IR35 costs UK Research and Innovation £36M – the same it spent funding tech projects

UK Research and Innovation (UKRI) has been hit with a £36 million ($44.5 million) bill after miscalculating tax it owed on the country's controversial off-payroll working setup, IR35. The figure – roughly the same as what the body spends helping organizations move tech from discovery to production – resulted from a review of …

[Natalie Gritpants Jr]

So the tax owed by the monitoring and assessment officers is equal to the amount spent on actually doing what the department is meant to do. Okay it's for two years, but unless they are all paying more than 50% tax/NI it means their wage bill is greater than the amount they are monitoring and assessing. And now it's even larger.

You may as well give the money out as a lottery among companies less than a year old.

[Michael]

description chosen to make a point

UKRI have a budget of £7,904 million in 2022 to 2023, to £8,874 million in 2024 to 2025.

The costs here are for the project managers that monitor the actual research projects. I've previously contracted PMs that do this job a number of days per month. So I don't see why they should be classed as inside IR35. Most of these people will only be doing this part of the time.

[Crypto Monad]

Re: description chosen to make a point

I've previously contracted PMs that do this job a number of days per month ... Most of these people will only be doing this part of the time.

That may be true, but full-time or part-time doesn't really make any difference as to whether it counts as employment or not. Part-time employment is a thing.

It's down to other things like control, substitution, and mutuality of obligation. Roughly speaking: if you can instruct the project managers what to do or how to do it, then it's likely to be employment. If you contract them to manage a project, but they can do it using methods of their own choosing, or even subcontract the task, then it's likely not employment.

[Rich 2]

I don’t understand the logic of fining a publicly funded body (for whatever reason, not just IR35)!! All it does is take money away from said body so they can’t do their job as well

[jdiebdhidbsusbvwbsidnsoskebid]

This isn't a fine, it's just tax that hasn't yet been paid.

But the point about publicly funded bodies paying another part of government is well made. There was a rumour years ago that the government were looking into paying government employees tax free to save on admin. I also heard that the idea was scrapped as being too complicated!

[Anonymous Coward]

Er no, actually

It is not tax that hasn't yet been paid, the contractors would already have paid taxes on their earnings. This is, in fact a penalty notice on the public body which equates to the tax that HMRC have calculated should have been paid if they had been employees. i.e. HMRC are taxing the same income twice. The contractors can request a refund of their own taxes paid as a result, which HMRC are very poor at advertising, something which both a Commons Select Committee and the National Audit Office have criticised them over.

Bearing in mind that the majority of these contractors have already been assessed using the HMRC CEST tool as being outside of IR35 which HMRC then come along in an audit and then say - "ooh no you got it wrong!!!" ??? and then levy the penalty. Even when it was their own tool which spelled out that all was fine. The whole thing is an utter shambles. I know all this as I have been through it as a contractor....

[NeilPost]

Re: Er no, actually

Why don’t HMRC pursue the contractors for back tax, and only punish the company as a last resort when that become non-viable..

That being said, how should UKRI enquire about tax paid, as TBH a tax return is a private matter between HMRC and tax-payer.

… and I would object to any attempt to gain any insight into it.

Although I absolutely support IR35, it’s hardly surprising contractors are being fucked off if they don’t want to convert a masquerading as FT employment into actual FT employment.

[katrinab]

The big complication here I guess would be taxing the employees other income, such as bank interest.

A doctor earning £100,000 for example would expect to get £500 of interest tax free, then pay 40% on the rest, not get the first £18,570 tax free, then pay 20% on the next £37,700.

[VoiceOfTruth]

Tie the slaves up with red tape

Said the experts in red tape.

[cookieMonster]

Unicorn Kingom??

LMFAO !!!!!

[Rich 2]

Your timeline is way off

“ It came into force across the economy in April 2021…”

No it didn’t!!! IR35 was introduced by Tony Blair’s government back whenever

The way it was implemented changed relatively recently, but the basic fuck-up - sorry, IDEA - has been about much longer than that.

[adam 40]

Green Card Day

who remembers that?

[Mishak]

Re: Green Card Day

I was there. I remember the look on the faces of the security guys when we all rolled up at the same time (procedures were changed as a result, even though there was no bother).

And the queue at the desk, where two people were getting the people at the front of the queue to fill in a green card so they could take it to their MP - leaving the rest of the queue waiting until they returned. That was soon sorted when one of the contractors leant over the desk, grabbed a stack of cards and walked down the line saying "fill these in so they only have to make one trip into The Chamber" - stalling tactic circumvented!

A pity it never made the news, unlike the 20 or so people protesting outside for better treatment for the disabled (who did need to be listed too).

