New proposal from IPSE - Smoke and mirrors?

[d000hg]

It is a logical conclusion derived from past behaviour of HMRC and recruitment agencies.

HMRC don't need a special FLC entity to punish contractors. They could do it through the existing PSC stuff.

[TykeMerc]

HMRC don't need a special FLC entity to punish contractors. They could do it through the existing PSC stuff.

A new corporate entity type with rules that can be set rather than the precedents of existing Ltd's will make it vastly easier.

Trying to change the rules for Ltd's would have monumentally wide ranging implications, too wide for that to be practical and far too wide for any large scale changes, a new entity type throws those limits away.

It takes a terribly naive mind to imagine that the rules around a new entity type won't be heavily pointed towards tax raising rather than tax mitigating.
The "optional" element is very easily done away with, just look at the actual reality of the purely "optional" Opt Out of the regulations.

[eek]

HMRC don't need a special FLC entity to punish contractors. They could do it through the existing PSC stuff.

They can't. There is no legal definition of what a PSC is and even the HMRC guidance is utter tulip...

[d000hg]

The Ltd setup isn't designed around contractors and allows them to take the mick, tax-wise. An entity which means contractors pay tax equivalent to what a permie would do might mean we pay more tax, but it's hard to oppose other than from reasons of pure self-interest. It'd probably mean I pay more tax, but I wouldn't mind too much if it removed the whole "you contractors earn 2X as much and pay no tax" argument.

I got into contracting to earn more and have more flexibility, not to get out of paying tax. That was just a happy coincidence

[eek]

The Ltd setup isn't designed around contractors and allows them to take the mick, tax-wise. An entity which means contractors pay tax equivalent to what a permie would do might mean we pay more tax, but it's hard to oppose other than from reasons of pure self-interest. It'd probably mean I pay more tax, but I wouldn't mind too much if it removed the whole "you contractors earn 2X as much and pay no tax" argument.

I got into contracting to earn more and have more flexibility, not to get out of paying tax. That was just a happy coincidence

I think what you actually want to be treated as a self employed person and taxed under the same regime as someone who is self employed. However we cannot do that for reasons from the dim and distant past (that I don't want to repeat here). As such we end up using Limited Companies because that is what we want.

Now if you could create an FLC and be treated as self employed that would be fine (and just about acceptable). However IR35 shows that the won't be the case as HMRC want to treat the contracting skilled self employed as employees even through neither the end client or our end clients want that.

As for taking the mickey paying tax. Sorry I just disagree with that becoming a contractor is a risk and may not pay off. As such (and as with all other business ventures) we should be able to reward those who bear some of the risk (i.e. spouses...) with some of the reward that the risk provided if it works...

[Zero Liability]

There is no 'taking the mick', as you sacrifice your employment 'rights' for it, as it is conducted on a b2b basis. As for the usual arguments clueless permies trot out, they are irrelevant; the client knows far more than they do about why they engage services via a ltd company and are willing to pay for it for a reason. The biggest joke involved with IR35 is that you are treated as employed for tax purposes but gain no employment rights and also must fork out the NI on your 'employer's' behalf. It is just a tax grab, that was originally intended for a very small subset of contractors.

[tractor]

...

The Ltd setup isn't designed around contractors and allows them to take the mick, tax-wise. An entity which means contractors pay tax equivalent to what a permie would do might mean we pay more tax, but it's hard to oppose other than from reasons of pure self-interest. It'd probably mean I pay more tax, but I wouldn't mind too much if it removed the whole "you contractors earn 2X as much and pay no tax" argument.

I got into contracting to earn more and have more flexibility, not to get out of paying tax. That was just a happy coincidence

Are you saying you would be happy to pay more tax if people stopped calling you names?

[TheFaQQer]

The Ltd setup isn't designed around contractors and allows them to take the mick, tax-wise. An entity which means contractors pay tax equivalent to what a permie would do might mean we pay more tax, but it's hard to oppose other than from reasons of pure self-interest. It'd probably mean I pay more tax, but I wouldn't mind too much if it removed the whole "you contractors earn 2X as much and pay no tax" argument.

I got into contracting to earn more and have more flexibility, not to get out of paying tax. That was just a happy coincidence

You already have two mechanisms for doing that - either umbrella or by declaring yourself inside IR35 and operating via a limited company.

You'd get out of the argument, and would have no IR35 worries any more.

So why don't you?

[TheFaQQer]

Are you saying you would be happy to pay more tax if people stopped calling you names?

Sticks and stones may break my bones, but you can f*** right off if you think I'm paying more tax just because you call me a name.

[BlueSharp]

I'm assuming that a FLC would be taxed the same as self-employed if it did go ahead, so no Employer's NI. Just class 4 NIC's.

Would FLC mean we could operate as the same entity i.e. Self Employed with the protection of a LTD and just put all our Income/Expenditure on our self assessment and not need accountants to manage the company accounts. Could you carry forward retained profit?