BN66 - Time to fight back: Continued

[BolshieBastard]

I'm actually tempted to go permie. What is the point in being a consultant if you pay more tax, don't get sick pay, can get laid off without redundancy, and you don't get paid holiday. I liked it when I first started because I could take the risk and preferred the cash. Now I don't really see any benefit.

Financially, you'll still tend to be better off IR35 caught then being a permie.

[BrilloPad]

Financially, you'll still tend to be better off IR35 caught then being a permie.

And office politics!

<shudders>

[BrilloPad]

Thanks DR
Might be worth writing to the European MEPs too in light of what this is about.

hear hear

DR's link includes links to MEPs too.

http://forums.contractoruk.com/622437-post1750.html

[MuddyFunster]

Were there any penalties? Did montp pay them?

No penalties. I just paid the bill. It wasn't MP's fault anyway - it was the intermediary muppets.

[Gooner99]

I'm sick to death of hearing this Government telling us that "its right and its fair" for tax avoiders to pay their fair share of tax. Their solution is that contractors, who carry the risks of self-employment, little/no notice period, no pension, no paid holidays, no sick benefit, pay 50% tax. I thought the top rate of tax was 40%...so now where are we on right and fair?

Read back what you have written – do you honestly expect to be taken seriously?

You knew the issues around self-employment, notice periods, pensions, holidays etc. when you decided to go contracting. At this point you decided that the increase in remuneration was more than ample reward. If your hourly/daily rate isn’t sufficient, go back to permanent employment.

There is no reason to expect other taxpayers to subsidise your decision to enter the contracting market – that is why the contracting rates are higher. Your argument would hold more water if you had been paying 40% through your PAYE element of the scheme – or perhaps you were, in which case you will have nothing to worry about with the clarification of the legislation. However, I suspect like most other contributors to this thread, you have been paying single figure tax for some time which is why you now find yourself in such a position.

In summary, I agree that you should not have to pay 50% tax, but paying the single figure sums that have been leapt upon by many on here was bound to attract the opprobrium of the government, and rightly so. You can't have both increased rates of pay and tax advantages. If the sums don't add up for you I suggest you go back to permanent employment, because they seem to more than add up for most in the contracting profession.

[Hawkwind]

Read back what you have written – do you honestly expect to be taken seriously?

Although you weren't replying to me directly I feel compelled to reply - the answer being a definte Yes.

I started contracting in 93 and quite happily adhered to the ltd. company / dividend model. Admittedly this did lead to certain Tax advantages and it was possible to minimise the top level to 25% rather than 40%. It was commonly agreed that this was reasonable due to the risks involved and lack of employment benefits - you may scoff at the risks but I am sure there are many that were out of work during the recession of the early 90's and the fallout from 9/11 that would disagree.

It was only when the current government started attacking contracting as profession through the tax system (lets be clear, IR35 et al have nothing to do with fairness they are just a means to try and stop our method of working) the schemes such at this one became popular.

I was faced with a decision to either pay an unfair amount of tax in my opinion (remember with NI the 50% is pretty much the lower rate as well as the higher) or look for an alternative.

I considered Umbrella Companies expenses based schemes but thought these were clearly dishonest. I don't even believe the majority of so-called IR35 friendly contracts really exist either, largely for the same reasons as recently outlined in the Dragonfly case.

This oddly meant that the only alternative I considered to be honest (morally questionable perhaps but definately legal at the time) was the MP scheme. I actually agree that the tax paid on the scheme is probably disproportionately low but if the government hadn't meddled with a perfectly good system they would still have received a large sum that I was happy to pay.

In summary I strongly object to the implied suggestion that I joined the scheme out of greed. Yes of course I enjoy the extra money but I am in this position because the government forced me into it as I definately refuse to be bullied into paying what they think is fair when it clearly isn't.

Even if we eventualy lose this case and I have to pay a larger sum I won't regret it at all because I've continued to enjoy contracting whereas I don't think I would have in the knowledge that from Monday until Wednesday afternoon I'd effectively be working for nothing.