[katrinab]

Re: Your timeline is way off

Tony Blair's version of it required the "employee" to run their own payroll and pay their own tax. The change was to have the tax deducted at source like what happens for actual employees.

[Primus Secundus Tertius]

Hire a contractor

I guess they need to hire one or two contractors to sort out this contractual mess.

[steamnut]

Who Knew?

Ever since that much-hated lady, now a dame, called Dawn Primololo announced IR35 is has been an example of misplaced legislation. It has never addressed the stated problem of employees quitting on a Friday and rejoining the next Monday as a contract supplier something they called "disguised employment".

And the problems keep coming....

Who benefits from fining a public organisation anyway?

[Doctor Syntax]

Re: Who Knew?

As I recall it the official justification was to stop companies firing employees and hiring them back as contractors along with such other exploitations as zero hours contracts. It worked well didn't it?

[Anonymous Coward]

Re: Who Knew?

… ironically- and yes they actually do pay the tax, NI and properly accrue you holidays, but evade pension requirements - the Department of Health’s own fully owned ZHC NHS Bank/Locum Agency ‘NHS Professionals’ is even worse than this.

Their employment contract hires you at the start of your shift - say 9am, and auto-terminate your employment when your shift finishes - say 5pm.

Fucking madness.

[jdiebdhidbsusbvwbsidnsoskebid]

"So the tax owed by the monitoring and assessment officers is equal to the amount spent on actually doing what the department is meant to do"

No, that £36m quoted is a tiny part of UKRI's overall annual budget of over £8bn. And the tax bill is over 5 years. It's a cherry picked number that just happens to be very close to but not relevant to the number that is the subject of the story. I'm verging towards "shame on you el reg".

[Tron]

Two ways of looking at it.

1. A government policy so crackpot that the government itself couldn't work it, and now has to chase itself for cash.

2. An act of economic self-harm that should have been recognised as a warning before the act of economic suicide that was Brexit.

Clock ticking on these hopeless, hapless halfwits. Lay your bets on how much else they can wreck before they finally go.

[Doctor Syntax]

Re: Two ways of looking at it.

The two are not mutually exclusive although not exclusively the current government's fault. It started under Blair.

[James Anderson]

An actual UK story.

A bit of a surprise from tha Americanized El Reg light.

This week:-

An IT failure at British Airways resulted in (I think can't be arsed to check) 150 flights cancelled.

An IT failure at French immigration regulated in queues two hours longer than normal.

An IT failure at Border Control (UK immigration) resulted in chaos at all the major UK airports.

All this on a holiday weekend that is one of the busiest of the year.

The story was covered by most of the UK newspapers and the BBC but somehow escaped the Registers notice.

It would have been nice to know some more details of the meltdown and which of the usual suspects (Crapita, Gemin, etc. etc.) was responsable.

[FirstTangoInParis]

Re: An actual UK story.

Apart from El Reg not generally working over a weekend (Sky News it is not), they also have a stated policy of waiting a bit so they can find out the problem and report the whole story with at least some degree of accuracy, not just the screaming half-assed generally over-simplified headlines that 24 hour rolling news uses.

Anyhoo, you have a valid point wrt IT systems going down just when their keepers have clocked off for a decent long weekend. I can't help wondering if the dev team are not allowed to build a replica and stress-test it to the max, because that would cost money (but not as much as you lose through lost revenue and customers who will never fly with you again).

[Anonymous Coward]

IR35 The bastard child of envy

This has done nothing but hinder the whole UK IT market.

If being a limited company is wrong then why does the limited status exist ?

This was Dawn Primarolo’s kick in the nutz to people who aspired to be more than just wage slaves.

Tories have just listened to the big 4 and tried to force it in.

Sad bunch that have hampered the UK IT world.

[Anonymous Coward]

Truss

Liz Truss announced that IR35 would be abolished in her mini budget. Just one of the several very good things the vested interest people didn’t like, so, she had to go, and hysteria and lies had to be whipped up to support putting Sunak and Hunt into place. Big shame. They of course will never, ever abolish IR35, and neither will Labour if/when they take over.

[Kinger]

Re: Truss

Unfortunately true, at a stroke contracting and skilled contractors who choose to work for themselves are quashed.

UKPLC is hobbled all to for the sake of a few people taking the pi$$ that were an simple target rather than going after the people\corporations who can afford to defend against HMRC!

Of course those with a vested interest (PM included) get to continue untouched.... and as for those who say "well if you are a genuine contractor then it won't be an issue" what about the countless big companies who didn't even bother with IR35 assessment risk (and it is a risk as HMRC can't be definitive) and just took PSC's out of the supply chain. The "genuine" contractor market reduces hugely as a result of this mess...