Why did HMRC go with IR35?

[babason]

At the risk of asking a stupid question. Instead of IR35 why didn't HMRC simply say all contractors must pay a fixed proportion (e.g. at least a third) of turnover as salary?

[Crossroads]

Stupid question indeed. Define "contractor". Do you mean a legitimate small business (who would be disadvantaged by such a move), or a disguised employee (who would gain an advantage by such a move).

[babason]

Stupid question indeed. Define "contractor". Do you mean a legitimate small business (who would be disadvantaged by such a move), or a disguised employee (who would gain an advantage by such a move).

Please stick to the point. The issue of definition arises whichever system you use.

I contend that IR35 is simply seen as 'over the top'. If it had been pitched more reasonably and clearly (e.g a third of turnover but feel free to insert something more reasonable and/or clear if you prefer) the greater body of contractors would've accepted it and the government would've had a bigger overall tax take with much less expense.

[SueEllen]

Please stick to the point. The issue of definition arises whichever system you use.

Crossroads has stuck to the point. Define a "contractor" and then define a "small business".

If the government and HMRC cannot distinguish the two they cannot write a law that will not be tested through the courts causing them to lose most of their cases.

Remember lots of MPs in the House of Commons are lawyers and most laws in this country, while they may be written for specific purposes can be used in different ways.

[babason]

Crossroads has stuck to the point.

No he didn't and now neither have you.

My question doesn't require definition of 'deemed employee', 'contractor' or 'small business'. For the sake of argument I am going with HMRC's definitions.

My question is why did they go for applying PAYE + NICs to 95% of turnover which was bound to provoke measures which ensure the actual tax take as a whole is only a tiny fraction of this.

Surely if they'd not been greedy and gone for say a third, there would have been a general reluctance maybe even irritation but on the whole it would have been paid and the tax take would have been higher for a lot less effort expended...

[max]

No he didn't and now neither have you.

My question doesn't require definition of 'deemed employee', 'contractor' or 'small business'. For the sake of argument I am going with HMRC's definitions.

My question is why did they go for applying PAYE + NICs to 95% of turnover which was bound to provoke measures which ensure the actual tax take as a whole is only a tiny fraction of this.

Surely if they'd not been greedy and gone for say a third, there would have been a general reluctance maybe even irritation but on the whole it would have been paid and the tax take would have been higher for a lot less effort expended...

Why don't you ask them?

How would we know!

[BrilloPad]

No he didn't and now neither have you.

My question doesn't require definition of 'deemed employee', 'contractor' or 'small business'. For the sake of argument I am going with HMRC's definitions.

My question is why did they go for applying PAYE + NICs to 95% of turnover which was bound to provoke measures which ensure the actual tax take as a whole is only a tiny fraction of this.

Surely if they'd not been greedy and gone for say a third, there would have been a general reluctance maybe even irritation but on the whole it would have been paid and the tax take would have been higher for a lot less effort expended...

ok mr troll/hmrc mole - I'm bored so I will bite.

your question "At the risk of asking a stupid question. Instead of IR35 why didn't HMRC simply say all contractors must pay a fixed proportion (e.g. at least a third) of turnover as salary?"

can you define contractor please? either your own or hmrc definition.

I don't know any contractors - only small businesses.

Are you suggesting that every business should pay a fixed proportion of turnover as salary?

[Crossroads]

Please stick to the point.

I did. Jog on.

[babason]

ok mr troll/hmrc mole

Give over...

I don't know any contractors - only small businesses.

That's fine by me and irrelevant...

Are you suggesting that every business should pay a fixed proportion of turnover as salary?

Nope. HMRC has come up with (arbitrary) definitions for a 'deemed employee'. HMRC then insists on PAYE and NICs for 95% of turnover from those 'captured'. The targeted small business then quite obviously resist vigorously, minimising the overall tax take.

I'm intrigued as to why HMRC went for such a large amount. If they'd gone for a more reasonable amount (say a third) the targeted small businesses would complain but would've paid, thereby increasing the overall tax take. It just seemed poor strategy on HMRC's part and I wondered if there was an explanation for it. However, it doesn't look like I'm gonna get one here as I am now a 'deemed troll'...

[SueEllen]

Please stick to the point. The issue of definition arises whichever system you use.

.

We (Crossroads, Brillopad, max and myself) don't know the definitions so please tell us oh wise one.