Aren't the majority of IT contractors inside IR35?

[chicane]

The problem is that most independent contractors are unwilling to behave like businesses and can't be arsed to establish their true working conditions, they'd rather see a weekly pay cheque with no fuss or bother.

Mal, I'm not sure if your comments are entirely fair.

I imagine the most successful contractors from a financial perspective are those that firstly have the right skills and experience, and secondly don't put barriers in the way of the agent and end-client when it comes to the setting up of the contract.

Many of the larger agencies have become increasingly militant of late with their contract terms - I know one guy with a very "outside IR35" working mentality who spent weeks trying to get his contract amended to be more IR35 compliant before simply giving up and looking elsewhere for work. Despite the end-client wanting this guy, the agency was happy to let him go rather than amend the contract terms.

Many contractors, especially in the current market, are therefore given two options. Do they accept employee-like contract terms whilst maintaining a genuinue contractor-like mentality, or do they stay out of work for a further couple of months?

It's a tough decision and I know which route most people would take.

[TheBigYinJames]

Mal, I'm not sure if your comments are entirely fair.

Malvolio has always had a very single-minded view of what is wise and stupid when it comes to Ltd/Umbrella.

If money is your single goal, your measure of self-worth, the metric by which you measure your personal value and life success, obviously paying Umbrella PAYE is a complete subjugation of your alphaness. Eat raw meat! Growl a lot! Spend the extra few quid you bust your emotional balloocks off gleaning. Be happy.

If, on the other hand, running a Ltd is a complete chore, a boring waste of your time and energy, dealing with grey faceless accountants, govt bureaucracy and mind-numbing forms not something that is worth the incremental income, then don't bother. Pay a bit more money, spend your slughtly deflated paypacket. Also be happy.

wise/stupid is a value judgement Malvolio places in this decision, which is his personal view, it doesn't hold for everyone.

[singhr]

Its fine to have the right clauses in the contract, but will we ever stand a chance if a real investigation takes place?

Yes, if you conduct your engagements in the required manner and not (t)roll over and play dead. PCG can give you lots of guidance and while you are there check out the stats for successful vs unsuccessful challenges from HMRC to restore your faith.

[Bright Spark]

All, my first post. I'm an IT contractor and been contracting for 3.5 years now, in the financial sector.

Have managed to get the right clauses into my contract to be IR35 compliant.

But seriously, can a normal IT contractor ever be outside IR35?

For example, which bank will allow an IT contractor to send in a substitute?

Its fine to have the right clauses in the contract, but will we ever stand a chance if a real investigation takes place?

All depends on how important you are to the IB and what area in the IB
you are working for.

ie. if your some whizz who can build complex pricing/risk spreadsheets in the
front office business which generates good revenue and profits then
people will be more than happy to do what they can for you, compared to
a back office java developer working in the IT department, they will
probably be less willing.

[malvolio]

No, I admit I'm not fair and dispassionate about it. I've been one of those fighting IR35 for the last ten years, so don't expect me to be. Yes, it is a personal decision, always will be. Not everyone wants to be a martyr, and not everyone wants the risk levels.

Some do, though, and as I tried to point out, there is good reason to do so.

The thing is, we are ten years into IR35 and there is a growing body of people who accept it as the status quo rather than as the complete nonsense it always was. If a few noisy old gits like me don't keep pointing out that it is a load of manure and does not have to be accepted, we'll never get rid of it.

I don't blame or condemn anyone for playing the IR35 game any way they see fit. Doesn't mean I have to agree with them.

[BolshieBastard]

90% of contractors on here are disguised employees and are all inside IR35, regardless of what they believe and say they are outside, have written etc.

For those who say they are inside and pay the tax/NI are the real idiots, because!!!!

As said 90% are inside, most reckon they aren't so act as if they are not. They are of course are inside. For those who reckon they are inside, they're right, but! by playing it the other way and saying you're not means you pay less tax... and because the Inland Revenue pull so few IT contractors out for an audit, in the the terms of a gambler, it is better to say outside than inside. Capiche!

Only 10% on here are really outside IR35 with multiple contracts, and only 1% of those have a real business. As 99% of contractors are really 'Self Employed' so when they die, the LTD dies!

And thats the bottom line!

...Now expect some bolshy tw@t to say, they are a real company and that they run their business properly...

WHS about IR35!

[northernladuk]

90% of contractors on here are disguised employees and are all inside IR35, regardless of what they believe and say they are outside, have written etc.

For those who say they are inside and pay the tax/NI are the real idiots, because!!!!

As said 90% are inside, most reckon they aren't so act as if they are not. They are of course are inside. For those who reckon they are inside, they're right, but! by playing it the other way and saying you're not means you pay less tax... and because the Inland Revenue pull so few IT contractors out for an audit, in the the terms of a gambler, it is better to say outside than inside. Capiche!

Only 10% on here are really outside IR35 with multiple contracts, and only 1% of those have a real business. As 99% of contractors are really 'Self Employed' so when they die, the LTD dies!

And thats the bottom line!

...Now expect some bolshy tw@t to say, they are a real company and that they run their business properly...

Unfortuantely I don't agree. For one what does multiple contracts have to do with IR35? You could have multilpe contracts all goverened by the client so all of them are inside IR35... You don't seem to mention it is the contract that puts you in or out. You are just blanketing ALL contractors which isn't also correct.

Because of this misconception of IR35 I would assume the rest to be wrong as well. As has been mentioned you attitude and negotiation with the client can make a huge difference. I am not expert but my and the other contractor here do the same job. I had times and any restrictions taken out of my contract, he didn't. I have laid down my working times with the client which are pretty random and I can WFH. My colleague works 9-5 and asks the client anything before he does it and so on and so on...

With this set up I am running by business properly and my contract and my working practices are outside IR35, his arn't.

Same job, very different way of approaching it and as I said I don't know IR35 inside out but put a lot of effort in being outside.

As 99% of contractors are really 'Self Employed' so when they die, the LTD dies!

Now I do agree with this but what has this got to do with IR35?

[MrC]

Isn't it "funny" that this kind of legislation now exists in almost all countries? Although the wording and the terms are different, I have been battling with the same problem in the Netherlands and South Africa for years now!

It seems governments hate entrepreneurs and one-(wo)man companies! Maybe because they can't control us enough, and hate our freedom?

This is probably a totally niave question, but depsite having spent days (weeks?? ) of my life reading about IR35 one question that i haven't seen posed or answered is why do governments bring in these laws? What are the justifications? Clearly they are an attempt to increase tax revenues but wouldn't there be a better/easier way? From what I've read HMRC have spent more in the court rooms than they've made back in tax and penalties.

[XLMonkey]

This is probably a totally niave question....

Yes, it is. Two reasons
1. National Insurance. If you are an employee, then you would pay both employers and employees NI on the revenue you get from the client. That works out at c. 24% additional tax up to the higher rate threshold, and c. 13% above it.

2. Income smoothing. If you are an employee, you pay tax on everything as you earn it (hence PAYE). If you are running a company, you can spread your income from year to year to cover periods when you're out of work. As a result, you pay less tax.

The government keep trying to find ways to make contractors pay NICs in particular, and failing.

[TheFaQQer]

This is probably a totally niave question, but depsite having spent days (weeks?? ) of my life reading about IR35 one question that i haven't seen posed or answered is why do governments bring in these laws? What are the justifications? Clearly they are an attempt to increase tax revenues but wouldn't there be a better/easier way? From what I've read HMRC have spent more in the court rooms than they've made back in tax and penalties.

It's only fair.