back to article UK industry calls for delay of IR35 off-payroll tax rules to private sector

Industry bodies are urging the British government to delay its plans to extend much-hated anti-avoidance tax law IR35 to the private sector, according to an analysis of responses to a government consultation by ContractorCalculator. In the autumn statement of 2018, UK.gov proposed extending the legislation to the private …

  1. }{amis}{ Silver badge
    Thumb Down

    which the government says will cost some £1.3bn by 2023-24.

    So the government recons IR35 will collect an extra £1.3bn in tax, but the tax office being blinkered bureaucrats won't take into account the fallout from IR35 has probably cost the government more than that already.

    I cant see how gross effect of this crap kneejerk law can be anything but negative.

    1. macjules Silver badge

      Re: which the government says will cost some £1.3bn by 2023-24.

      Totally agree. Also they will not take into account that to collect the mythical £1.3Bn will undoubtedly cost them £2.6Bn, due to the new, custom-designed offices and then additional 1,000 bureaucrats.

    2. Cynical user

      Re: which the government says will cost some £1.3bn by 2023-24.

      Some contract roles I've come across in the public sector are already increasing the daily rate by 25-30% to compensate for IR35. I'd imagine this is pretty common.

      Still, as long as the "tax received" inbox claims a bonus, then they're not worried about the "cost of projects" inbox expanding.

      1. MiguelC Silver badge
        FAIL

        Re: which the government says will cost some £1.3bn by 2023-24.

        Not wanting to be the one that says 'told you so', but I did, more than a year ago

  2. Christoph Silver badge

    Meanwhile that same government is pushing for Brexit so that them and their rich chums don't get hit by the new EU tax avoidance laws which would make them pay their fair share.

    1. Paul Crawford Silver badge

      This would be the Brexit that is costing the UK (i.e. rest of us) £26B per year?

      https://www.express.co.uk/news/politics/1045243/Brexit-cost-how-much-has-brexit-cost-uk-june-2018-500-million-pounds-a-week

      1. Pascal Monett Silver badge

        Interesting article, but for one thing :

        "The analysis found the UK’s deficit would largely have been eliminated in the 2018-19 financial year if Britain had voted to Remain"

        I'm sorry, but I don't believe that for one second. That sentence raises my credibility warning to red alert. There is no way any country will get rid of its debt, and pretending that an alternate reality would have seen debt disappear in just one year is the product of one of two things : either they are smoking some real good stuff, or this is a puff piece designed to damage the government and attempt to reverse the UK population's opinion on Brexit, for some goal I cannot imagine.

        In any case, that article contains some amount of smoke and mirrors.

        1. OssianScotland Silver badge

          IIRC Deficit is not the same as debt

          Deficit is shortfall in income over expenses over a period, so adds to debt

          Debt is accumulated deficit (thus if you start from a surplus you can have a deficit without debt, or have no deficit, but still have debt)

          (I should have said something smart involving differentiation....)

        2. Anonymous Coward
          Anonymous Coward

          Deficit != Debt

          Wiping out the deficit by 2018-2019 would have been a possible outcome of a remain win, though I still have my doubts. Even so, Britain would still be carrying a national debt, it just wouldn't be rising any more. Whether or not you actually believe this outcome is plausible, all credible evidence says that deficit or not, we would at least have been better off than we are now.

  3. Anonymous Coward
    Anonymous Coward

    Just retire, that will show them.

  4. Anonymous Coward
    Anonymous Coward

    I am HMRC's target

    Given my earnings, I'm currently paying back child benefit from 2 years ago. I live in Scotland, so I've then had to put up with the extra tax bands, then they lowered the higher bracket threshold (or at least didn't raise it like at Westminster), then they've raised the higher tax rate.

    Honestly, it feels like every time I get something paid and settled, HMRC turns around like fucking Columbo and says "just one last thing, sir" at which point I know I'm getting shafted again.

    BoJo announces a higher rate tax cut? Well that'll be from Westminster then, not Holyrood - I'll not bloody see it if it ever transpires. And just to rub salt in, the Scottish Parliament are talking about *dropping* corporation tax to 17%, making these Limited Company contractors just a little better off.

