IR35 - an agency or umbrella cannot lawfully deduct the secondary NICs from a fee already agreed

autoeng68

I've just read an article that references this which is official HMRC guidance it refers to being inside IR35 in the public sector:- Off-payroll working in the public sector: reform of the intermediaries legislation - information for agents - GOV.UK (www.gov.uk)
It says that whoever is now liable to pay employers NI (usually the agency or Umbrella when inside IR35  that they " cannot lawfully deduct the secondary NICs from a fee already agreed"
This means that if you already have a contract and were previously "outside IR35" then when they switch you to being "inside IR35" it is unlawful to deduct the employers NI from your originally agreed rate.
This feels like the best kept secret ever reference IR35. For the last 2 years i have been receiving various guidance from agencies, umbrella companies, and HMRC and at no point has this ever been mentioned!
This is the original article:- IR35 reforms: Confusion over who pays employers’ NI leaves IT contractors out of pocket (computerweekly.com)

Marcon

autoeng68 said:

I've just read an article that references this which is official HMRC guidance it refers to being inside IR35 in the public sector:- Off-payroll working in the public sector: reform of the intermediaries legislation - information for agents - GOV.UK (www.gov.uk)
It says that whoever is now liable to pay employers NI (usually the agency or Umbrella when inside IR35  that they " cannot lawfully deduct the secondary NICs from a fee already agreed"
This means that if you already have a contract and were previously "outside IR35" then when they switch you to being "inside IR35" it is unlawful to deduct the employers NI from your originally agreed rate.
This feels like the best kept secret ever reference IR35. For the last 2 years i have been receiving various guidance from agencies, umbrella companies, and HMRC and at no point has this ever been mentioned!
This is the original article:- IR35 reforms: Confusion over who pays employers’ NI leaves IT contractors out of pocket (computerweekly.com)

Quite. Which is why so many organisations have renegotiated fees with their contractors.

autoeng68

Thats certainly not the case in the Automotive industry, i had a role last year that was due to switch to "inside IR35" and the rate was not being renegotiated meaning that the the employers NI would have come out of my original negotiated rate. Like i said there was no mention from either the end client, the agency, or HMRC that this was a legal requirement and should be happening!
I'm looking for a new role at the moment (as i lost that role due to Covid) and everything is being advertised at the old rates, you'd expect all the rates to have an increase of 13.8% to cover the employers NI, but their not showing that the expectation is that Contractors will pay for this change in legislation not the end client.
If this is a legal requirement and not happening, shouldnt HMRC be taking action against companies/agencies not adhering to it as its a legal requirement!

Marcon

autoeng68 said:

If this is a legal requirement and not happening, shouldnt HMRC be taking action against companies/agencies not adhering to it as its a legal requirement!

No. HMRC aren't bothered provided they get their money - and in any case, how would they know? It'll be up to any contractors who feel the law has been breached to take action against the party breaching it.