IR35 loses appeal case

[The Lone Gunman]

Yeah, I see where you're coming from, but would one of us be in trouble if we were directors but got other people to go and do the work? I can't pretend to have a clue what I'm talking about here, but it seems to me that the target is the actual worker who is (in the view of this vague law) "pretending" to be an unconnected supplier, whilst effectively being an employee.

In the M&S supplier example, the company director would presumably be involved in running his company, employing staff, developing new lines etc, rather than going in to M&S's own kitchens every day to make delicious chocolate rice crispies cakes (£3.50 for six). Or something.

Dang: We have done this to death. It is perfectly legal for a one man Ltd company to operate. The sole proprieter doing all the work and then splitting company income into wages and divvies.
M&S example: The cost of having premises is factored into the invoice. A number of M&S suppliers were originaly a manufacturing arm, sold off then engaged as suppliers.
Many of them have no other business and only produce what M&S require. New lines come from M&S requests. M&S have been known to fund factory refits too.
M&S dont have many issues where suppliers need to be working on their kit in their offices due to the product under development.

(I knew this was a bad idea).

[dang65]

Dang: We have done this to death.

Fair enough! I have to say, I don't tend to read up much on this sort of thing and don't really know why I decided to chip in this time.

[NotAllThere]

Yeah, I see where you're coming from, but would one of us be in trouble if we were directors but got other people to go and do the work?

If you are the sole shareholder and director of a company which has one employee on £30K a year, who is charged out at £100K a year, you can take the around £50K profit as dividend income, no problem. If you are, however, the employee, and the contract is IR35 caught, then you can't.

So, you can live tax-efficiently off the sweat of the worker, but not your own. This brought to you by a Labour government. Very socialist.

[Sausage Surprise]

Blacjac, in that case good for you, in my experience you are a rare bread.

Wonderloaf? You can't get that anymore!

[dang65]

So, you can live tax-efficiently off the sweat of the worker, but not your own. This brought to you by a Labour government. Very socialist.

In which case (and I'm really sorry if this has been thrashed out a million times before), do many IT contractors get their wives/husbands/partners to be the Director of their Ltd while they themselves go and do the actual work? Then pay the director the massive dividends and the worker peanuts. Or has that all been de-loopholed now?

[dmini]

Thats what they tried to stop with the "Income shifting" legislation intended into the budget this year - but they couldnt work it out in time - so we've got till next April now
Its OK to take huge dividend off other people - so long as they aren't related to you

[Lewis]

So how come HMRC stopped at 2 years? I see he changed Ltd company, was this a reason? If so, is that prehaps a reason to not keep the same Ltd running too long?

[Lockhouse]

In which case (and I'm really sorry if this has been thrashed out a million times before), do many IT contractors get their wives/husbands/partners to be the Director of their Ltd while they themselves go and do the actual work? Then pay the director the massive dividends and the worker peanuts. Or has that all been de-loopholed now?

There's also a connected persons rule (as distinct from income shifting) that disallows this.

[Archangel]

A lot of this is about semantics and interpretation and franckly you are not helping.
We need a united front in the contract market and you pointing out people are, in your opinion, disguised employees undermines the cause.
Some of us believe that the rules for IR35 are manufactured. Constructed as a catch all for what HMRC considers to be indicative of a disguised employee.
The rules are manufactured from a traditional view of what an employee is and the rules are possibly valid but many of our industries are in no way traditional and need a different interpretation, possibly an exemption from this kind of examination.
It is very difficult for some of us to avoid IR35, particularly if our clients (and fellow contractors) insist that we fit the HMRC model.

I would love to work on fixed price work packages (I have done so for 6 months in 10 years), but the problem is that I work on dev packages from the ground up. Could you quote a fixed price when the requirements are not in place and even if they are they change?
When I accept a contract I know that there will be a number of tasks required to be done and I will be doing some of those tasks. Those tasks are dependant on the project stage and work from other teams being complete. It would be very easy to paint that as control.
At certain times there will be a need to coordinate with other teams to achieve delivery targets and there will be times when a lot of effort is required for any number of reasons. Because of this there are times when the client will not accept absence. You could interpret that as having to request holidays.
I would argue that it is my business to provide services to my client. Those services are agreed by the contract. When those services are provided is also defined by the contract. I am controled by the contract and holidays (if ever I take them during contract) have to be negotiated ex contract.

It is not as easy as HMRC state.
Please do us a favour and get with the mind set. IR35 is wrong. It is badly implemented.
If you are going to say people are caught, at least point out that it is only HMRCs opinion that makes them caught.

Sorry, I could rant on like this for days (and sometimes do).

Well said LG I agree 100%.

[Integrity]

What ever happened to the "Doctrine of Privity"?

The doctrine of privity in contract law is simple "A contract cannot confer rights or impose obligations arising under it on any person, legal or natural, that is not a party to it".