pickings

No-one's stopping you. Let us know how you get on

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Anonymous Coward

Re: easy pickings

Eh? The point I'm making is that permies don't have the flexibility of contractors to spend their own money as they see fit - sick pay / pensions aren't flexible benefits that you can opt in or out of and take a cash equivalent.

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Re: easy pickings

"Eh? The point I'm making is that permies don't have the flexibility of contractors to spend their own money as they see fit "

I believe the AC who responded to you by suggesting that you try it out by becoming a freelance contractor - that way you will have the freedoms and benefits you are referring to.

Whilst we can (and should) pay ourselves sick pay from the company coffers, if we aren't working then those coffers dry up pretty quickly. Getting paid sick leave from as part of a salaried job doesn't run out in quite the same way.

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Re: easy pickings

>Getting paid sick leave from as part of a salaried job doesn't run out in quite the same way.

Also income protection, as provided by an employer to an employee (ie. sick leave and full salary for three years followed by reduced pension), is a lot cheaper than what a contractor (or individual) can purchase. So you have to make a decision: how much sick leave am I likely to be taking? a couple of days for flu isn't the problem but longer-term...

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Re: easy pickings

>The point I'm making is that permies don't have the flexibility of contractors to spend their own money as they see fit

I can see why you're posting as an AC.

'Employment' has many rights enshrined in law, one of them is sick pay, another more recent addition is the workplace pension.

So the choice is very simple: do you want to work under the umbrella of the rights bestowed upon you as an 'employee' or are you prepared to forego those rights and run the risk for greater rewards?

If you think contractors are "taking the p*ss" there is absolutely nothing (apart from you yourself) preventing you from writing to your MP and lobbying the government to change employment law; something many are expecting the Conservatives to do, after leaving the EU as they try and make a 'success' out of Brexit...

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Re: easy pickings

"Tell you what, I'll forego sick pay and pension contributions (currently paid into a pretty hopeless scheme but it's the only way to get the company contributions), take a 30% pay hike and sort my own affairs out - no sick pay, no holiday pay, no pension contributions."

There's nothing stopping you becoming a contractor and doing exactly this

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Anonymous Coward

Re: easy pickings

"Tell you what, I'll forego sick pay and pension contributions (currently paid into a pretty hopeless scheme but it's the only way to get the company contributions), take a 30% pay hike and sort my own affairs out - no sick pay, no holiday pay, no pension contributions."

Yes, correct, you just described going self employed. What's your point?

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Here's a saw

I want you to climb that tree, sit on that branch and saw it off.

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Anonymous Coward

"HMRC said it is applying the off-payroll for public bodies rules on a case-by-case basis for each role, rather than a particular supply contract"

Pure and simple - lies. It took each of ~25 different roles across ~250 heads in the Digital / MTD project, and blanket assessed them all as "inside". I've seen the original letter.

And as a result of the blanket assessment - it's conceivable that HMRC themselves could now be found liable for the deemed payment PAYE and NICs for all their contractors.

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Anonymous Coward

"And as a result of the blanket assessment - it's conceivable that HMRC themselves could now be found liable for the deemed payment PAYE and NICs for all their contractors."

Might as well stick 'em for full employee benefits and pensions at the same time.

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Travel expenses

It's not just about National Insurance - the new rules also mean that contractors can no longer claim travel expenses. There'll be no more stories about people commuting e.g. York to London (annual season ticket price: £14,000). I've worked in London alongside contractors from all over the country who commute either daily or weekly. If they can't claim travel expenses, they'll look for alternative work closer to home.

Given that most government departments are in central London, this will undoubtedly hit government recruitment hardest.

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Anonymous Coward

Re: Travel expenses

"Given that most government departments are in central London, this will undoubtedly hit government recruitment hardest."

I've said if from day 1.

The travel and subsistence expenses thing gives those living outside London a competitive disadvantage.

Relocating is not an affordable option for many of us.

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Anonymous Coward

Re: Travel expenses

People not claiming back £14,000 per year for travel would not be a terrible thing. Employees pay their travel out of their wages (after they've paid tax too). You can say what you like about sick pay and holiday pay - it's not worth that much.

What will actually happen is those contractors will have to move closer to London as it's not just well paying government work that's centred there.

Now is a great time to hire contractors if you're a private company as supply is about to sky rocket - you should be able to offer lower than usual rates in a month or two ...

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Re: Travel expenses

"What will actually happen is those contractors will have to move closer to London"

Today's contract might be in London, in three months time the next contract might be in Glasgow. Yet another misconception of how contracting actually works. Meanwhile if BigCo has an employee based in York and wants them to spend 3 months working on a London contract will there be any ban on paying that employee's expenses? The whole issue is down to a failure to see the need for a level playing field for small business vs big business.

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Re: Travel expenses

"You can say what you like about sick pay and holiday pay - it's not worth that much"

Well holiday pay is worth AT LEAST 30 days worth a year (probably closer to 35 with bank holidays) and sick pay varies depending on you being I'll but as a permie at my last co I could take 6 months on full pay...

Forget the sick pay though.. let's focus on holiday pay, your employer pays you to have 30 working days off, they still make your pension contributions for that time and still pay employers no payments.

I think youll find its worth more than you think.

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