IR35 Update following discussion group yesterday - survey request

[Zero Liability]

That would imply they should take a more agnostic approach than the one mentioned in the OP, however. It certainly means figures like the "protected yield" one are worthless without more accurate figures.

[jamesbrown]

They really do need to provide some evidence for their assertions regarding the vaunted "protected yield" figure.

It's nonsense, and it can be shown to be nonsense on the basis of (among other things) its failure to account for the upcoming dividend tax changes. However, these WAGs are commonplace in gov't, and they won't lose any sleep over accuracy. The whole thing is driven by a mixture of ideology and a search for revenue (and to be seen to be searching for revenue). Let's see how the discussion and consultation pan out, but we certainly shouldn't rule out strategies related to employment law, even if they're unseemly.

[jamesbrown]

A very useful article on SDC here. FWIW, I share this interpretation on the likely implications, contrary to what some have been speculating (i.e. that it represents a substantially tighter test than is currently applied). (Not that it necessarily matters if the client is interpreting SDC without an incentive to do it properly).

[LisaContractorUmbrella]

This is what HMRC want to target but they are going about it the wrong way.

We have had a discussion on here where it was floated that people should invoice x to be able to incorporate. However it was pointed out that some people incorporate for entirely different reasons.

Also this probably helps explain why HMRC cannot provide the figures for the number of one man bands.

They would have to define their criteria and cross match records with Companies House.

Otherwise they would say that a company with multiple directors and one fee earner who takes a salary is a one-man band, while ignoring someone who set up a company for limited liability protection and is not taking any money out of it.

This hits the nail on the head. The issue seems to be, with both T&S and IR35, not what is happening but how often it's happening but unless we can come up with something that will take a significant number out of incorporation who shouldn't be there and also make it a 'fair' solution to appease the MP's HMRC will continue with their sledgehammer/nut approach

[LisaContractorUmbrella]

We only have a few days to submit our response to the IR35 discussion - can I ask anyone that hasn't completed the survey to take it asap and if you can help get the message out there on social media it would be greatly appreciated

[WordIsBond]

The problem with having a two-sided (proper) risk/reward evaluation of SDC is that, in many cases, engagers that aren't currently interested in IR35 would suddenly become much more careful in designing contracts with appropriate working practices that reflect a client-supplier relationship. Obviously, this would be a good thing for contractors. But it probably wouldn't increase tax revenue for HMRC.

If the risk to engagers ends up being employment rights, correct.

But if it is just employers NI, not so sure. Given a choice between 1) pay some form of employers NI up front 2) risk getting hit with employers NI plus big penalties later or 3) become experts in avoiding IR35, I'd guess a lot of engagers would just settle for #1 and have done with it.

And yes, they might try to reduce contractor rates to compensate for it. But others wouldn't reduce their rates, they'd just pay it and pass the cost on to their customers. There would be a marginal decline, maybe, but supply and demand will always win in determining the cost of services.

[WordIsBond]

There was a panorama a few months ago about one of the factories in China that make chips for iPads and iPhones etc, Apple had pressure from western press to ensure no one in their supply chain was forced to work unreasonable hours. So the factory, upon getting their new batch of recruits said 'OK and before you can start working for us you must sign this waiver form stating that you are willing to work all hours, otherwise you must go back home' - obviously they all signed it because they're desperate for work, and all ended up working 16+ hour days 6 days a week - so it's not just "idiots" that need protecting, there's plenty of big companies who would jump on the opportunity and vulnerable people open to abuse from being able to 'mutually opt out' of employment rights (we're seeing similar in the uk through forced incorporation for lots of low paid staff)

China is not the UK.

Minimum wage. Safety net. Working Time Directive. Health and Safety. Etc, etc.

We get these scare stories about how the government has to protect people from bullying big companies, so there are limits on what companies can agree with workers. But the scare stories are always about things happening elsewhere, in countries where the workers don't have any rights.

In this country, you don't have to be a slave. Even if threatened with termination, there is a social safety net. Anyone who agrees to intolerable conditions is simply failing to educate themselves as to their rights and/or failing to avail themselves of those rights. We'd do better to spend less time legislating to protect the idiots and more time educating people of the rights they already have so we don't have any idiots.

[MrMarkyMark]

Yet, time and time again, whenever banks pull this stunt, hardly anyone leaves (which is why they keep doing it).

I believe Bar****p faced issues last time round, they had to take some back on higher rates.

[Zero Liability]

We get these scare stories about how the government has to protect people from bullying big companies, so there are limits on what companies can agree with workers. But the scare stories are always about things happening elsewhere, in countries where the workers don't have any rights.

At the risk of running a little off topic, their government has little time for individual rights of any kind, particularly where these conflict with govt policy. This has been the case historically (thus why many are still so poor) and remains the case. Their legal system is reflective of this. So like you say, it's not a particularly useful place to point to when discussing such things.

[LisaContractorUmbrella]

Even if the £430 million figure was right (and I don't think it was), it isn't any more - because it was calculated before the change to the dividend tax rates.

So without doing anything to do with IR35, the "loss" to the exchequer has been drastically reduced.

According to the response on the Dividend Tax petition the changes are netting the Government £500 million