[poppy01]

dont bite, its gooner

[BrilloPad]

dont bite, its gooner

Even I could not reply. I was trying hard to find one thing that I could understand to respond to - but the post was such total nonsense I could not manage it. Was not even worth a

I think Hawkwind did very well to muster a post!

I am think of starting a bn66 - trolling thread where me and the trolls can have some fun.

Seriously - do remember that there is a bn66 news thread for important posts. I know several here feel that there is alot of nonsense to wade through. If someone feels strongly - why not get links to the good posts then add them to the news thread?

[Emigre]

Read back what you have written – do you honestly expect to be taken seriously?

You knew the issues around self-employment, notice periods, pensions, holidays etc. when you decided to go contracting. At this point you decided that the increase in remuneration was more than ample reward. If your hourly/daily rate isn’t sufficient, go back to permanent employment.

There is no reason to expect other taxpayers to subsidise your decision to enter the contracting market – that is why the contracting rates are higher. Your argument would hold more water if you had been paying 40% through your PAYE element of the scheme – or perhaps you were, in which case you will have nothing to worry about with the clarification of the legislation. However, I suspect like most other contributors to this thread, you have been paying single figure tax for some time which is why you now find yourself in such a position.

In summary, I agree that you should not have to pay 50% tax, but paying the single figure sums that have been leapt upon by many on here was bound to attract the opprobrium of the government, and rightly so. You can't have both increased rates of pay and tax advantages. If the sums don't add up for you I suggest you go back to permanent employment, because they seem to more than add up for most in the contracting profession.

The issue is wider than that. Employers do not want permies for many of their projects, they want contractors. This more than anything else is why the contract market exists, and one overlooked everytime the tax rules are changed.

I agree with you that paying near single figure rates would upset Government. However, as has been said many times on this and the original thread the majority of people on the MP scheme found it after enduring the uncertainties of IR35. I think you will find that a large number of contractors were ok about paying tax through their PSC prior to IR35, a much higher level of tax payment. At that time we all had certainty about what our tax position was. The Government has brought this situation upon itself initially through the shoddy wording of IR35. The Government has been aggressive with their attempts to extract more tax from contractors. Contractors have elected to either cough up or have got aggressive back - that's called human nature and fighting for ones rights.

Rates and tax are separate issues. Rates reflect the issues in the original post. Tax is levied according to the basis of engagement. Where a client wants a contractor they will not accept self-employed beacuse client/intermediary becomes liable for tax not payed by the contractor. Thus we are driven towards Ltd Co. Ltd Co had a separate legal persona and the Courts have resisted "lifting the veil of incorporation" except in exceptional circumstances. The Government with IR35 attempted to legislate to make PSC and inividual one persona.

There is no doubt that the MP scheme is aggressive in nature but the fact that the last time the tax avoidance industry was as healthy as it is now was in the last few years of the last Labour Government should be telling. Simply, people, including contractors, are happy to pay a reasonable level of tax (that does include me!). We are not so happy being the whipping boys for irresponsible Government spending.

[sortednet]

Long time lurker

I have been lurking here for a while and thought I would join in. I have been with MP for several years and now have a six figure liability from this typically ZaNuLabour action.

I have decided to go the CTD route to weather out the process. I have decided I cannot handle more uncertain risk so I have opted for a Ltd company that is paying a reasonable (liveable) salary to both myself and my wife. The rest of the non expensed money will go into SIPPS. This means that my actual tax rate is less than it was with MP. If I am found to be inside IR35 the government gets nothing (payment to SIPP is still tax deductible inside IR35) and I have no uncertainty. It does mean that I will be waiting quite a while to enjoy the benefits but I would have been saving a lot of the money anyway. I will not be declaring myself inside IR35 so I will have the choice of balancing any dividend payments made to my appetite for risk at the time.

If you require low risk and high certainty and are saving anyway, I think this is a solution to consider.