Public sector contracting

[d000hg]

I see two or three situations unfolding next week.

1) They will back down and agree that my contract and position is indeed outside IR35 along with several other guys but not the whole site. (sorry if you happen to be in a first / second line support role)
2) They will play safe and tell us all that we will be considered as caught regardless of the facts
3) They will do 2 with the added position of increasing my day rate to compensate for the additional taxation

Only option one will work for me. My guess is that I will be taking a new job for 3 or 4 months until they have worked the issues out for themselves.

What's wrong with 3) - if you get the take-home you want, why care?

[speling bee]

What's wrong with 3) - if you get the take-home you want, why care?

Agreed. If someone is prepared to increase my rate for a 3 month extension to compensate, I'll take it and stick it in a pension.

[centurian]

What's wrong with 3) - if you get the take-home you want, why care?

WHS

I suspect it's more down to the psychological aspect of having to pay so much in tax and NI - and the fact that ClientCo were prepared to pay such an increased rate to begin with - which indicates a lost rate increase opportunity.

However, it's bottom line that counts. Put sentiment out of it - see it as a victory.

[amcdonald]

Making one-man PSCs pay PAYE and employee NI would be just fine really. I mean I prefer to pay less but I can't really find a good reason that I should pay a smaller proportion of my income than a permie.

Whilst not having any of the rights or benefits of a permie, remember you're only a deemed permie for tax purposes you're not a legitimate employee. It's aggressive workers rights avoidance implemented by HMRC

[bobspud]

WHS

I suspect it's more down to the psychological aspect of having to pay so much in tax and NI - and the fact that ClientCo were prepared to pay such an increased rate to begin with - which indicates a lost rate increase opportunity.

However, it's bottom line that counts. Put sentiment out of it - see it as a victory.

No a victory is booking tomorrow off and going to London for two interviews for roles paying more than I am on now. One of which has a potential for a longer term offer of a senior role paying proper permanent wages. (135k + car, health and 25% bonus) So if I am going to pay tax like a bitch I will be one and take the holidays and sick leave open to them...

I don't see that caving in to pay tax you are not due while having no employment rights is acceptable, it is certainly not a victory. Especially when it is just to appease a dumb procurement monkey that does not have the knowledge to understand or underwrite the contract that they signed in the first place.

[d000hg]

Whilst not having any of the rights or benefits of a permie, remember you're only a deemed permie for tax purposes you're not a legitimate employee. It's aggressive workers rights avoidance implemented by HMRC

Sorry but "not having the same rights as an employee" has nothing to do with paying the same amount of tax on your income, and everything to do with getting paid more than them

[BolshieBastard]

What's wrong with 3) - if you get the take-home you want, why care?

Three reasons, 1, you've now accepted HMRC's premise of being IR35 caught, 2, your next client probably wont pay as much since they arent public sector, 3, HMRC could potentially look into anyone who worked \ accepted IR35 principles in the public sector and is now contracting in the public sector.

[d000hg]

If your next contract isn't PS then you won't be IR35-caught then so rate is less important. Since you're talking about leaving PS now anyway you're just postponing the same choice.

[centurian]

No a victory is booking tomorrow off and going to London for two interviews for roles paying more than I am on now. One of which has a potential for a longer term offer of a senior role paying proper permanent wages. (135k + car, health and 25% bonus) So if I am going to pay tax like a bitch I will be one and take the holidays and sick leave open to them...

Well it's only a victory if you land the role, otherwise it's a lost days invoicing. But genuinely best of luck on those roles anyway.

I don't see that caving in to pay tax you are not due while having no employment rights is acceptable, it is certainly not a victory. Especially when it is just to appease a dumb procurement monkey that does not have the knowledge to understand or underwrite the contract that they signed in the first place.

You're letting sentiment get in the way of sound business decisions. I only care about the bottom line. If a public sector outfit offered me a role paying an extra 50%+ on my current day rate, but was inside IR35, I would still take it. I only focus on the net value. The extra tax is just an additional expense of the contract, like travelling costs.

[malvolio]

Well it's only a victory if you land the role, otherwise it's a lost days invoicing. But genuinely best of luck on those roles anyway.



You're letting sentiment get in the way of sound business decisions. I only care about the bottom line. If a public sector outfit offered me a role paying an extra 50%+ on my current day rate, but was inside IR35, I would still take it. I only focus on the net value. The extra tax is just an additional expense of the contract, like travelling costs.

The difference being that IR35 prevents you storing money in the war chest for future bench time, sales effort, business development and training. That's the real problem with IR35, not the tax paid; it prevents you from fulfilling your duty as a director to operate the company efficiently and economically.