    Maybe if people in my situation weren't persistently treated like a cash cow to subsidise their inflation-breaking pay rises (been a few years since I saw a raise, and every tax change has seen my take-home drop) people wouldn't be lured into going contract, and they wouldn't feel the need to twist and tear the regulations to pin down each and every person involved. I can certainly see the attraction of an extra grand a month in my pocket.

    1. Aitor 1 Silver badge

      Re: I am HMRC's target

      Two taxation systems.

      That is the essential problem.

      People are taxed one way, and companies a completely different way.. so people will allways try to get taxed under the less onerous system.

      And considering that companies are the ones with more say in the system, no wonder they pay less tax than people.. so of course people want to be taxed as companies.

      And there should be nothing wrong about it, we should all probably be taxed the same way, that would stop tax evasion, and be essentially fair.

      Would this reduce the tax burden on the rich? Not really, they already pay as companies. This would slightly reduce the tax on the shrinking middle class (the ones that really pay for society to work through their taxes and through they work for companies).

      Subsidies etc can stay, so we would have progressive taxes, and I know about tax efficiency, etc etc, I don´t want to bore people and would be off topic.

      1. Gonzo wizard
        FAIL

        Re: I am HMRC's target

        I'm freelance. There are two issues at the core of this that are being completely ignored:

        1. Freelance = flexibility - on both sides. Anything that discourages people from working freelance on a significantly large scale will increase cost to businesses as they will have to put people properly on the payroll, or pay higher day rates to those willing to work inside IR35.

        2. Completely agree with your point about two tax systems. So if HMRC will legislate such that I receive pension contributions, sick pay, paid holiday, paid life insurance and all the other employee benefits and legal protections (i.e. contractual equality at the level of the individual) then fine, go ahead. Either I'm an employee of the end client in every sense of the word, paying my taxes as an employee with all the rights and benefits thereof, or I'm not, and I am compensated appropriately for not receiving any of those benefits or protections.

        As an aside, the government's total tax take will fall if I go back perm, as I suspect quite a percentage will do (as happened when IR35 was originally introduced). Most of my clients are (or have been) multinationals that use international structures to avoid tax. My company doesn't, and neither do I. Food for thought.

        1. fwthinks

          Re: I am HMRC's target

          1) Flexibility has nothing to do with the amount of tax you should pay. If the tax law changes, then either the contractor needs to accept lower income or the company pays a higher rate. The tax man (and all other tax payers) should not need to subsidise the engagement by allowing a contractor to pay a lower tax rate than other people just to keep them in a job. That would be no different from the current system of tax credits for low paid work which just allows much lower rates than would be realistically required to live on.

          2) There is nothing stopping your company paying your employee's (i.e. you) any benefits you want. The issue with the two tax systems is that you are both the employer and employee, you get to pick which approach is the most tax efficient. So you get the best of both worlds. I think you also overestimate the benefits and protections that permanent staff get - its very easy to get rid of people in the UK and the market trend over the last 20 years is to remove benefits - for example nobody offers a final salary pension now.

          3) I agree that tax revenue may fall - but for different reasons. If a multi-national company employs someone in the UK, then they are not able to avoid tax by using international structures. So switching from contractor to permanent (in the UK) will not lower the tax revenue by itself. The real risk is that the company switches to a company like Wipro / TCS etc and the work is moved off-shore.

          1. Sometimes an Engineer

            Re: I am HMRC's target

            Disagree some of this:

            2. Yes there is something stopping you from claiming benefits from your company, and it's called IR35. Allowing your company to pay any expenses whatsoever is banned if you are working within IR35. All income from a contract is assumed to be personal income and cannot go to your company, and then you pay both employers and employees NI on that personal income (as well as normal income tax). If you want to pay yourself pension, you can only do personal contributions, there is no allowable method of paying employer contributions (despite the change requiring all companies to offer a workplace pension with a minimum 3% employer contribution).

