Contractor IR35 Revolt
There has been a bit of a contractor IR35 revolt at Aberdeen Standard Investments over the IR35 changes to be implemented in April 2020.
It seems that Aberdeen Standard Investments (ASI) are testing contractors but inputting the data in sch a way that virtually all the contractors are inside IR35. So, this is an effective blanket ban on contractors using personal services companies.
Questions on Contractor IR35 Revolt
- What has caused the Contractor IR35 revolt at Aberdeen Standard Investments?
- Could ASI’s contractors be hit for back tax, penalties and interest by HMRC?
- How much will the contractor mass exodus affect Aberdeen Standard Investments?
- How much money will the Government make from the IR35 changes?
- What effect will the contractor IR35 revolt at ASI have on the government?
- So, what is causing so many companies to blanket ban PSC contractors?
What has caused the Contractor IR35 revolt at Aberdeen Standard Investments
It’s even worse for contractors at ASI than for contractors elsewhere. ASI are issuing the results of contractors who have sat HMRC’s Check Employment Status for Tax tool.
The formal document makes no distinction between a future contract they would offer and the existing and previous contracts carried out by the contractor.
It states that ASI determines that the they (the contractor) IS operating inside IR35 and goes on to list reasons it believes this to be the case around the working practices.
Could ASI’s contractors be hit for back tax, penalties and interest by HMRC
This means that ASI believe that the contractors have always been inside IR35 but declaring themselves outside IR35.
This means that the contractors involved could very well be approached by HMRC for back tax, penalties and interest.
After all the company that they have a contract with is saying that they believe that contract is inside IR35.
As companies testing contractors using the CEST tool have to hand over the results of the tests to HMRC for ‘future reference’ HMRC will know that the contractors have failed the test.
How many contractors at Aberdeen Standard Investments are refusing to take the test
According to an inside source, probably around 40% of contractors at Aberdeen Standard Investments (ASI) have refused to take the test. Taking the test could possible incriminate them.
Contractors are starting to look for contracts elsewhere. One contractor has got a contract in Dublin. Others are likely to follow.
If contractors cannot stay at Aberdeen Standard Investments unless they sit the test (or just declare themselves inside IR35 which is hardly likely), then it means that Aberdeen Standard Investments are going to lose a large proportion of their contractors.
Those contractors will take with them their skills and experience. However they will also take with them the business knowledge and the systems knowledge that they have picked up at Aberdeen Standatd Investments.
How much will the contractor mass exodus affect Aberdeen Standard Investments
This will be a huge blow to ASL.
Those not taking the test or the new PAYE contracts will have to leave the company by the end of February. There is an IT skills shortage in Dublin. This will increase as many UK financial firms are likely to move there after Brexit. Many contractors are looking at Ireland. Company tax is just 12.5% there.
Aberdeen Standard Investments were quite happy the way things were before these IR35 changes. They had, what they believed to be the right blend of contractors and permanent staff. They felt this was their optimum blend.
Now that is all blown out of the water and is bound to have a huge effect on their ability to be able to deliver computer systems.
How much money will the Government make from the IR35 changes
The Government say they are going to make £3 billion over 4 years from this. However, that is just a trifle in tax terms. It’s the equivalent of less than a tenth of a penny on income tax.
And to get this money they are prepared to hugely disrupt all of the UK’s major companies.
Those companies must be doing impact studies. I’m willing to bet that the overall loss to the UK’s companies in implementing this is a multiple of what the Treasury will bring in from making contractors go PAYE.
I don’t know why so many UK companies are so meekly surrendering. You would have thought that they and their representatives would be lobbying the government hard to get the changes at least postponed.
What effect will the contractor IR35 revolt at ASI have on the government
However, the contractor IR35 revolt at Aberdeen Standard Investments may make both this company, HMRC and the Government sit up and take notice.
They may be he contractor equivalent of Leonidas’s 300 Spartans at the Pass of Thermopylae in Ancient Greece.
Already at ASI they are having emergency meetings about what to do about it.
What is causing so many companies to blanket ban PSC contractors
It’s the fear of being financially penalized by HMRC if they get their contractor status assessments wrong that is intimidating so many companies.
It’s also the knowledge that HMRC is the accuser, the police, the judge and the jury – as well as being the Appeals judge as well that is frightening them too.
What a mess the Government is getting into over this.
It will be their own fault if any downturn in the economy caused by this major hit on all the UK’s major companies gets blamed on Brexit and the Government.
Nobody told me there would be days like these!
The Government has gone mad!
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