Disguised employee, IR35 & fellow contractors

[Contreras]

My mechanic just fixed something for free for me. No one says, "Naughty, pay more tax."

The mechanic isn't working on-site, in your garage, with your tools, drinking your tea, for an extended period of months (or years even).

Just sayin like.

[Zero Liability]

Well, a consultancy can also have consultants who throw in work for "free" to win further business, without thereby becoming "disguised" employees of the end client. True, they're employed by their consultancy firm, but that is neither here nor there insofar as the end client is concerned. I agree with WiB, it's just an arbitrary crock of shyte when all is said and done, based on an outmoded master/servant worldview of how employment should work. If the tax system were not so heavily predicated on it, no one would even give it a second thought, except union relics and a dying breed of supposed aristocrats.

[WordIsBond]

The mechanic isn't working on-site, in your garage, with your tools, drinking your tea, for an extended period of months (or years even).

Just sayin like.

100% accurate, and 100% irrelevant.

I actually had a mechanic come here and do some work once. And I made him tea.

I had someone working on my house for more than a month and we had him in for dinner a couple times. Horrible. He actually became a friend. But if he'd been working for me here in my home office for six months on an IT project, and he had come to dinner a few times, HMRC would use it against him in an IR35 investigation if they could.

Really doesn't matter where you work or whose tools you use or whose tea you drink. Businesses should build relationships and look to provide a level of service that results in repeat business. If that means actually occasionally doing a little bit of unpaid work to strengthen that relationship, there is no sound business reason in the world you shouldn't do it. It's the same reason stores give BOGOF. It isn't because they expect to make any money on THAT deal, it's the other stuff they expect to sell you.

It is normal business behaviour to have loss leaders, to go above and beyond the call of duty in customer service sometimes, to do things to establish friendly relations (rather than bristly arms-length relations) with customers. That's NORMAL. And any legislation that puts us in a position where normal business behaviour is used to accuse us of being hidden employees is aberrant and distortive.

I expected Labour to pass that kind of legislation but I don't expect the Tories to defend it and strengthen it. I expect them to abolish the ugly monstrosity and replace it with something straightforward and simple.

We have two distortive things. One is the complexity of employment taxation and a significant gap between employment income taxation and business income taxation. That distorts by creating an incentive for TMI. So you have people incorporating who never should have. Distortion.

And then, to counteract that, instead of simplifying and bridging that gap, Gordon Brown invented another distortion.

The Tories actually started to solve one of those problems with their dividend tax. If they went just a little bit farther, the first distortion would be resolved and they could eliminate the stupid second one. You don't need to have equal taxation to eliminate tax-motivated incorporation, because the corporation comes with extra accounting, etc. Just narrow the gap a little more, and few will incorporate to avoid tax -- and by the way, you'd collect more tax, too, and you wouldn't have to have teams chasing IR35, and it would be EASY to enforce.

But it makes too much sense. The Tories have caught the New Labour disease of tinkering, deciding the winners and losers of tax policy, using tax to try to control behaviour rather than simply to try to find a reasonable means of raising revenue. Simplification isn't something they understand. Instead of increasing employer's NI, you have another new tax, an employer's levy. That lets them decide who the winners and losers are, as far as who has to pay it. It's all extraordinarily egotistical. They've got a god-complex where they decide who is good (and gets to pay less tax) and who is bad and pays more.

[LandRover]

The Tories have caught the New Labour disease of tinkering, deciding the winners and losers of tax policy, using tax to try to control behaviour rather than simply to try to find a reasonable means of raising revenue. Simplification isn't something they understand. Instead of increasing employer's NI, you have another new tax, an employer's levy. That lets them decide who the winners and losers are, as far as who has to pay it. It's all extraordinarily egotistical. They've got a god-complex where they decide who is good (and gets to pay less tax) and who is bad and pays more.

David Gauke. The man is going to extraordinary lengths, as if its a 24*7 obsession, he seems to have a personal issue with us, and yet look at his background. He really is THE driver in all this.