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 …

  1. Steve Davies 3 Silver badge
    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.

    1. Doc Ock

      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.

      1. Anonymous Coward
        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

  2. Adrian 4 Silver badge
    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 ?

    1. Dan 55 Silver badge

      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.

      1. Anonymous Coward
        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.

        1. Commswonk Silver badge

          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.)

      2. Franco Silver badge

        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."

  3. Dan 55 Silver badge
    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?

    1. Roland6 Silver badge

      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?

      1. JohnG Silver badge

        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?

    2. 's water music Silver badge

      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?

  4. Bogle
    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.

    1. Anonymous Coward
      Anonymous Coward

      Re: Support? We've heard of it.

      Customers.... really?

  5. Anonymous Coward
    Anonymous Coward

    Karma ... we all know what she is.

    1. Anonymous Coward
      Anonymous Coward

      Karma ... we all know what she is.

      Payback?

  6. Anonymous Coward
    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?

    1. Anonymous Coward
      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.

    2. Doctor Syntax Silver badge

      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

  7. Anonymous Coward
    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?

    :)

    1. Swarthy Silver badge
      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.

      1. Captain DaFt

        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!

  8. Christoph Silver badge

    "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.

    1. Steve Davies 3 Silver badge

      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.

      1. Anonymous Coward
        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? :(

        1. Bluenose

          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.

      2. Aitor 1 Silver badge

        Re: Less Experience?

        Wrong.

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

      3. Dwarf Silver badge

        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.

  9. Julian 8

    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

    1. Shady

      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"

    2. Anonymous Coward
      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.

      1. Doctor Syntax Silver badge

        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?

      2. Anonymous Coward
        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.

        1. Anonymous Coward
          Anonymous Coward

          Re: easy pickings

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

          1. Anonymous Coward
            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.

            1. Sir Runcible Spoon Silver badge

              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.

              1. Roland6 Silver badge

                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...

            2. Roland6 Silver badge

              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...

        2. d3vy Silver badge

          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

        3. Anonymous Coward
          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?

    3. Aitor 1 Silver badge

      Re: easy pickings

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

    4. P. Lee Silver badge

      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?

  10. Natalie Gritpants

    Here's a saw

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

  11. Anonymous Coward
    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.

    1. Anonymous Coward
      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.

  12. Buzzword

    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.

    1. Anonymous Coward
      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.

    2. Anonymous Coward
      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 ...

      1. Doctor Syntax Silver badge

        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.

      2. d3vy Silver badge

        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.

      3. d3vy Silver badge

        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)"

        Utter arse gravy.

        For a start a permie wouldn't be able to commit to that commute and if they needed to for a short term placement their company WOULD have to pay it.

        As for the paying commuting expenses from post tax income... Also arse gravy in many situations.

        Every permanent employer I've had has offered travel loans for the purchase of rail cards etc, the loan is paid back as part of salary sacrifice.

        This is a very common arrangement.

        1. Anonymous Coward
          Anonymous Coward

          TAX CHEAT ALERT!

          "Every permanent employer I've had has offered travel loans for the purchase of rail cards etc, the loan is paid back as part of salary sacrifice.

          This is a very common arrangement."

          So you are taking a reduced salary in order to avoid paying tax and NIC on travel loan repayments?

          Doesn't that make you a tax cheat?

          1. Tom 38 Silver badge

            Re: TAX CHEAT ALERT!

            So you are taking a reduced salary in order to avoid paying tax and NIC on travel loan repayments?

            Doesn't that make you a tax cheat?

            No man in this country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores. - Lord Clyde, Lord President of the Court of Session

            Every man is entitled if he can to order his affairs so as that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax. - Baron Tomlin, Lord of Appeal in Ordinary

            Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes. - Judge Learned Hand (what an awesome name), US Second Circuit

          2. d3vy Silver badge

            Re: TAX CHEAT ALERT!

            "So you are taking a reduced salary in order to avoid paying tax and NIC on travel loan repayments?

            Doesn't that make you a tax cheat?"

            Only in the same way as a pension or cycle to work scheme makes you a tax cheat.

            It's all above board and approved by HMRC, they have a page on their site about it.

            My point was you can't complain that contractors get tax free travel expenses as a benefit when employees can do the same thing though a different mechanism.

      4. CrazyOldCatMan Silver badge

        Re: Travel expenses

        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 ...

        This happened after all the Y2K contracts started to finish (which was also the last time I was a contractor..) - lots of partially-educated muppets were released into the contract pool (most of whome only really knew how to do testing - very few had any real support experience). As the result, my contract rates went down from ~£40/ph to < £20/hr.

