Preparing for the changes to IR35 - What you need to know. - VoiceTube: Learn English through videos!

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Good afternoon, everybody.
Welcome to this Webinar on our 35 in the private sector from April 2020.
My name is Andy Chamber and under depth Director of policy at its say And I'm joined by my colleague inner today.
I'm Nina.
I'm senior researcher here Gypsy, and I'll be speaking about our research on the topic a bit later on today.
Great.
So many of you have already said that you can see the slice and you can hear us, which is wonderfully reassuring France very much for that.
So it looks like everything's working Fine.
Technology hasn't let us down.
I hope so.
We'll crack on.
We're gonna try and get all this done in an hour.
But if we have to go over that, that's that's no problem for me.
But I've promised it will do it an hour, so I'll try not to get out of schedule.
So what will this Webinar cover?
Well, we're gonna obviously look at the changes in the private sector which are due to come in in April this year.
It is gonna talk through some of its AIDS research.
Recent research that we did into this, that we had an excellent response from from our members on how they're like is react.
We're gonna look at how the market is reacting.
Many of you will be aware that there's been some quite extreme market reactions to the proposals on, and we're gonna touch on the government's review off the legislation, which just reported back last week.
And we're gonna talk a little bit about it's that.
What if they've been doing in lobbying?
Because we are, of course, completely dismayed by this legislative change which is coming in, and we are still pushing to get this changed that we have not given up.
We are still pushing for the government to change its mind on.
I'll talk a little bit about that as well.
But what we're not gonna cover here today is the whole ritual around.
How I after the five status, is determined.
Very happy to do another weapon are on that people would find it useful and just let us know.
But in the vial, the chat box that you could see in front of you here or email into it, say I will put on a webinar about, but it's just that it's a bit of a rabbit.
Oh, it's a complex area.
We could do a whole another our webinar just on that.
So we're just gonna really look up.
You know, the practical things.
What's changing in April?
What are the new tweets?
The legislation?
What the contractors need to be aware off on dhe, What's going on in the world around us.
In response to this?
That's the purpose of this weapon off.
So this really all starts in 2017 when the government, in its wisdom, decided to change the way that I are 35 words in the public sector.
Um, there were two big changes.
Versatile.
They said that the liability for determining I are 35 status is going to shift to the public hiring organizations, the public authorities that are ultimately hiring the contractor to do the work.
And the second thing that they said that they would do is that where are 35 applies the feed payer, and we'll go into that the next died.
Who the fever is mustard duck.
Did that tax on N.
I asked force this was new because up until then I are 35 work retrospectively.
Essentially, you get to the end of the tax here on what was supposed to happen is that contract would voluntarily say, Well, actually, I think our 35 applied to that engagement.
So then you did something for the team calculation.
You paid your test, but you still paid it after the fact that after the tax year ended.
Now what they're saying is, once it's been decided, right, you're lonely.
There are 35 applies then on you've got to you've got to the duck attacks at Source.
This was also where we started to hear the phrase the off payroll working rules.
Are we off payroll working legislation, which is now what the government seems once call it.
But it's still basically I are 35.
The underlying rules around there are 35 the things which determine whether it should apply or not.
I haven't changed the case law that we're not gonna talk about today.
We're going to try not to talk about it, and that hasn't changed.
I am look at the steps to a little bit later on, by the way, where we do get slightly into that stuff, but we're not going to go too far into that now.
Also, I should have said in the beginning, please feel free to ask questions using the text box.
We've got a good number of people attending this.
I can see that we're almost up to 400.
So I expect there'll be a lot of questions.
We're gonna do our best to kind of plate those questions and answer them during this webinar on We may either I might interrupt myself to ask questions or inner might interrupt me, Thio say, Look, you had a lot of questions, don't you think?
Or we'll just leave sometime at the end so that we can cover them up.
Okay, the feet pair, I I said that we talk about what?
So who is this feat payer?
Well, basically, it's usually an agency.
It's whoever is in the chain above the contractor.
That's who the fetus is.
Whoever is paying the limited company contract, er they are the feet payer.
Now, sometimes agencies.
If it's deemed that Arthur your place now they are the feet pen.
They have this responsibility to duck the tax at source on.
They might not have the software systems to do that.
They might not want to do it, so they often might bring in a payroll or an umbrella company.
Then they become the feet because they insert themselves in the contractual chain above the limited number contractor and believe the agency.
It's unclear whether the government, the sword, that lots of umbrella companies would be used as a result off this legislation because on Brother Cos.
