Louise Rayner CEO, presents:

1. Louise Rayner CEO, presents: “IR35 Reforms A history of the Public Sector reforms, how these continue to unfold” Case Study – Elmbridge Borough Council April 2019 Umbrella Illustration & Discussion Document

2. Who are NumberMill Consulting? • Established by Louise Rayner FCCA, MBA • EX RSM 7th largest UK accounting firm • EX CFO Adecco - responsible for 35,000 contractors Travel & Subsistence • EX Commercial Director Randstad Managed Services • MD & Part Owner Milestone Operations - 2000 temps sold to Staffline in 2015 • ACCA Accountants & FCSA Accredited • Contractor Accounting Specialists • Compliance Consulting • IPSE IR35 Qualified team • Accountax – Legal retainer Umbrella Illustration & Discussion Document

3. Protecting the supply chain Umbrella Illustration & Discussion Document

7. IR35 Simplified Series of 3 Case Law tests – Only one of which needs to be present Relevant cases include; Ready Mix Concrete Ltd v Minister of Pensions & National Insurance (1968) Express and Echo Publications Ltd v Tanton(1999) Carmichael v National Power (1999) Montgomery v Johnson Underwood (2001) Umbrella Illustration & Discussion Document

8. CEST TOOL FOUND TO BE FLAWED

10. IR35 “Life Blood of Flexible Workforce” 1999 – some compensation for risks and rewards of being in business CASE LAW HAS NOT CHANGED, merely extended Contractors are not tax evaders Impact on £200 a day worker £7,812 Impact on £300 a day worker £10,092 Umbrella Illustration & Discussion Document

11. Public Sector/End Client Umbrella Illustration & Discussion Document

12. Public Sector/End Client Agency Umbrella Illustration & Discussion Document

13. Public Sector/End Client Agency PSC Umbrella Illustration & Discussion Document

14. Decision “Duty of Care” Public Sector/End Client “Fee Payer” liability Agency PSC IR35 liability Worker Umbrella Illustration & Discussion Document

15. Given blanket assessments 52% Umbrella Illustration & Discussion Document

16. Supply Chain Response Mass transfer to umbrella “tow the line” no rate increase some rate increase Gross Payments – taking the risk Use of aggressive tax models and intermediaries In-house incorrect assessments undertaken by managers Blanket reviews – Employment tribunals Engage IR35 technical specialists/reviews “Fee payer” Model & IR35 Technical reviews Umbrella Illustration & Discussion Document

17. Mass transfer to umbrella “tow the line” no rate increase - some rate increase Gross Payments – taking the risk Engage IR35 reviews – Insurance Other impacts Impact on margin Impact on cash flow Impact re VAT “Fee payer” Model & IR35 Technical reviews What happened? Umbrella Illustration & Discussion Document

18. Continues to unfold …… Contractor shortages Increased costs in the supply chain “Black market” & un-level playing field Disgruntlement and Tribunals Increased usage of aggressive tax schemes Increase in use of umbrella Umbrella Illustration & Discussion Document

19. Methodology The operational review of internal IR35 assessments conducted via Elmbridge Borough Council was completed as follows: Review of Internal Guidance provided to staff Review of 10 Document Samples IR35 Assessment completed of 10 Samples Preparation of Questionnaire to highlight key areas Consultations with Line Management Consolidate findings into a report Umbrella Illustration & Discussion Document

20. Conclusions…… Mixed, inadequate and inconsistent understanding of IR35 and the Public Sector Reforms Insufficient background legislation knowledge of IR35 & other related legislation Lack of training required to conduct an extensive IR35 review Insufficient Documentation / Information provided to staff Risk of a ‘blanket approach’ taken towards temporary staff Inconsistent IR35 review process undertaken Heavy Reliance on the HMRC Employment Status Tool Reviews completed for workers where not required No knowledge of supply chain agency practice – potential risk re Umbrella and IR35 Umbrella Illustration & Discussion Document

21. Informationflows 3.Off-payrollworkerandfee-payer(ifnot personclientcontractswith)haverightto askforreasonsfordeterminationdirectlyfrom theclient 1. Client required to providestatus determination and reasonsfor determinationtopersontheycontract with and off-payrollworker; 2. Status determination andreasons fordeterminationarerequiredto be passed down the contractualchain …… PSC Worker Client Agency Fee-payer Contractual chain Action required Proposed change

22. 1. Status determination flows down contractual chain Transfer ofLiability 2. Agency 3 failsto share the statusdetermination with thefee-payer Fee Payer Client Agency1 Fee-payer Client Agency1 Agency2 PSC Agency3 5.IfHMRCfailtocollect theliabilityfromAgency1, the liability finally transferstotheclient 4.IfHMRCfailtocollectthe liability from Agency 3, the liability transfersdirectlyback to Agency1 3. The liabilityinitially sits with Agency3 Contractual chain Action required Proposed change (tax liability)

23. Public Sector/End Client Agency Fee Payer Project PSC Worker Umbrella Illustration & Discussion Document

24. Alternative Approaches Consider careful individual assessment Calculators – be aware of pay, remuneration and rights impact Technical Reviews – engage experts FCSA Accredited umbrella “Fee Payer Service” Umbrella Illustration & Discussion Document

26. For Enquiries Enquiries@numbermill.co.uk Louise.rayner@numbermill.co.uk 0333 121 2001 - Option 1 Umbrella Illustration & Discussion Document