The research, which follows on from anecdotal evidence that contractors had been leaving the public sector in droves in the month after the introduction of the new rules, also shows:
27% of public sector contractors surveyed have left the public sector 47% of public sector projects lost at least a quarter of their contractors 61% of contractors left due to their refusal to work under new IR35 rules 52% of contractors of those leaving the public sector are yet to be replaced 50% of contractors say they will now never work in the public sector if caught by IR35 and 46% will only do so if the government effectively pays the extra tax.
With regards to public sector IT projects and the NHS in particular, the research found:
79% claim IT projects they have been working on suffered delays as departments couldn’t draft in replacements, with 37% of IT contractors abandoning public sector in the wake of the reforms. 25% of NHS departments have lost 50% or more of their flexible workforce 63% of NHS contractors are thinking about a new career entirely, with 40% indicating they may quit contracting altogether.
And public sector recruiters are witnessing this outgoing talent affecting projects they are recruiting for.
Dave Chaplin, CEO and founder of ContractorCalculator, said HMRC was warned this would happen and cautioned against a roll-out of the rules to the private sector.
However, according to the report by Recruiter , in a statement an HMRC spokesperson claimed ContractorCalculator's findings were based on an “unrepresentative” sample.
Read the full press release here
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Off-payroll working (IR35) in the public sector: pay an intermediary 20 September 2017
Guidance has been updated with an explanation of how to calculate the deemed direct payment to a worker who provides their services through an intermediary and is subject to the off-payroll working rules.
The deemed direct payment is the amount paid to the worker that should be treated as earnings for the purposes of the off-payroll rules.
To calculate the deemed direct payment you must:
1. Work out the value of the payment to the worker’s intermediary, having deducted any VAT due. 2. Deduct the direct costs of materials that have, or will be used in providing their services. 3. Deduct expenses met by the intermediary that would have been deductible from taxable earnings if the worker was employed. 4. The resulting amount is the deemed direct payment. If it is nil or negative there is no deemed direct payment.
You then need to deduct tax and NICs, as appropriate, from the deemed direct payment.
You’ll need to report the pay and deductions you make to HMRC using a Full Payment Submission (FPS), as you do for workers on your payroll.
You must also pay employer Class 1 NICs due in respect of these engagements, and report them to HMRC.
You don’t have to add these workers to your existing payroll, but you can do this if you wish. If the payments are not reported under your existing PAYE scheme, then you’ll have to open a new one.
You should keep a record of the deemed direct payment, Income Tax and NICs deducted on a deductions working sheet.
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The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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