Currently unregulated, and I'm not gonna go into this too much.
But we do touch no bit later that there is a concern that we have that some umbrella cos a noncompliant.
They're offering and discouraged enumeration packages which I think contracted should be aware or because we've seen the mess that we've got into over the lone charge on, so I wouldn't want that to happen again.
We, by the way, have sent to the government you're mad.
You're pushing everyone into these umbrella couples, some of which have perfect compliant.
But some of which arm and that's the elites in greater use of these disguise remuneration skis.
You should regulate those first and then think about doing this.
But in their wisdom, they have decided not to do that.
Okay, so let's have a quick thinking in this new world of our 35 that on goes public sex changes that I talked about.
Broadly speaking, we're gonna be brought into the private sector in April unless it's A and others are able to convince the government not to do it.
Um, Then what does this really mean?
Well, there's this thing called a small company exemption.
I'm gonna talk about that a bit more.
But essentially, this only applies to where the end client is even medium or large in size.
If they are medium or large in size and they will have the responsibility to make the eye are 35 determination, it's up to them to think Well, you know, it doesn't.
I think five apply.
All know if the incline is small, then the personal service company, or PSD.
I know that many contractors don't like that term.
I don't think you like it either, because it doesn't mean anything legally, but we sought to know what we mean.
We're talking about the limited company contractor there.
You retain the responsibility for I R 35.
If the Enquirer is small, it is the fee payer.
If the kind of medium or large that has a response to the tax liability.
They are the ones that have to make sure the taxes deducted if the client is decided.
That I are 35 applies, however, at an extra confusion into this already incredibly confusing world of I R 35.
If it's service's are what's called contracted out, then it is the service provider that has a responsibility to make the status determinations on a little chart here.
The next light.
Which kind of demonstrates this, I think, quite well.
Eso in the left hand column.
You've got a situation where the client is small.
It's a simple chain.
A contractor is working directly for a pliant.
There's no agency involved now if there is a yellow box around the end cemetery, and that means that they have to make the Earth certified decision.
And if there is a red box, that means that they have the liability to payal the taxes that go along with an I R 35 court decision on those faxes basically unemployed their employment taxes.
That's what we're talking about.
If I say five applies now or from April, then contractors will be paying employment taxes.
We're gonna talk about the problems that I see with that issue as well.
So in in the left hand column, you can see that it is the personal service company that has the responsibility for those two things, just as they have always done.
They have always had the responsibility for the I.
R.
35 in the private sector.
They still do have the responsibility.
And if you're inclined, this one, you will still have the responsibility.
So that's one thing that the next, as we go into the next time, we're going to see what happens when the client is medium or large.
Show the next one along.
Simple supply chain, no agency.
The incline both has the status decision responsibility on, and they've got the responsibility to do that.
That's because they are the feet.
They are paying the contractor the next mile long.
You see, you've got an agency involved.
The end client still has to make the Arcee five decision, but it is the agency that has to deduct the tax.
They are the feet.
You get that you get the message in the next one.
You got two agencies in a chain.
But it is the one immediately above the personal service company that has the has thio deduct the taxes and in the final slide that what you can see there is this thing about contracted out.
Service is on There, you will see is the service provider which has to make me I, Arthur a fire decision.
Ah, I'm gonna talk about that now.
So what is it, contracted out service?
Well, actually, the more I looked into this, the more I realized that this is probably just about it's difficult to work out a czar 35 status is.
And I think there's gonna be lots of confusion around this issue on probably some court cases as well.
But the way it should work is like this.
If a company buys in a fully contracted out service, it doesn't have the r 35 responsibility for anyone working for that contracted out service.
However, if a company buys in labor to do some work for it, then it does happen.
And that's what I mean.
Working without Wednesday, it contracted out service.
And when is it buying in labor?
Well, I think we could probably have a lengthy court battle over just just that.
A straightforward example is a bank that wants to have a canteen to feed its star.
So it goes to a catering company, and it says, Catering company, Can you come in?
And, man this cantina make sure is what food available?
Uh, that's a fully contracted out service is a pretty straightforward one, because the bank Lee doesn't only about catering.
And if that catering firm comes in, and if it happens to be using people, personal service companies work who are working for it, then it is the catering company that has to think about the R 35 status of those arrangements.
Unless, of course, the catering company is a small company, in which case it goes right back there onto the PS seas again and what we're hearing.
