Has Gordon dropped a clanger?

[gingerjedi]

For various reasons I have operated under an umbrella up until now but the measures that are about to come into effect have forced me to go down the ltd route, This will halve my tax liability as I see it so why did they bother? I'm sure my situation is in no way unique and I expect every other person under an umbrella to do the same.

Did they just assume we would put up with it? Are small ltd's next on the 'to do' list for GB?

[ContractIn]

Thats what IR35 was introduced for, the small Ltd's with essentially one client at a time.

[rawly]

Yes - this is interesting. In the Pre Budget he estimated he would pull in £2bn from this measure - yet he's not getting any of it from me at the moment.

One thing does lead to another. I only used an MSC as I didn't agree I should pay NI twice if Gord wanted a 'level playing field'. So, I went MSC with an IR35 pass and from that I gained more benefit from Dividend payments.

Next, he's pushed me out of MSC and into Ltd, and so now as another extra I also gain the benefits of Flat VAT, worth over 5%.

So - what was the point of all this ever since IR35 was introduced?

To me a level playing field would have been to drop the Employers NI burdeon and I never would have bothered with all this in the first place. But now it has gone beyond all this and the whole thing needs dismantling and thought about more logically. It's just crazy. But the Tax system has always been like this.

[gingerjedi]

Thats what IR35 was introduced for, the small Ltd's with essentially one client at a time.

Well it's clearly not working the further they push it the more people want to find ways to avoid it, I remember a story a few months ago saying that IR35 was not working and they were thinking of winding the whole idea up, any truth in that?

[ContractIn]

Well it's clearly not working the further they push it the more people want to find ways to avoid it, I remember a story a few months ago saying that IR35 was not working and they were thinking of winding the whole idea up, any truth in that?

I've certainly not seen any formal communication, but there are plenty of articles about how unsuccessful HMRC have been in enforcing IR35. I did read somewhere that out of 1400 (approx) investigations, they were only successful in a handful of cases, proving IR35.

So guess most are taking the risk of working outside IR35 with a Ltd setup on the premise that HMRC will not get round to investigating them.

All IMHO

[The Lone Gunman]

Well it's clearly not working the further they push it the more people want to find ways to avoid it, I remember a story a few months ago saying that IR35 was not working and they were thinking of winding the whole idea up, any truth in that?

That was a fun conversation. Turned into a "To PCG or not PCG" brought out some terrific drivel from "The Scarlet Pimp".

One of the members of the PCG published on their forum that a friend worked for the IR. That friend had told him that the IR were not going chasing IR35 anymore as it cost them more than it made.

It was only ever hearsay.

[oraclesmith]

I guess that the estimated amount of tax raised from getting rid of MSC's has more to do with good news politics than reality. They probably speculated that every MSC'er would go to a brolly or go PAYE !

[swamp]

My take on Gordon's crackdown on MSCs is that, in part, they want to try and define more clearly what a Personal Service Company is.

Expect IR35 MKII in 2008.

[The Lone Gunman]

My take on Gordon's crackdown on MSCs is that, in part, they want to try and define more clearly what a Personal Service Company is.

Expect IR35 MKII in 2008.

Ditto. Start planning your exit strategies right now.

[Diestl]

Or Expect the torys to be in power.