            Also, nice benefits like expenses away from home are disallowed under IR35. So if you were an employee and working away from home for 6 months (eg in a hotel mon-fri), you could claim this back from the company you work for, and the company would account for it as an expense. You cannot do that under IR35 (as effectively you don't work for a company, despite being taxed as if you do.)

            So overall I agree with the previous posters. You cannot treat contractors as employees for tax purposes, but not for employment rights purposes. One or the other (and I don't particularly care which)

      2. Doctor Syntax Silver badge

        Re: I am HMRC's target

        "Two taxation systems.

        That is the essential problem.

        People are taxed one way, and companies a completely different way"

        Not really a problem, just a reflection of different modes of operation.

        If you operate a freelancing company you should run it as a company. It's not, or shouldn't be, a conduit for cash straight to the worker's pocket, nor should it be a vehicle for strange financial shenanigans involving loans with peculiar T&Cs or the like. I don't have too much sympathy with those who run into problems with doing the latter. A little sympathy if they were suckered into it by some smart salesman pushing a financial package to make a commission but they should remember if it looks too good to be true it probably is.

        If you're an employee of a company that you don't own you'll expect your employee to take incoming cash, pay your salary, employer's NI, put aside cash to pay your holiday, sick pay, [mp]aternal leave and any employer's pension contributions. Also to continue paying your salary if things get a bit slack. A freelancer's company should so just that. In particular the client pays for instant availability - the regular greeting of an agent is "Are you available?". "Available" almost invariably means out of contract and possibly having been so for some considerable time. Providing that availability is an overhead for the the business.

        Envious of freelancers? If you think you can hack it, including providing the availability, join in. If you can't, keep quiet, the freelancers are doing things differently to the way you choose to do them.

    2. Natalie Gritpants Jr

      Re: I am HMRC's target

      How very dare you use the word 'fucking' next to Columbo. More respect please.

  5. Pascal Monett Silver badge
    Trollface

    I guess I misunderstood the situation

    I thought the UK government just wanted out of the EU, but it would seem that it actually wants out of the economy entirely.

    Well, carry on then.

    1. Anonymous Coward
      Anonymous Coward

      Re: I guess I misunderstood the situation

      It's what people voted for!

    2. Jellied Eel Silver badge

      Re: I guess I misunderstood the situation

      Define economy. EU has exclusive (in)competence in a lot of political and economic areas, not all of which serve UK economic interests. Brexit just means having UK hands on those levers, and less money flowing to the EU to bankroll EUrocrat's lifestyles.. Which can sometimes mean 'tax free'. It's odd that politicians often have favorable tax & expense treatment compared to us mere mortals.

      I think IR35 is similary conflicted, with lobbying serving many interests, and the same with employment law in general. I guess a simplistic view starts with the contract. In my case, that's usually been pretty easy to define with design, implementation, commissioning and handover phases, often with seperate SoW and gaps between phases, which is the nature of that beast. It gets harder to argue when contractors are in post long-term, and not really attached to a defined project. But employers like that because contractors have fewer rights, and with some financial engineering, claim cost reductions.

      But then the combination of IR35 and reduction in FTE benefits just means staff get screwed, and companies struggle to attract & retain staff, or find contractors willing to work on those terms. Which was probably what the big body shops wanted, ie hire them, or work for them, or don't work.

      1. Doctor Syntax Silver badge

        Re: I guess I misunderstood the situation

        "Define economy. EU has exclusive (in)competence in a lot of political and economic areas, not all of which serve UK economic interests."

        The EU isn't them, it's us, or at least has been for a few decades. As long as we've been in the EU we've been in the decision making process.

        "Brexit just means having UK hands on those levers, and less money flowing to the EU to bankroll EUrocrat's lifestyles"

        Brexit means taking our hands off those levers. The impact of that depends on the role the EU continues to play as a suppler and customer. There are a couple of alternative outcomes after the transition period (if any). One is that they don't in which case you'd better hope those unicorns come galloping over the horizon otherwise a good deal of the economy is goingto go the same way as Honda and Scunthorpe steel works. The other is that they continue to be a significant part of the economy in which case you might then start wondering just why it was that we took our hands off those levers.