        At which point,. it was no longer financially-viable to be a contractor and I went back to permanent wage-slave status again.

        But at least I now have an advantage of looking down on the Evil Kontract Scum!

      5. Anonymous Coward
        Anonymous Coward

        Re: Travel expenses; environmental concerns too

        "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."

        Air pollution in London

        London surpassed the EU's annual limit for nitrogen dioxide exposure just five days into the new year, according to King's College. The university estimates that air pollution is responsible for 9,400 premature deaths in London every year.

        It simply doesn't make sense to encourage yet more people to cram into London.

        1. Anonymous Coward
          Anonymous Coward

          Re: Travel expenses; environmental concerns too

          "It simply doesn't make sense to encourage yet more people to cram into London"

          Yeah it does, the more lungs available the higher the quality of air filtration. Duh.

          London is the only place where id invite someone to breath on me to save my poor lungs having to do tthe hard work.

  13. web_bod

    The team?!?

    Are you serious?, GDS is so inept, that a handful of questions required a team of contractors to deploy?

    1. d3vy Silver badge

      Re: The team?!?

      "Are you serious?, GDS is so inept, that a handful of questions required a team of contractors to deploy?"

      Yes - if there was not enough perm resource to develop and manage the project it would have been staffed by contractors. Thats what contractors are for.

  14. Anonymous Coward
    Anonymous Coward

    From my decades long employment as an engineer within various goverment departments, I think I can add some pearls / dollops of wisdom / shite (delete as applicable).

    Unions and Employment Equivalency

    Despite all that's happened over the past 30 years, the unions still have a strong grip on the civil service. Worse, there's a notion (formerly a custom, probably originally a civil service rule) that above a certain employment grade one is considered 'universal'. That is a sufficiently senior person running, say, a large software development project is considered to be the same as a senior person running, say, the child protection department in a social services department. They are/were/though-of-as 'interchangeable'.

    With that interchangability comes an expectation of pay equivalency.

    This is where the problems set in. If a government department wants to employ a bunch of shit-hot software developers, it has to pay market rates. But if it does so, it runs the risk of the unions making a case for all people of the same grade throughout the entire civil service regardless of what it is they do being paid the same.

    No one in government is brave enough to run the risk of a general civil service strike. That brings carnage (or blessed relief, depending on one's point of view).

    So, even if a department wanted to pay the going rate for decent permanent engineering staff, they can't really do so. So they get contractors in.

    Permanent Contractors

    Contractors in the civil service are, in theory, there to plug a short term gap.

    The problem is that throughout my entire 25 years I never once saw anything but gaps. The gaps may change shape, but there are always gaps. Thus there are always contractors, charging large sums of money, seemingly way beyond what it would cost to employ highly skilled permanent engineering staff a competitive salary (including the pension liability). It would almost certainly be cheaper in the long run to increase the established compliment of the department, increasing the salaries (setting aside my point above for a moment) to make that a realistic recruitment target.

    I occassionally saw a contract clear-out - someone somewhere would decide to get rid of them - but they'd always drift back. Sometimes quite quickly. Occasionally exactly the same people for an increased fee.

    But it's difficult to work around my first point. It's a hard problem to solve. It's partly why privatisation is so favoured.

    1. Doctor Syntax Silver badge

      "Unions and Employment Equivalency"

      Admittedly my experience of this is from 30 years ago but there were separate groups of general service, scientific and engineering. There were differentials between them. When I first joined PTG (engineering) were at the bottom of the heap. They then got an increase because of difficulties of recruitment which left scientific grades at the bottom.

      I don't know how IT fitted into that group - it might be that S/W are in general service and PTG is restricted to chaps with screwdrivers and soldering irons. But in principle, unless things have changed radically, there would be no problem with a set of scales to make recruiting IT on realistic salaries.

      The real problem would be the thought that they might get near, let alone above, general service grades who, as far as I could see, were interchangeable as they were all equally unqualified for any work they might be given.

  15. Maddock 124

    About time the contractors paid tax.

    1. d3vy Silver badge

      "About time the contractors paid tax."

      I know, I know don't feed the trolls...

      Last year I paid around 13k in Corporation tax, 2k in NI and about 2.5k (It was somewhere in the middle of 2 and 3) personal income tax. So thats £17,000 - how much did you pay?

      I also collected around £5K in VAT for HMRC and helped to keep a small accountancy firm in business.

      1. Anonymous Coward
        Anonymous Coward

        Stuff the numbers, what was the overall percentage that you paid? Then you can compare permie tax to contractor tax. I wager you paid a lower rate than a higher rate permie? I paid well over double your NI and income tax.

