Risk

[Bluebird]

Eric,
It's a good point you make.

I'd like to think that in a year od so's time 'My Company' has a number of employee's, and I'm still the majority shareholder and pay myself a small salary to maximise the profits of the company - lots of small companies do this.

[Mustang]

Hear, hear Eric!

[Flat Eric]

Eric,
It's a good point you make.

I'd like to think that in a year od so's time 'My Company' has a number of employee's, and I'm still the majority shareholder and pay myself a small salary to maximise the profits of the company - lots of small companies do this.

**** me, that's a first. Someone agrees with me ... I usually just spout drivel

[Bluebird]

**** me, that's a first. Someone agrees with me ... I usually just spout drivel

I said I agreed with you, I didn't say it wasn't drivel

[The Lone Gunman]

But it's their personal cash flow - eg. meeting the mortgage etc, not the limited company's. A lot of small businesses are started whilst the director is in full time employment elsewhere. For a typical IT contractor, the limited is necessarily a vehicle for their employment so it's not surprising the HMRC are after us.

I'm not saying that IR35 is right, but I think it's wrong not to make an effort to be a real IT services business. There are many contractors out there whos limited's are effectively run by their accountants and who haven't a clue as to how to run a proper company. They come into contracting as a means of higher paid employment and use their limited as a method of being paid more - they have no intention of building it into something bigger.

In order to understand the situation with IR35 and HMRC, it's necessary to look at the distinction between permanent employees (and nothing's that permanent nowadays) and contractors performing the same role.

You seem to have fallen for the revenues bulltulip.
There are any number of people who have started their own business as a vehicle for their employment and/or as a method of increasing their earnings.
There are thousands of one man businesses that have no intention of ever being more than a one man business.

The only reason we are being compared to employees is because the revenue say we should be. They deliberately ignore the factors that make us businesses.
Remember it is their rules that stopped us being self-employed too.

[oraclesmith]

You seem to have fallen for the revenues bulltulip.

If you mean that I can understand where they're coming from then yes.

There are any number of people who have started their own business as a vehicle for their employment and/or as a method of increasing their earnings.
There are thousands of one man businesses that have no intention of ever being more than a one man business.

Fair point, but there are any number of permanent employees who but for IR35 could easily convert to long term contractors in the same office doing the same work as before, with the taxpayer chipping in a chunky pay rise for good measure. The tax has to come from somewhere so the more income tax avoidance, the more that other areas like inheritance and capital gains will be squeezed.

Some corporates used to encourage perma-contractors as a way of shifting some of the salary budget to a supplier budget and avoiding hassles with unions; with contractor-employees being in post for 10 years and more. It still goes on.

The only reason we are being compared to employees is because the revenue say we should be. They deliberately ignore the factors that make us businesses.

I would say that most contractors who know their way round a limited company are genuinely in business on their own account. But it's a few abusers and newbies who fall into setting up a limited as an 'accounting option' that spoil it for the majority. The likes of Giant and their Trailblazer product will only make it worse as more and more artificial companies spring up.

Remember it is their rules that stopped us being self-employed too.

You can be a sole trader and pay tax on all your income less expenses.

[The Lone Gunman]

You can be a sole trader and pay tax on all your income less expenses.

That is almost impossible to do, though many of us would take the option if it were possible. The clients will not touch sole traders. Maggie implemented a law, when BT started this Fri to Mon thing, making the client (and possibly the agent) responsible for any unpaid tax the contractor did not pay. Since then the clients have insisted on Ltd status (even if they don't know why).