Majority of contractors distrust HMRC's IR35 calculator, survey finds The vast majority of contractors do not trust the results of HMRC's online assessment tool determining them inside the IR35 changes, according to a survey by IT recruitment firm Qdos Contractor. Of the 1,500 contractors questioned, 85 per cent said they did not trust the Employment Status Service (ESS) Tool. However, …
The cynical would say that if HMRC had consistent criteria for deciding IR35, it would make it harder for them to catch people out and screw them for more tax.
However, Hanlon's Razor goes: Never attribute to malice that which is adequately explained by stupidity.
I think HMRC score on both fronts...
It's not the fault of the tool, the tool only implements the written rules.
The fact the tool appears to need tweaking implies the rules are either ambiguous or non-existent (or are being made up after the fact). Something I would hope a good lawyer can successfully defeat in court.
(OK, perhaps it is the tool if it's been coded badly, but then you should have got a professional contract team in to develop the application in the first place)
Oh gawd, are IT still implementing the Big Black Book?
Ollie White pointed out the project-killing results of that over forty years ago.
I once turned down a very lucrative contract, pissing off my agent no end and dooming myself to months of unemployment, because the client, when asked, proudly claimed that the time to review "non-standard deviations from written protocols" was after the BBB version was live.
I just couldn't bear the thought of my name being on the first version, and becoming a curse word for all who came after.
"No. His own company was his employer."
A lot depends on the actual day to day working practices. There are several key elements to take into consideration as far as I'm concerned (and I come across as quite 'difficult' when I 'train' the people I work with to adhere to these principles).
1. Right of Substitution - real or sticky plaster? - Some roles are not subject to simple substitution (requiring bespoke client knowledge as well as security clearances etc.) but should at least be *theoretically* possible.
2. BAU or Project work? If the work can dry up and you are out on your ear, that's a key component of being considered outside IR35 imho. BAU roles are hard to defend as they are typically considered 'employee' type roles.
3. Who do you work for? If you work for yourself, act like it. Clients provide the work, but it's up to you how you do it. If they want you on-site for a meeting, they *ask*, not tell. If they give you a company 'signature' to use, amend it to show you are independent of the client.
Just to re-iterate, above all, if you think you work for yourself, act like it.
When it first was released (I haven't checked it since, but I doubt it has changed), the only question that was of significance was 'Are you allowed to substitute', it didn't matter what you answered to the rest.
If you answered 'Yes, I am', then you were outside IR35, if you answered 'No, I'm not' then you were inside IR35.
From what I can see, this is the usual heavy handed approach from HMRC, relying on the agencies, and some public organisations allowing themselves to be bullied, instead employing some capable lawyers, and forcing the issue, relying on the evidence, & results from the last time HMRC tried it on.
There are public organisations who have stuck two fingers up to HMRC, and told them quite plainly 'NONE of our contractors fall within IR35'.
I would like for someone who is close to Jeremy Corbyn, to ask him to publicly promise to repeal IR35 as soon as he takes office (Hey I can hope, can't I).
All the weighting certainly WAS on the Substitution clause, but all of the articles I have read (E.g. Qdos, ContractorUK etc) have said this goes against all the examples they are aware of with case law precedent, as there is also a heavy weighting on SDC (Supervision, Direction and Control).
HMRC also seem to place a lot of weight on using your own equipment, which I have long maintained should be explicitly stated as an exception for IT Professionals. It's fine for plumbers and electricians, but there are few situations IT Professionals would be allowed to use their own laptops, at least for those working on site.
I don't see how this tool is possible given that the judge in Hall v Lorimer (Court of Appeal November 1993) explicitly said,
"This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of this exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another. The process involves painting a picture in each individual case."
Note the use of the word 'qualitative' (as opposed to quantitive) which means that any weighting in the tool runs counter to one of the most important pieces of case law on the subject.
P.
I wouldn't rate your chances, Labour have announced their tax plans for permies but have made no mention of dividend tax etc. yet
Very likely that Labour's Robin Hood crusade will mean contractors and their perceived tax-dodging offshore haven cheeky disguised employee antics will be fall under the banner of crushing the rich and grinding them down to feed the poor.
I await their manifesto with trepidation.
The substitution clause is absurd in IT. Only in some major project with hundreds of cattle programmers would it be reasonable to substitute someone chosen by the original contractor rather than the client.
If I contract with a consultant, it's because I want to purchase their specific experience for a short period. It isn't employment in a form relevant to employee benefits, tax etc. I don't expect to pay those any more than I expect to pay a medical consultant's NI.
HMRC are engaging in the same sort of practice as the people defining what a planet is : they start with the answer they want (that Pluto is, or isn't) and then try to tweak the rules until they get that outcome. It works for individual cases but will never produce generic rules.
The rules will be changed until the targets are met.
£185 Meellion will be extracted from contractors by hook or by crook.
An individual exiting the UK will be counted as two and two people arriving will be counted as one until the promise of 99,000 is met.
Apparently we will be getting jam tomorrow.
1. There will be no jam for you laddie with that attitude
2. Whilst it would probably make Teresa* mildly moist to continually beat the ungrateful proles electorate for their own good, extortion is probably a better method, tell Uber to hand over £185 very big ones and they can have free rein during her reign.
*Try an image search on Google.com from a UK IP address for Teresa May (the glamour girl, not the third rate politician), the results are revealing (and not in a good way). Wasn't bias in search results Fake News ?
"vast majority of contractors do not trust the results of HMRC's online assessment tool determining them inside the IR35 changes"
I'll happily trust it, the day it says "If you provide honest answers to each question asked, the tool will give a definitive and final inside/outside ruling. HMRC is bound by the output of our own tool."
From what I can see the only reason, not to trust the answers the tool gives, is the word "BETA" on an orange background on every page.
Other than that the only reason to be sceptical is a future - after the event reassessment that uses the then current version of the tool. Hence why the best you can do is to include the results of running the tool as an appendix to your agreement, along with any clarifying remarks, and get the client to sign up to that.
The issue wasn't the tool but the Departments' interpretation of the questions; one department changed the rules numerous times over the review period and refused to work with contractors to establish the true nature of the working practices. Whilst another more legally astute department got its contractors to complete the old working practices sheets and made informed judgements based upon case law and facts.
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