We've heard from a lot of consultant sees who were saying, Well, we think that we're trapped and they may well be, but I don't think it's very clear.
And if you've got a small consultancy which then has contractors working for it then because of the small client or small company exemption, then it is.
The PS sees that retain the art that if I have responsibility that you can see I've got put it point they're saying potential for confusion.
I hope that already all confused.
But this is one of the sticking points off this new legislation.
We've asked the government to provide lots of lots of examples of what is and what isn't contracted out service.
And as I say, I think we're gonna have a few rows and difficulties over this particular issue like we've got to move on a little bit.
So I'm there's a few new things with this legislation that not just the the shit in the liability and the responsibility new since the public sector changed our that the there is this thing called a space ist determination statement or STDs.
We're gonna have a quick look at what that is.
Clients have to provide this, so we're gonna quickly look at what lies there.
There is a requirement now to not only cascade the status determination down through the supply chain, so you know, the client tells the first agency the first agency tells the second agency that someone was so forth until you get to the feet pair, but also the client has to tell directly the worker, I either contractor, they've gotta go and say to the contractor, This is what we've decided.
He is the S P s.
They didn't have to do that in the public sector, which led to a lot of problems because contractors in the public sector didn't even know who had made the decision that they were now put.
Why are 35 following on from that?
The bottom little Hector.
Them that you can see there is the client lead status disagreement process that this is new as well.
This now means that in the legislation there is a provision for contracts to say, client, I disagree with your state's determination statement, and I want to challenge it.
But we're gonna look at a bit of that.
You know what?
The headline on that Don't get too excited because I think that the provision is quite weak, but it is something.
But I do think it is quite weak.
There's liability transform this.
But I'm not gonna talk about that here because contractors are affected by that.
That really is about further up in the supply chain.
How the liability for any unpaid tax has been shipped back up the supply chain.
If, say, you got a non compliant umbrella which I mentioned earlier, the cess tool, the jet employment status for tax tool, which we like to complain about a lot, I will be complaining about it a bit, Maur, I'm afraid to say in this webinar that has bean improved in inverted commerce.
I still don't think it's any good on there is a course, a small company exemption which we've already talked about.
So let's, um uh, how many of the managed to there we are, right?
The status termination statement.
So let's So what is this thing?
So this is really just a formalization of what the what the client is required to do.
And there's basically free bits to the STS is that first of all, they have to decide whether our 35 applies a ball and state there.
Second of all, they've got to give their reasons for why they decided that our 35 replies or doesn't apply.
And thirdly, they must take reasonable care.
But that that is in the legislation.
They must take me.
They will care if they don't do a ll three of those things.
It is not on STS and the client has not discharge its obligations under the legislation.
So what is reasonable?
Care me?
Well, actually, that's not very clear either.
But what is taken to me is that clients cannot do blanket decision.
They are not allowed to just stay right.
Everyone's caught by our 35 which many of you will be aware is happening has happened on the government.
Deny that it happened in the public sector, which is incredulous to us because we know examples where it did happen.
Um, now the problem is with the STS, and the way that this works is that that's all good.
We like the fact that times are not allowed to do blanket determinations.
We want clients after look individually, engagements on making our 35 assessment on each engagement.
But let's imagine that they don't do the S d s.
In other words, they fail on one of those three things, all three of them, then what?
That means.
The registration means that then they are saddled with the tax liability on HMRC could come along to them at any point in the next six years and say you owe his tax that should have been deducted on those engagements and we're gonna go after the client full of it.
However, if the client instead that I are 35 applies, but they haven't taken reasonable care.
The that's probably trickled down to provide chain and taxes being deducted.
Its source on The problem with that is that there is no tax liability because it's already been deducted, even though the client hasn't taken reasonable care.
In other words, what with what we've been saying to the government is these provisions aren't strict enough because they don't actually stop clients from doing blanket decisions because clients come work out.
If they do it, it's probably nothing bad gonna happen to them, which we think isn't good enough.
We have told this to the government umpteen times.
Andi, they still are just proceeding with what they got.
Um, nevertheless, that that's what s the essence you're probably gonna hear about it.
You should receive less B s from your client.
The client has to do it and they have to give it to the work.
In other words, the contract.
So, um, look at that's what on STS is right.
The tour I said that I would complain about gonna complain about it now.
So fed up with me, complaining about it'll.
Then just maybe just close your ears for for a minute or two.
The Sistol, it is called Possessed A.
Let's start checking pleasant places protect.
It's an online tool, which attempts to clarify status.