        1. Jellied Eel Silver badge

          Re: I guess I misunderstood the situation

          One is that they don't in which case you'd better hope those unicorns come galloping over the horizon otherwise a good deal of the economy is goingto go the same way as Honda and Scunthorpe steel works.

          Hopefully it won't be me needing to rely on unicorns for energy generation or transportation. But Honda (and Ford) and Scunthorpe are good examples of EU problems. Announce the ban on ICE vehicles. Watch in horror as ICE vehicle manufacture shuts down. Demonise diesel, and wonder why diesel engine production stops. Cheer as the EU tells us they'll be buying more US oil, gas and soybeans, but don't ask who'll they'll be fed to. I guess EUcrats could get into the pig feed business if that means more snouts in the trough.

          Or the curious case of British Steel. Denied carbon permits, despite the UK still being in the EU. Forced to need those carbon permits because the EU hates industry. British (and EU) steel is uncompetitive pretty much entirely due to carbon and energy policies handed down from Brussels.. Along with stuff like banning coal power, even though it's EV policy and decarbonisation will require a huge amount of additional electricity generation.

          Ok, it's not all the EU's fault. The UK's been taking industry and energy advice from schoolkids after all. But an independent UK could always repeal the Climate Change Act and reverse some of the damage that's done. Plus the UK has always seemed to polish the turds that float down from Brussels, instead of mostly ignoring them as France, Germany, Poland etc do.

      2. jmch Silver badge

        Re: I guess I misunderstood the situation

        " just means having UK hands on those levers, and less money flowing to the EU to bankroll EUrocrat's lifestyles."

        This argument always puzzled me. It's as if there exists some noble British Beaurocrat who is so much more competent and yet works for a pittance.

        Newsflash: most government beaurocracies suck, are expensive and inefficient. Preferring to be screwed over by Westminster rather than Brussels is a curious form of patriotism, given that you're getting screwed over anyway.

        1. Jellied Eel Silver badge

          Re: I guess I misunderstood the situation

          Preferring to be screwed over by Westminster rather than Brussels is a curious form of patriotism, given that you're getting screwed over anyway.

          But that's sovereignty. At least they'd be OUR incompetants, and we wouldn't be expected to pay the tax-free pension liabilities of non-UK bureaucrats. Britsh jails for corrupt, negligent or incompetant British bureacrats I say!

          But the difference being our lot should be acting first & foremost in the UK's interests, which is the problem with the EU as it both expanded from being a simple trading club, and in numbers. Easier to align the interests of a smaller grouping than 28 nations. Or easier to ignore/overrule national interests when thanks to EU-PR, you can just outvote them. But that was handy to get cheap labour, and maintain EPP control over the EU.

          1. jmch Silver badge

            Re: I guess I misunderstood the situation

            " Britsh jails for corrupt, negligent or incompetant British bureacrats I say!"

            Fair enough :)

            "should be acting first & foremost in the UK's interests..."

            I think the time has passed long ago that the interests of one nation lined up internally very nicely in parallel or in opposition to the interests of another nation / set of nations. Really there are the interests of the political / high-level bureaucratic class; the interests of big business and the related directors, owners, financiers and oligarchs; the interests of the middle classes; and the interests of everyone else.

            Those interests have much more overlap across national borders than along them. And in the last few years the interests of the middle classes are those that have been most eroded because that's the people who actually get shit done without paying too much attention to politics.

            1. Jellied Eel Silver badge

              Re: I guess I misunderstood the situation

              I think the time has passed long ago that the interests of one nation lined up internally very nicely in parallel or in opposition to the interests of another nation / set of nations. Really there are the interests of the political / high-level bureaucratic class; the interests of big business and the related directors, owners, financiers and oligarchs; the interests of the middle classes; and the interests of everyone else.

              Or collusion between those classes to serve their own interests, rather than their electorate. Tax policy is an area the EU's steadily encroaching on, or just serving big business for fun & profit. So Britsh Steel and carbon economics. Create an exciting new casino game that allows people to profit from economic activity, and make bank. If it means the collapse of British Steel, or car factories, or even Fiddler's Ferry, well, that's a small sacrifice for other people to make while the political class is saving the planet.

