Less than a week after the chancellor confirmed he was pressing ahead with the reforms, the Treasury last night announced that the Off-Payroll reforms – due to come into force on 5th April 2021 – will now be delayed until April 2021.
This means that contractors retain the right to determine their own status and that the liability will not transfer to the end client.
Alan Broome, MD at Acumenica said this morning “This is undoubtedly a big win for contractors but it is only a deferral. Make no mistake, the rules will come into force next year. We, the contractor community, have been given a year’s reprieve and it’s most important that we spend it wisely. Contractors need to engage immediately with their clients and get their working practices in order. All the measures we’ve been recommending for months, which were really essential good business practice anyway, now need to be put in place. We’ve seen from many of the big FS companies’ knee jerk blanket bans over the past few months that they’re not going to help much. Contractors, this time, need to look after themselves. This is what we mean when we say that the time should be spent wisely.”
It may be too late for many contractors, who have already been forced down the PAYE/Staff route, but it would appear that there may be a way back for contractors who chose the umbrella route. And for those who are still operating through a PSC it’s likely to be business as usual. It remains to be seen though, what the end-clients will do. It’s still entirely at their option to refuse to engage with PSCs and they may not fancy the admin task of reversing the decision but we remain hopeful. Maybe a blanket ban will precipitate a blanket u-turn.
It’s also business as usual at Acumenica. We remain committed to Britain’s contracting workforce and we welcome enquiries from clients old and new. For more information and assistance please email email@example.com or call 03330 166 559. Please also keep an eye on our website as we will be providing an analysis of how this will affect our clients, and the wider contracting community in the coming days and weeks.
The way umbrella company or PAYE solutions calculations and illustrations are presented can sometimes (OK, most of the time) be confusing and opaque. We prepared this short video to explain how the calculations actually work. Hopefully you’ll find it helpful.
Last night we presented our final (for now) IR35 reforms webinar. Thanks to all who tuned in tonight and last week and to all who attended the recent live events at Freeagent too. All told, we’ve had a great opportunity to present to in excess of 400 contractors. Hopefully you’re all a little bit wiser for the experience.
Here’s the (badly) edited recording. If you weren’t able to attend, or tune in, this give you a chance to catch up, and if you were, you can listen again. Surely any opportunity to listen to Alan’s dulcet tones shouldn’t be passed up.
We all know that to be considered outside IR35 that you have to satisfy a number of conditions. Chiefly these relate to Direction and Control; Right of Substitution and Mutuality of Obligation. But in addition, other factors are considered. Amongst other things, the question of whether you are Part & Parcel of the organisation you are contracting to, or in business on your own account (IBOYA) is becoming increasingly common.
In recent weeks, I am increasing asked whether a contractors LinkedIn profile would have any impact in a status enquiry. While I do not believe it would be a material factor, and is unlikely to stand up in court, if you are saying on LI that you are “Lead Project Manager at Lloyds Banking Group” rather than “Director at Joe Bloggs Ltd contracted to Lloyds Banking Group on the ABC change project” then at the very least you are going to have one less awkward question to ask.
It’s a small part of a very large jigsaw but establishing yourself on LinkedIn as IBOYA at the very least confirms your mindset.
You’d also be well advised to avoid terms such as “when I worked at” or “I was employed to do X” as these would suggest an employed position rather than that of an independent consultant. Similarly, you’d want to keep an eye on the endorsements and recommendations, to ensure that the language used there is appropriate too.
I must reiterate that this is not a major part of any IR35 defence strategy but is merely good housekeeping and might help avoid unnecessary stresses should HMRC actually coming knocking. Picture the scene, you’ve spent the afternoon asking questions from the badly dressed HMRC agent, then he asks in his best Columbo accent “Just one more thing, you’ve been telling us all day how you’re an independent consultant in business on your own account, yet your LinkedIn profile says your job title is Business Analyst and your employer is Royal Bank of Scotland. Can you explain that?”
Wood, the oil and gas company based in Aberdeen, have today notified all of their PSC contractors of their plans post April 2020.
Wood are currently working alongside tax consultancy Grant Thornton to review the status of all UK-engaged contractors and they aim to have this process completed by mid-December and the contractors notified early 2020.
A couple of key points are that Wood are not using the CEST tool to make these determinations and they are being conducted by the Wood managers, not a central function. This is good news as the managers will be more attuned to the working practices and therefore better able to make the important decisions.
If the contract is judged to be outside of the scope of IR35, then it will remain in place after April 2020 although there is an indication that this maybe under revised contractual terms. We expect this will most likely be under a Statement of Works type of arrangement.
If the contract is deemed inside IR35, the options are as you would expect: either apply for a staff position or move to agency PAYE where “the rate will be reduced recognising the costs to be borne by the Wood engaging company e.g. costs like employer NIC.” Interestingly, there doesn’t seem to be an umbrella option.
It’s good to see that Wood are taking the lead on this and there are definite positives to take from the announcement but, as ever, the devil will be in the detail, and this won’t become clear until the reviews are completed next month. But it’s definitely good news that the blanket approach is NOT being taken.
If you’re at all concerned how the IR35 reforms will affect you, please feel free to contact us through the usual channels. We are very keen to engage with as many PSC contractors as we possibly can at this pivotal time in the contractor community.
Acumenica has seen an email which has been issued by one of RBS’s Staffing Solutions providers and it doesn’t look good.
The bank has stated that after 6 April 2020, most contractors won’t be able to work for RBS via their own limited company. They will therefore be subject to PAYE deductions for income tax and National Insurance Contributions.
Therefore RBS will not engage with most limited company contractors after 29th February 2020 and they will either be expected to engage through an umbrella or use the staffing solutions firm’s PAYE solution. Presumably NatWest and Ulster Bank will also take the same position.
Whilst this is obviously not great news, there is a chink of light in that they have stated they will “most contractors will not be able to work for RBS” which suggests that some will. We expect when the details comes down, it may well be that this is similar in approach to Tescobank in that contractors need to start working on a more business-like footing to be considered appropriate for contracting positions.
It’s also telling that RBS’s default will be Umbrella or agency payroll which may well leave the door open for a reversal should things change.
All Acumenica clients who are affected by the news can be assured that we are working hard on a solution. We’ve a ways to go but we’re confident we can continue to support you beyond April 2020.