It is voluntary.
Nobody needs to use it.
You can use it, your client can use it or an agency can use it on.
They slightly reword the questions depending on whether you've said I'm the worker.
I'm the agency.
I'm the client.
Um, it gives a definitive result in 85% of cases.
In other words, in 15% of the time, it doesn't give a definitive result.
I've heard anecdotally that in the new version obsessed, which they launched in November, um, that that's actually become slightly worse, that they coming up, they can't work out.
Whether I say five applies in Maur than 15% off cases has been heavily criticized because it does not match the taste law on the rial fatal floor For, EPPS say, is that it doesn't include any questions on mutuality of obligation.
And I said that I wouldn't talk about you know what determines our fate?
Five status.
But there's basically three main things and then an extra extra bunch of tests as well on one off the main freeze mutuality of obligation.
HMRC say that mutuality of obligation exists whenever there is a contract.
Many judgments in tribunals and courts have disagreed with that.
There is a range of opinion over what the threat of obligation is.
We believe that the HMRC view is an extreme view on.
We think that the Sesto should test for meat relative obligation on because it doesn't it is fatally floor nevertheless, locks off.
Clients are going to use the Sesto because, hmrc say, will we stand by the results?
I don't know.
I'm not really here to have a go at Planet because the underlying are safe.
I rules are just ludicrously complicated on we.
It's a have been complaining about this for the last 20 years and say It's outrageous that you expect contract is tough to wrestle with this stuff.
Now they're expecting clients have to wrestle with it.
They created this fester, which is full, but but quiet of naturally bound to go towards it, which is a concern.
Now, one thing to look out for on the Sesto is that this question You can see if one of you here this is actually in the last kind of copied directly from.
There's a link to the zester.
What?
The end of this presentation, by the way.
So you can go and have a look at yourself.
Ah, this question is critical.
In my view, I played around with the Cecil quite a bit.
This is this is what I've done here is I've said that I'm a client.
So this is asking me as a client, do you have the right to reject a substitute?
If I click yesterday, I have a right to reject the substitute.
Then I have not been able to answer the rest of the questions in any permutation so that the tool has generated a outside of I r 35 results.
In other words, for me this is the crucial question.
If I click No, I do not have a right to reject the substitute as the client.
Then either the pigment, How?
Answer other questions.
It will say it can't decide or it will say I have 35 does not apply.
So my advice to you is if it's all possible.
If you are in a position where you could influence your client and there's one question you want and they're using the Sesto and there's one question you want to influence the one, it's this one you want them to say No, they don't have a right to reject the substitute.
If they say that, that is likely to generate a result, which is outside of our 35.
But it might.
Generators are wishes it can't help.
Okay, I've got to keep moving.
There's quite a lot to get through quite a few slides, so I'm gonna and I do want to leave a bit.
Time for questions of the Yanks, I can see there's lots and lots of questions coming, So the small company exemption that we thought about basically a company is small.
If it meets, two of the three bullet point criteria that you could hopefully see on your screen in front of these are less than or equal to 50 employees.
Less are equal to 10.2 million turnover less than or equal to five point one million on the balancing.
If a company meet, two of those is small.
Now there's been a tweet because that review that I mentioned the government of which I'm gonna talk about it at the end.
They changed this because initially they were saying that small companies don't actually have to explain to the one that less, more so.
In other words, if contractors working for a small client the kind just won't give them less.
Yes, every contract we left, especially his head, go Well, maybe this client doesn't know what's doing, and it's got this now, this liability and I'll just keep quiet.
Or maybe I've got the liability because they're small and therefore, perhaps I should have tax investigation.
Insurance and blades are empty membership or whatever else it might be.
We said that that's not good enough.
They've got to be linked to all companies that want to rely on the exemption, and we're glad it's there.
We think all companies, but it's better than nothing.
We said they should explain.
They should tell people in the supply chain and the contractor look with small so we don't do.
We are 35 STs Uh, what they've done is they've said that if they are asked if the client is asked, it must now provide a response to the leader of the law, which is a bit of a halfway house.
But maybe better than nothing.
It would be better to possibly just said, Hats out from the whistle.
So you have the art.
A fiver.
The fat that's left open means that there is potential for confusion, I believe.
Okay, this is a little excerpt from the legislation itself.
This just shows you about the client led to speed reservation service.
I don't want you to show you the legislation because this is really a what there is to it.
It basically says that any stage during a contract, any contract to consent to the time Look, I disagree with your are 35 states termination?