  6. Anonymous Coward
    Anonymous Coward

    Tax revenues will end up going abroad

    I suspect contractors (I was one until recently) will end up working permanently for large multinational consultancies, who for tax purposes are not domiciled in the UK.

    Hence the supposed tax revenues will end up going abroad...

    1. Anonymous Coward
      Anonymous Coward

      Re: Tax revenues will end up going abroad

      Being domiciled in Luxembourg — where, it has to be said, personal taxes are not notably low, but at least the budget is in surplus — I can only but agree. The usual suspects (EY, KPMG, more alphabet soup) have recently awarded themselves spooshy new hot-desking pieds à terre in the city.

  7. NeverMindTheBullocks

    Meanwhile we find out that as part of the roll out of the changes in the Public Sector the Civil Service Head of People (Not a creepy title at all) was suggesting to Public Sector managers in a letter to departments that they should consider shopping contractors who left the Public Sector as a result of the changes, to HMRC.

    Copy of the Letter here - NHS Wales Website.

    https://lnkd.in/gNNgreZ

    Relevant paragraph on page 6.

    "Hiring managers must discuss the contractor’s intention to stay with them. Permanent conversion or longer-term extensions to contracts beyond April may be attractive to some, offering role security. Hiring managers must also make it clear that by remaining in the public sector and having their tax affairs managed through payroll makes them compliant with the off-payroll rules. If it appears they are choosing to go and work in the private sector to simply maintain ‘outside of IR35 status’ you could consider informing HMRC, who may take action to investigate the contractor’s tax affairs further. "

    1. Doctor Syntax Silver badge

      A clear admission of how big a mistake it was combined with being a poor loser.

  8. Anonymous Coward
    Anonymous Coward

    Bound to fail

    There will be some turmoil, but ultimately the measures will fail to deliver. Sure there is a number of so-called "permitractors" who are direct replacement for permanent staff with just a different payment structure, but there is a vast number of us who are genuinely providing professional services in specific fields for short periods of time.

    Even some Public sector organisations had the presence of mind to not blanket apply the IR35 to all contractors, instead opted to review and adjust contract terms and practices. The cost/effort of doing that was far cheaper than losing at least 1/2 of their project resources, causing delays to the cost of millions.

    I can't imagine there will be many private sector companies that will wreck themselves by blanket application of IR35, I guess HSBC (who recently jumped the gun and decided to blanket apply IR35 to all contractors) will be a good test case.

    Just as it happened with the public sector application - the better skilled contractors will move on to roles that are "outside IR35" leaving the companies who caved in to make due with the dregs.

    Most likely outcome is that any private sector company with half a brain will prefer to pay some initial sum as an "investment" to the likes of QDOS and sort out contract terms and working practices and/or take insurance. Over the alternative of suffering severe disruptions to their projects and cutting off their access to the best talent.

    1. Anonymous Coward
      Anonymous Coward

      Re: Bound to fail

      HSBC (who recently jumped the gun and decided to blanket apply IR35 to all contractors)

      No sign of this when I was contracting at HSBC a few months ago, but then I was actually contracting for a consultancy that was providing bodies to HSBC. I think about 90% of a large development department were similar.

      They managed to hire a permanent senior developer on our team, but after a few months he left to go contracting because his "developer" job consisted of nothing but interviewing people.

      1. Doctor Syntax Silver badge

        Re: Bound to fail

        he left to go contracting because his "developer" job consisted of nothing but interviewing people.

        It depends on who he was interviewing. If you mean interviewing new recruits, maybe he was right. If it was interviewing users to find out what was needed then maybe he needs to widen his view of development.

  9. Anonymous Coward
    Anonymous Coward

    Obviously the offshorers and integrators will love this

    Many companies currently take the easy way out - need a team? TCS, get me some bodies, no interviews, no hassle, fly them over. Easy.