        You kept a small accountancy firm in business? Another tax dodger no doubt...

        It's time to scrap the complex Income / Corporation tax / NI nonsense and replace it with a graduated rate for all income.

        Sick pay is biggest bogus argument I've heard in my life - I reckon have had 10 days off sick in the past 20 years.

        1. psychonaut

          @AC

          i get what you are saying, it may seem unfair, but try starting out on your own, you will appreciate all the help you can get.

          you clearly dont have any idea of the uncertainty and risk involved in generating not only your own employment, but the employment of others, either directly from hiring people to work for you as you expand or indirectly by using their services. and also, yes, sick, holiday, pensions, child vouchers, medical etc.

          it depends what line of business you are in, but when i started i didnt make very much money for several years.

          i do believe it is worth something more than working for the man.

          little companies can grow into big ones, generating tax revenue and employing many people (mine doesnt, im too scared to do it, and im too much of a control freak, and im comfortable with making a reasonable living). someone has to start these things, and its risky. surely we can have a little bit of a benefit?

        2. d3vy Silver badge

          @anon.

          Yeah the % was somewhere in the low 20s.

          Does that make you upset?

          I doubt my accountant has a tax bill in double figures, he's very good.

          I can picture your little face getting redder and redder as you thump your hands on the desk and stamp your feet at the thought of all of these people paying less tax than you.

          On a serious note the % paid means nothing, permies have many ways to legally keep themselves in the 20% tax bracket, it's not my fault you're a bit too thick to realise this and take advantage.

  16. x 7 Silver badge

    Also affects others, not just IT staff.

    For instance most of the breast cancer screening staff at the NHS clinics in Manchester are affected, and are likely to leave. Breast screening in Manchester is likely to come to a stop as a result. Management hasn't realised this yet. Other parts of the country are also affected

  17. kmac499

    You couldn't make it up

    Reminds of the guy who made the hollow Bronze Bull for some ancient tyrant king. The kings enemy was locked inside and a fire lit under the Bull,. The King was so impresseed with the idea he supposedly put the inventor in the Bull as the first test subject.

    The HMRC have finally gone certifiably Nuts. Such a shame, just as HMG will need a load of extra contractors to sort out the clusterfuck of BREXIT,

    1. Anonymous Coward
      Anonymous Coward

      Re: You couldn't make it up

      They will hire from the usual suspects, crapita, etc. They dont pay taxes, but do offer nice "rebates" to the right people.

  18. Domino
    Linux

    Open Source Government

    I see the plan behind ir35..

    A team of permies whose job is to deploy open source government software.

    If the open source doesn't do what is needed, hire contractors to add features to the open source software. The indirect delivery surely is outside ir35 with payment per completed feature rather than time based.

    Solves some (failed) delivery, transparency and data protection issues as a bonus..

  19. eileenmorris

    Do not see the problem, this was done in the construction Industry twenty years ago, I remember because I was doing the PAYE and suddenly we acquired extra PAYE employees. My employer just negotiated a good rate with the Tradesmen but then they were all good tradesmen.

  20. davechaplin

    HMRC breaks promise to stand by it's own tool - for its' own contractors!

    So, let me get this straight about the ESS tool......

    The market have told HMRC that their tool is producing the wrong answers.

    The HMRC ESS tool has been shown to give contradictory answers compared to actual historic IR35 court cases.

    HMRC responds saying it is accurate, but that they are going to keep on working on it. They also say that they will stand by the result of their tool, unless they consider the arrangements contrived.

    The market loses complete trust in their tool and either (a) conducts their own testing, or (b) invokes blanket bans, and in some cases (c) just ignores the whole thing.

    Some of HMRC's IT programmers, some of which are working on the tool project themselves, take the test and are found to be outside IR35 - which they probably should be since it's project work. HMRC says they disagree, and will not stand by the result they said they would stand by and try and force false employment onto the contractors - who then jump ship.

    Why is this? Surely they believe in the results or they don't. Unless they are playing the "contrived card". Are they now going to go after the contractors for extra tax, the ones who built the flawed tool?

    HMRC did not listen last year when the whole market told them this would be a disaster. It is a disaster. Are they going to listen now to the calls to delay this nonsense for 6 months?

    Dave Chaplin, ContractorCalculator

    1. Sir Runcible Spoon Silver badge

      Re: HMRC breaks promise to stand by it's own tool - for its' own contractors!

      "Are they going to listen now to the calls to delay this nonsense for 6 months?"

      I have two words for you that will answer that question: Cognitive Dissonance.