If you do that, the client has 45 days to come back to a weak point.
It has to be either a or B that you can see there our concert with which is you know, either Yet we've considered your representations and we've decided that we were right all along all we've considered it.
And here's a new status determination.
We are concerned that, you know clients is gonna You're gonna have a hard job convincing your big back hire you is the lonely contractor.
You know, the the power dynamic between you is just so different that you're not gonna be able to convince them.
However, what I would say is it's worth a challenge.
You know what?
Why not do it?
You've got it in law that you can do it on if you do challenge them.
The things that you might want to consider doing is going and doing your own sets.
Tool results and see if that helps you is voluntary and ancient.
Marcy.
Don't keep a record of it.
You don't have to put your name into it.
So if it turns out and we don't you, like show.
It's the point.
Say that this is my understanding of how this relationship works on.
Also, you might want to get your contract reviewed independently, which you could do pirates say.
But other providers are available on dhe and you can go and get that done and then show them that that what?
That the way that works is someone professional?
Looks your contract at this size, this is either inside or outside of our 35.
Show them that as well.
You might also want to consider any communications you've had from your time in the past, which demonstrates your mind they're dealing with a contract here and not an employee or not.
The quays I employees, which is what I offer you five status is now becoming.
Um you know, if they sort of states you yet you're a contractor.
You don't get these rights or whatever.
You show that to them and stay.
Look, you're being pretty clear here that I'm a contractor.
I'm an independent contractor.
It's worth the challenge.
You know, I think that what we should have here is some access to an independent arbitration service at the courts or whatever.
But of course, that would require such a huge resource that hmrc you're terrified of doing it.
So, yeah, I'm not overly excited about the plant led to speak resolution service, but it is there, and you should be aware of it.
Employment status.
It's so this is what they are.
35 rules are basically saying, Tiu, if you're caught fire after a fire than you are employed for tax purposes only the government has put out guidance, which you can see.
This is a direct quote from a guidance, which says that if you're deciding if the Fire 35 applies or no, you must work out employment status, the person before their service is.
But it's no about employment benefits.
It's not about employee benefits.
So we think this is an inherent unfairness, and we have.
And I'm gonna talk about this briefly, and we have help one member to make a claim for employee rights from their client.
Oh, this is it.
This is the start when it came mates.
But here it is.
Susan Winchester.
Now you can Google Susan at Google if, say, Susan Winch, that you'll find the full story of what we did there, and we managed to win a payout because she put in a claim for her.
They pay employment status is a very difficult area of our law, and you'll be aware of difficult cases like the Uber case, which is gonna speak at the Supreme Court in the summer, we had the Pimlico Plumbers face of the Supreme Court this.
Our 35 legislation makes it worse because basically, is is asking clients have a look, your engagements.
And if you think it looks like an import employment then are 55 applies.
But there's no requirement need to actually employ that person.
We think that's nonsense.
And actually, what one should say is, if the client wants an employee, they should employ them.
If they want a contractor, they should engage a contractor on A LL.
The tax of employment status rooms should follow.
I should be joined up.
Okay, I'm gonna hand over now to inner who's going to talk us through some of our survey results on this.
Sure.
So what?
The changes, changes coming in.
Foreseen.
April.
We thought January might be a good period for us to serve at all members and try to steal the attitudes up what they're planning to do with regards to the changes, but also suitable that clients planning to do with regards to the changes and what kind of preparations they're making.
So I was survey was so open between the 16th in the 23rd of January, and we've got a really good response rate.
We got about three and 1/2 1000 responses and what was Still we sold two key kings on the freeway on society.
So very high level, sir considering.
So about 97% of the creel insists we surveyed that actually really concerned about the changes.
And then that's really surprising because about mining.
Three of them is that they're planning to stop contracting after the change is coming to fours and that look differently for different people.
So some people said they were replying to do contracts abroad outside of the U.
K.
Some said they're planning to stop working altogether, some Satya planning to retire early, and then we have a small proportion corrections that they're planning to look into employment.
And this proportion might be even great because about half of the respondents said that there will only work on contracts if those contracts outside of I 35.
But then afterwards, when we asked them, What are you going to do if you're working on the contract and you climbed to 30 is actually inside?
If I 35 most of the responses that I would eat a drinking age this contract or I will challenge my client on it, and there was also small portion of them was that they would increased their their age in order to compensate for the hot packs they will be playing.
So that's what's happening.
Calm the freelance.