    When it then comes to IR35 regulations and HR making the hiring manager's life even more complicated, they'll simply say bollocks to it and get some more TCS/WIPRO/MASTEK/Capita/Generic Body shop people. The already dwindling number of native PMs, BAs and Devs will just be replaced by hassle-free visas.

    Web designers are apparently in short supply in this country and have been added to the list of skills needed to get a visa.

    I wonder how hard our offshore "partners" have been lobbying for this?

    1. sal II

      Re: Obviously the offshorers and integrators will love this

      The real kicker is that quite often these Integrators end up hiring the very same contractors on outside IR35 basis, with the only difference being the client ending up with double the bill for the same resources

      1. Anonymous Coward
        Anonymous Coward

        Re: Obviously the offshorers and integrators will love this

        I'm sure there'll be a few token locals (at twice the cost) where they can't get away with flying someone in.

        Imagine getting your house rewired. Sorry, can't use a local contractor, you have to pay twice as much to get one via an Indian company.

    2. Doctor Syntax Silver badge

      Re: Obviously the offshorers and integrators will love this

      "get some more TCS/WIPRO/MASTEK/Capita/Generic Body shop people"

      Then they'll need some more good freelancers to repair the damage and integrate the repaired product into the business.

    3. macjules Silver badge

      Re: Obviously the offshorers and integrators will love this

      Actually what tends to happen now is that larger enterprises create their own in-house contractor agency, then "employ" contractors via that mechanism and pay the referring external agency a monthly commission via normal invoice.

      Currently on a 12 month contract via exactly that method. No IR35 but far as everyone is concerned it is still a normal external contractor relationship.

      1. sal II

        Re: Obviously the offshorers and integrators will love this

        Why stop there, why not juts use the in-house "agency" to look for people two and cut the middleman.

        Barclays have done it, a lot of their contractors are through in-house "agency", works rather well and there is less disconnect between contractor and client

        1. Doctor Syntax Silver badge

          Re: Obviously the offshorers and integrators will love this

          Really cutting out the middleman is contracting direct, company to company, without any agent, in-house or not. My experience, probably not everyone's was that, at least where the clients were SMBs.

          On a wider scale I wonder if there's scope for a freelancer owned agency. Not so much a group of freelancers doing their own pimping but a regular Ltd Co with the shares spread out between freelancers with the board drawn from the shareholders. The purpose wouldn't be to find work for just the shareholders, it would need a wider resource base, but to ensure that there was at least one agency drawing up proper IR35-resistant contracts and maybe educating clients.

  10. Aristotles slow and dimwitted horse Silver badge

    Ugh...

    "which the government says will cost some £1.3bn by 2023-24."

    But (a) they said this back in 2002/2003 when this was first introduced, (b) they still haven't recovered anywhere near that over the last 15-20 years, and (c) they have pretty much lost every case that has been brought to court/tribunal.

  11. Lee D Silver badge

    I would severely question what software you're using to do payroll if it can't update between November and April along with the entire rest of the country, and the government systems, and everything else.

    I get it's not instantaneous, it may not even be bug-free years later, but to support an "IR35" set of fields, calculations, and records... that doesn't take six months. Especially not if your industry is software that has to legally keep up with the moving-target of tax legislation.

    I know where I work, I have to update the finance software whenever it changes, and that happens a lot just before April to make sure it's right for the new financial year. I'm sure you can push an update in six months.

    Those people *not* using up-to-date (or unable to be updated) software to run their payroll... well, that's their problem. At worst they should buy into one of those online services that does it all for you on a website.

    If your development process is that bad that a well-documented taxation, the details of which will be available long before November, is approved in November, and then you're not at all sure how to get that into your software for next April... when the governments own online taxation portals will similarly be updated for 70m people, maybe you should be taking on a few of those ex-public-sector programmers!

    1. Gonzo wizard

      It isn't just the payroll software but your whole HR system. And your flippant comment suggests you've not really thought this through. Once the changes are enshrined in law you need to analyse what that means for your software package, get those changes made and tested by your dev team, and then a full regression test performed over multiple payroll months. Fix all the bugs. Rinse and repeat. Now ship your product to 'n' client companies who all have their own processes for installing and verifying critical software updates, and who may find problems of their own. If the changes were signed into law on November 1st you've got five months for the whole process. For a few relatively minor changes this is no big deal. To support a whole new class of worker it's a ridiculously short period of time.

