Government to consult on tax avoidance in the private sector

[WordIsBond]

The example in the consultation demonstrates the one-sided approach HMRC is taking to this, and how they are ignoring what happens in the real world. https://forums.contractoruk.com/futu...ml#post2555823

[swamp]

The example in the consultation demonstrates the one-sided approach HMRC is taking to this, and how they are ignoring what happens in the real world. https://forums.contractoruk.com/futu...ml#post2555823

Notice how his 'PSC' is not registered for VAT. That's just totally unrealistic, unless it's normal for Project Manager roles to pay £230 per day.

Meanwhile HMRC are very quiet about trousering the extra 20% from all finance, insurance, charity, and public sector contracts.

[madame SasGuru]

Notice how his 'PSC' is not registered for VAT. That's just totally unrealistic, unless it's normal for Project Manager roles to pay £230 per day.

Meanwhile HMRC are very quiet about trousering the extra 20% from all finance, insurance, charity, and public sector contracts.

HMRC regard VAT as revenue neutral so the quickest way of seeing your response is utterly ignored is to talk about VAT. Even charities and public sector contracts have special ways to treat VAT which mean they are not as awkward as you believe they are.

[swamp]

HMRC regard VAT as revenue neutral so the quickest way of seeing your response is utterly ignored is to talk about VAT. Even charities and public sector contracts have special ways to treat VAT which mean they are not as awkward as you believe they are.

If your client isn't VAT registered -- ie finance or insurance company -- then it definitely isn't "revenue neutral".

Agree that public sector sometimes have some treasury agreement, but investment banks don't!

[WordIsBond]

Notice how his 'PSC' is not registered for VAT. That's just totally unrealistic, unless it's normal for Project Manager roles to pay £230 per day.

Would you register for VAT if your company had £50K a year in revenue?

To be fair, what they were trying to do was create a simplified illustration with as few variables as possible. By leaving VAT out, and by setting the total contract at £50K (so there is no higher rate tax) it keeps it simple. That's really what they should be doing. But Pension AE is mandated by law and affects taxation so it really should be included.

The real problem is not that they set the rate low in their illustration, or failed to include the impact of pension contributions. The real problem is that their preferred solution, while it narrows the "tax gap", means the contractor ends up with less take-home than the employee, even though it is the employee that gets full employment rights.

[TonyF]

The evidence document that HMRC commissioned has some intersting stats that could be used to help fight the rollout. For example 44% of public sector bodies said that the new rules cost them more than before, 32% of public sector bodies said it was harder to fill vacancies now, 23% of sites said that CEST was not helpful ect ect.

[b0redom]

It's probably worth also noting that the majority of contracts I've seen in the public sector recently including those at HMRC have declared themselves outside of IR35.

[GreenMirror]

The evidence document that HMRC commissioned has some intersting stats that could be used to help fight the rollout. For example 44% of public sector bodies said that the new rules cost them more than before, 32% of public sector bodies said it was harder to fill vacancies now, 23% of sites said that CEST was not helpful ect ect.

Do you have a link to that?

[TonyF]

Do you have a link to that?

Research paper was dropped onto the government pages on Friday - https://assets.publishing.service.go...lic_Sector.pdf

[fidot]

I think I'd really struggle with an unfettered RoS. The reason my skills are in demand is that almost nobody these days has the specific combination of 40+ years experience and industry knowledge in my particular speciality. Everyone else I know has retired or semi retired and works only when they feel like it. So, I am in demand. But - Who the heck would I sub to?

All fair points. However, as I have posted before, what would the client do if you had decided not to take this role?
They would have taken someone else on. You happened to be the best fit (skill/price/availability etc) in the client's eyes at the time of interviews. Even if the second best fit is half as good as you and twice the price, they would still take him/her on if the alternative is not doing the project at all.
So, they are already open to the idea, in principle, of you not performing the role personally. The trick to substitution is convincing the client that you have a better idea of an appropriate substitute than any agent.