The sorry and ah, Princes, by and large thought that the school is very unfair.
Pink employees, National Insurance and not getting employed rights here return just fair.
And I'm on the client side.
We also said so really high level of war E.
And a lot of clients were in three prepares for the changes.
So about 35% of the clients said that, um, they'd uncertain what they're going to do when the change is coming to force.
Or, uh, the Kevin announced yet to their finances.
Well, they're going to do.
And that's only three months before the changes coming.
Whores, and in terms of decline, businesses were also sold it two out of five um, Fremont's too said that their clients will stop using contract that scruple outside I certify, and some of those clients said they would be doing blanket assessments.
Some of that said that they would stop contracting altogether hiring contract this all together and some of them said it would move all of their contractors on through P A y e so we can see that there is going to be a lot of destruction not only on the field last suicide, but those on the client side.
And now I can't go back time giggle, speak a bit more about called the Markets, reacting to the changes.
Thanks.
And sorry.
I was I juggled the slides a bit prematurely there.
So many confused people, but thanks.
And that's that around the number of people who were saying they're gonna stop contracting is really concerning people talking about instead of retiring early and working aboard.
And we've said to the government that there's gonna be an economic impact of this.
I mean, they're they're chasing big revenue number, which we don't think that they're gonna get because people are gonna behave in different ways.
They're just not going to get they know it's not.
They're not gonna get that all these contractors or just keep on learning the same map money and just move seamlessly into the on payroll system.
I think that it's gonna be many more behavioral changes that they haven't cracked it.
Okay, So, um, the market now many of you will be aware that And, you know, this is perhaps the most concerning thing of all for a lot of people is that there has bean an extreme reaction from some large hiring organizations, the banking sector.
We're the first ones to kind of go on a ll.
The sort of major banks seem to take the view that no, that not that they will put everyone inside our faith fired, but they will just not engage contractors at all and will therefore not involve themselves in this I R 35 decision making regime whatsoever.
I mean, we told the government that this might happen because no one wants this.
Our 35 liability is just too confusing and to worry.
And the banks have just said they're they're They're such compliance driven kind of organizations.
I think so, institutionally, that they've just taken the view.
We're just not going to engage contractors at all.
You can come on board wine umbrella company.
We might offer some of you unemployed role.
Probably acquire a reduced salary, by the way.
But you can't just you just can't work for you person.
So it was company at all, which is really considering It's not just the banking sector.
Vodafone G s K E D F energy A few other large hiring organizations were hearing have done the same thing a little bit of a point to say that they're gonna use ESS than I've already talked about our concerns around that and how we think that it's not generating accurate results.
Uh, some, some of them will go to that.
There are people out there in the marketplace that going into relations and doing there are 35 assessments for them.
That probably the best bet because those people are experts and they've been helping contractors do this for a while, So they are actually gonna probably be in a position to advised the client.
Look, you you can put this one outside of our say five because it's safe to do so on their insurance products, which are coming to the fore where those decisions are being insured against us.
Well, so I'm not sure if they've been launched yet, but I'm aware of bourbon leans in the marketplace.
That might happen, So there's a bit of a light at the end of the tunnel where there's the contracted out service's bit and I think that a lot.
What we're hearing a lot of contractors saying is, Well, why don't we form a little consultancy on?
Then way we could offer our servicemen were contracted out basis?
Well, that's okay.
Providing that the client buys into that.
It's it can work.
And the statement of work contracts, which is a specific type of contract which really nails down the project.
And it's often but not always, involves being paid on the delivery of certain milestones.
Rather than, say, a standard, you're right.
That is one I think area that could be a potential way to not get around the I 35 rules.
But to clearly demonstrate that this engagement is outside of I R 35.
It's all about getting the clients to buy into this, though they have to feel comfortable with with that because they could be taken a risk of agency, come along and say that's not contracted after this, they're they're basically an agency supplying labor on.
Now you've got the responsibility because you're a liability because you didn't do the S.
P s on.
That's the trouble with that.
But I do think my my hope is, and you know, the optimist in the hopes that although we're seeing its extreme reaction now, in time, the clients will come back to contract because they need them and they enjoy working the contractors.
And it's a business model, which is work well on in time.
They will learn to live with the risks of our 35 in the same way that contract has learned to live with it.
Then, when it first came out in 99 2000 it was way before I got involved in this whole world, so I wasn't there.
But my understanding is there was a lot of panic and confusion there and a lot of contract to spell that that's going to the end of their business.