      Contracts need to be re-written and thoroughly checked to confirm that they conform to the new laws. And if you're an end employer, you probably need to wait until your agencies publish their updated contracts before you can finish updating and checking them and be certain they are correct.

      Contractor induction, anyone? Go into a bank (or any complex organisation) and there are days of activities that a freelancer has to undertake. I worked for a retail company and was still required to undertake several days of training specifically written for contract staff. All that needs to be reviewed and updated.

      Companies will rightly want and need to review the whole contractor lifecycle to ensure that they comply with the new laws and aren't doing anything that inadvertently leaves them open to legal action from contractors, other suppliers or their own customers. This is non-trivial.

  12. Franco Silver badge

    "The Register has asked HMRC for a comment."

    La la la, not listening is my guess. Either that or "the success of the public sector rollout proves that we should extend this legislation to the private sector"

    I was contacted last week about a contract with a public sector body which is "managed" by one of the usual crowd of large outsourcing companies. Based on what they offered me (and after I stopped laughing) they are taking £100 a day minimum profit per contractor based on usual industry rates for the type of contract, and you can bet they have the tax arrangements in place to minimise what they pay compared to directly hiring contractors, yet individuals are the problem according to HMRC.

    The recruitment consultant was almost apologetic when he told me the day rate, that's how low it was and anyone who is a contractor and deals with consultants on a regular basis will know what a rarity that is.

  13. MercilessMatt

    IR35 Exemptions

    So, with the advent of IR35 in the public sector, contractors looked to greener IR35 free fields, and the public sector found it hard to recruit. Now rumours abound of contractors being offered IR35 exemptions to go and work at HMRC, something of course denied by HMRC. A fellow contractor recently went to work at a local council, who 'had a special arrangement with HMRC whereby their contractors were exempt from IR35'. Check ContractorWeekly site, for 'IR35 HMRC Exemption'.

    Of course, if indeed there is truth in these articles, which the cynic in me believes there is, all of this will go away when 100% of the market is blanketed by IR35 (exempting small companies), because contractors will have nowhere to run, so recruitment will probably be less of an issue. Of further interest is the fact that an employer was recently taken to court by a contractor subject to IR35, and made to pay holiday pay.

    It should also be considered that, if you are currently in a contract, declared outside IR35, and continue to be past April 2019, whereupon you find yourself inside IR35, HMRC may well enjoy the opportunity to say 'So, you are now inside IR35, so you must have been for the period of contract prior to April 2019, when you were declaring yourself out'. I know of at least 2 other senior contractors at my current place, who have a stated intention of leaving before IR35 is enforced, to avoid the chance of significant legacy tax bills.

    When I spoke to my current client, they advised that they will be applying blanket IR35 across the entire organisation. Not sure they realise just how much talent may be walking out of the door.

    1. Doctor Syntax Silver badge

      Re: IR35 Exemptions

      "a special arrangement with HMRC whereby their contractors were exempt from IR35"

      If it were me I'd want to go through the documentation with a fine tooth comb before believing it.

    2. Anonymous Coward
      Anonymous Coward

      Re: IR35 Exemptions

      There are most definitely exemptions, and in the darkest of places too - a large HQ in Cheltenham for example.

  14. Trooper_ID

    i'm leaving but not on a jet plane.

    I have advised that I shall not contract with them after 31st March due to IR35 implications, and HMRC coming after me for several years of back tax when I declared my self out, and they then declare I should have been in. I am leading a large multi site multi agency project which is mostly staffed by contractors. The majority are also not working past 31st March. Good luck in getting that finished after end of March.

  15. EnviableOne Bronze badge

    Blind leading the blind

    When HMRC cant even read their own rulebook and define people in that should be out, how on earth are the rest of us supposed to cope ....

    https://www.google.co.uk/search?q=ir35+hmrc+lost+cases

    I would pick one, but there's too many to choose from

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