      For those that aren't aware of what this means: https://en.wikipedia.org/wiki/Cognitive_dissonance

      People who have invested a lot (time/money/reputation) on a particular course of action will do just about anything *except* admit they were wrong. They will just dig the hole even deeper (i.e. they will roll this out to the private sector next year).

      There will be lots of pain and tears before this policy is actually shot through the head and buried.

  21. David Lawrence

    Still don't understand....

    ...why they don't just force the self-employed to pay themselves a salary that is the equivalent of the same permie job. They would then have to do the NI as well. The rest is an honest profit to be disbursed in the same way that any company does it.

    It's a win-win because my understanding of the original problem is that the National Insurance coffers are running dry. I used to be a contractor and I would have had no problem with such a fair and reasonable approach.

    1. Sir Runcible Spoon Silver badge

      Re: Still don't understand....

      That's a much more sensible approach than the one they are taking now - but how would you set the values?

      1. Roland6 Silver badge

        Re: Still don't understand....

        >but how would you set the values?

        Well as currently this is public sector... Use HRMC rates, just as HMRC's expenses policy is used to assess other businesses expense policies...

        So a contractor on £400+ pday is probably doing the same work as an HMRC employee on £26K pa. ie. minimum wage - if only they could get one with the relevant experience and willing to work for that rate... So provided you are paying yourself at least the HMRC permie rate your okay... :)

        In view of the recent cases concerning pseudo-self employment such as Pimlico Plumbers and Uber, I do hope that PCG take HMRC to court about their recent IR35 decisions, because by changing the status of existing agreements from Out to In they've effectively admitted to being an “unscrupulous” employer and thus now should provide backdated employee benefits to those affected. Because I'm not sure that HMRC can choose to opt out of existing employment law without that law being amended: employment is employment...

        1. d3vy Silver badge

          Re: Still don't understand....

          "So a contractor on £400+ pday is probably doing the same work as an HMRC employee on £26K pa. ie. minimum wage"

          No permie developers (except maybe graduates or juniors) are on 26k a year.

          26k isn't minimum wage.

          And you assume that client work is the only thing we do... How do you figure i reimburse myself for all the bits that i do for my company?

          What about the evenings and weekends spent upskling? Actually... What about the costs of my training? On 400 a day after corp tax and company expenses and the wage you propose there's not enough for training (at least not decent training)

          I don't think you've thought this through.. given your figures/assumptions i don't think you have much of a grip on the reality of the job market in 2017.

          1. Roland6 Silver badge
            Pint

            Re: Still don't understand....

            @d3vy - you missed the caveat: "if only they could get one with the relevant experience and willing to work for that rate..."

            Also you missed the point, I was responding to the line of questions:

            "why they don't just force the self-employed to pay themselves a salary that is the equivalent of the same permie job."

            "but how would you set the values?"

            The problem HMRC would have is that if they actually set the equivalent rate too high, then it would be above what they would pay their employee's and thus immediately give the unions a reason to demand higher wages. So the only option is to set it low....

            The outcome of this is that so long as you pay yourself a salary (ie. income on which NI + PAYE is paid) more than £26k pa then you have satisfied the 'equivalence' test; what you do with the remaining monies your company receives is wholly up to you, as you've ticked the box of having paid the right amount of tax... :)

            Sorry, you are right, circa £26k is the maximum you can earn and still be in receipt of benefits (other than child benefit).

            And I agree the job definition of a contractor/self-employed person can be very different to an employee. However, given the numbers of emplooyees reading/contributing I've taken the narrow viewpoint of the job a client has contracted you to do, as the rest is largely invisible to them. But as I note above you are effectively rewarding yourself out of the other monies the company has accrued for these activities...

            1. d3vy Silver badge

              Re: Still don't understand....

              @Roland

              Ahh right, I see, so force them to take at least 26k in salary and then they can do what they want with the rest - that makes more sense and would likely be preferable to the way that IR35 is implemented.

              --

              However with the dividend rate being increased and the allowance being decreased the % of tax being paid by contractors has already crept up considerably in the last few years, The effective % that i paid out was always not far off what you would pay through PAYE anyway, its probably even closer this year.

              --

              A quick bit of back of the fag packet maths shows that the extra wage WOULD increase the contractors personal tax contributions BUT because wages are a business expense the corporation tax would DECREASE.

              This means that the money in the company available for the contractor to take out at that sweet 7.5% dividend rate goes up a bit and HMRC gets less money overall and the contractors net remains fairly unchanged as the extra dividend pays their PAYE bill.

              * Disclaimer - Im not an accountant and its 1am so I am prepared to be wrong - but at the moment it all looks right.

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