But they learn to live with the risk of it.
They got some insurance products in place, and they carried on business as usual.
My hope is that gonna happen, and I've already talked about the umbrella cos we're going to see a rise in those being used lots of umbrella Cos entering supply chain.
So what's it say doing Or have we been doing on I r 35 on?
Well, we we were formed as PCG, as many of you will know, the Professional Contractors group in 1999 when our 35 this first mooted is an idea in the 1999 budget.
In case you don't know, by the way, I after, if I was a nickname, that came out the fact that it was the 35th press notice from the Inland revenue off that of that budget.
So it's by our inland revenue 35.
That's where the name comes from.
It was always called the Intermediaries, Letter stated.
Now the electrical of your payroll working legislation.
But it's basically the same thing, but we were formed by a bunch of contractors who said that this is they saw that this was a terrible thing for the flexible labor market and for their way of doing business.
So they formed a bond, made the professional contracts group, But we changed our name a few years ago to say so.
At our core, we have this sort of Frenchy against Off five.
It's in our d.
N.
A.
We have been continuing to do it with these changes.
We have been strongly opposed to both the public sector changes, which we said, you know Oh, that's just a blueprint for the private sector and the government said No, no, no What?
No plans have been since the private sector and look where we are now.
We are strongly opposed to this.
We have submitted lengthy consultation responses.
We have done research most recently that you just heard from in Iran.
We have submitted that to the government.
We have formed alliances with lots of friendly groups, including the C B I, who have also been calling for a delay to this private set to change in April, but also with friends who represent the agency's because they didn't want this either.
Complete nightmare for them so are received.
The Recruitment Employment Confederation on dhe abs go is, well, the Association of Professional Staffing Companies.
We are a member of the are certified foreign, which was set up, which is fits in treasury in hmrc We we've got a meeting on Friday of this week.
There will be going in there and we'll be saying to them yet again, you know, what are you doing?
Why you're doing this Republic problems.
This is how our members are being affected.
We were involved in a protest.
That part very successful Process that Parliament about a month.
Nothing.
Um, on.
We went into parliament and there's a picture of me there with David Davis on.
The Lady there is from Cici was involved in quite a famous are 35 case called E C.
J.
Consulting, which took place around 10 years ago now, eh?
So she knows exactly what it's like to be called up in the media complexity of while 35.
What a night there is on.
Some MPs are supportive of us.
We've been living in peace.
We've been meeting with a lot of them peas.
Um, even the Labour Party who created by our 35 nights late night has brought him by Gordon Brown.
Um, now that they're saying that they don't agree with the private sector, change in blessed and who with shadow?
Um, a small business or bay secretary has bean um, helping us to trying to ask questions in the house about the difficulties that this world calls.
There's also being a House of Lords enquiry.
Some of you might be aware of this too.
It is still ongoing.
So we went in there.
There's another picture of me.
I'm sorry.
I'm such a sort of vain megalomania putting photos myself over the slides.
But we went into the House of Lords last week on Gave evidence to the well, that's Bill Subcommittee, which is looking exclusively at this for the finance bill.
Which of these draft club still draft laws is at the moment, we still haven't seen the final legislation on dhe.
Um, we put it to the laws that the government is making a big mistake.
We said that John abandon this proposal, but indeed, at the very least, they should delay it.
The Lord's appeared to be quite sympathetic.
It as a whole.
They're gonna report.
Well, I'm not sure I tapped all they're gonna report before the budget, but I happen to know that they another evidence session on Monday, which is two days before the budget.
A good friend of its face profession, Professor Patricia Layton, who is a employment law expert, is giving evidence to them on Monday.
So I definitely are gonna report before the budget and I'm not sure whether when they report it will be too late to really have much of an impact.
Even if it Thursday, as I hope and suspect it will do that the government shouldn't do what they are about to do because it is causing habit in the private sector.
Uh, so we've submitted evidence of them.
I've just written to them again, actually to follow up on some of that and we'll have to wait and see what they say.
The government has done a its own review off.
These rules on dhe during the election campaign are 35 because we were smoking it up on because our fantastic members and thank you if you're one of these people were writing to their MPs and speaking to candidates and asking, what on earth are you doing about our faith?
Five a.
Ll.
The parties ended up committing to reviewing.
I are 35.
The last party to do it was the Conservative Party.
But they did commit to it, and you can see a little tweet there.
From my own MP Dominic wrath.
The Brexit sector is he said, the Brexit sexually.
But I'm not sure they dominate rock he's look about, Tweetie said.
We will review in big, bold letters that changes to I.
R.
30.
Fine.
So we were thinking, Okay, great.
We wrote to the chancellor a sooner.
The election results came in.
We wrote to the chancellor who density Javert on said, Look, you need to have an incompetent, fantastic intravenous review.
It needs to have an independent chair.
We need to have a thorough impact assessment of what happened in the public sector.
This lead a proper impact assessment which we've never had on what's really gonna happen when you roll this out into the private sector.
Unfortunately, none of that they decided that it would be a government led review on the quote heiress from what they published in January when they announced the review that it will determine if any further steps could be taken to ensure the smooth and successful implementation which is due in April.
So no delay, you know, no independent chair talking about is there Are there further steps that we can do to make sure this is smooth and successful?
The art of government is no, because it hasn't been smooth or successful in any way that you could remotely claim it has been on.
We're very we're very, very disappointed.
Now they have announced what's in their review.
Basically, the headline is that HMRC have said that they won't be heavy handed, Whatever that means.
They're talking, they're to the clients, Really?
And what they're saying is that clients, if you make a mistake about this, we won't penalize you.
But they will still have the liability form attacks.
So clients still have to do this.
There's no real soft landing.
And so, you know, this is a very disappointing results for us.
We concerned now.
I'm going back into the treasury tomorrow to see the financial secretary.
I've been invited back in along with a small group of people that initially went seeing his part, this review and he's going to say how wonderful it is that he's, you know, listen to business Norwest, and we're going to say you haven't listened to a fool and this is a disaster, Andi, we're gonna set the lightly because we're still hoping that we can convince him to change his mind.
But we are gonna make it pretty clear that we are very disappointed with the outcome off that review.
Now some of you are asking.
I've caught up the corner of my eye some questions about this.
So retrospective investigations.
This is the big question.
The question is, if your client decides in April that, um, I are 35 applies and you've been happily working in that engagement and your shore that I thank you for It doesn't apply.
Does that mean hmrc gonna come along, though?
Well, hang on a minute.
If it applied after April, how come when the contractor had the liability for this, they weren't applying it in.
And should we investigate that arrangement?
HMRC have bean somewhat helpful on this.
And they have said the quote that you can see there and there's a link the way you can find that boat in the small.
In the fine print there, you've got scroll down section two and find the penultimate paragraph, Section two.
But there you will find this that hmrc of things that they will know that they were only used information resulting from these changes.
I either private set changes open inquiry into early is if there is a reason to suspect fraud or criminal behavior.
So they have a caveat in there.
You know, I know that in the public sector they did look back at some cases and they did open investigations.
There's nothing to stop them from Investigating previous years, more generally on contractors remain liable for those previous six years.
They're allowed to go about six years.
There last about four years.
But another two, if there's been carelessness and they always manage to prove that has been callousness except actually in the recent mother recent BBC cases where they were thwarted on their attempt to do that.
But generally speaking, they could look back at the last six years and say, Did you consider our say fire for any of the engagements that you had in that period?
And the contractors are still liable to that period?
You must be aware of that.
Your the liability is gonna change from April unless it's taken political moment not to do this.
But that's only going forward retrospectively.
You're still liable.
I don't think we're going to see a huge My hope is not that.
See, a huge amount of investigation is being open previous years because clients have said, Well, I bet you five applies now.
But, you know, despite wait, you might see have said I would proceed with caution that that that that's what I would say.
In other words, you know, if you've got tax investigation insurance, they don't chuck it away.
OK, we're getting to the end now of this life.
So I just thought I'd show you if you're interested where the legislation is.
So the initial while 35 legislation is called Chapter eight off the income tax earnings and pensions at or I T.
Uh, that was the original, then in 2017 label in a new Chapter 10.
It's not renew anymore, is it?
But we still call it the new Chapter 10 which was the public sector bit, and now they've published draft clauses.
They actually published these in July, which are gonna change Chapter 10 so that it applies to both the public and the private sector.
Andi includes some of those new provisions, like a small company exemption which, by the way, only applied in the private sector, not in the public sector, but the other ones apply, and both stuff like the client led to speed resolution service.
The requirement to explain the STS separately to the contractors.
Well, it down through the supply chain that'll applies in the public sector.
A cz Well, the final legislation is gonna be published after the budget next Wednesday, shortly after the budget is afraid of the government heat using.
We keep on saying, you know, this is another reason why you can't bring this outbreak because