IR35 - how many investigations per year?

[Fred Bloggs]

yes, same situation for us.

Is this because everyone knows the rules and what we are dealing with now? And if so, does the panel think this is an argument for keeping the legislation in its current form?

Definitely, I have always argued that the best solution to IR35 is to leave it exactly the way it is. Those who seek to campaign against it, I believe to be completely misguided in their intentions.

[Fred Bloggs]

With regard to the tax that contractors pay, I paid far and away more tax in the last year through VAT and CT on my Ltd Co than I even earned in my last staff job. I suppose I'm still an IR35 tax dodging scumbag contractor, but if I went back to a staff role the chancellor would lose £000's every year from me alone. I don't expect politicians to start to understand that, they have other agendas.

[simondolan]

yes, same situation for us.

Is this because everyone knows the rules and what we are dealing with now? And if so, does the panel think this is an argument for keeping the legislation in its current form?

As Parasol are an umbrella I'm not surprised you are quiet on the IR35 front!

[northernladuk]

its not a valid question for a self styled ir 35 expert to make.If these experts dont understand the way we work then they should go back to been counting instead of telling us that working through an agent means we are not really in business. as this is the appropriate response

There are people on here and plenty more that don't bother reading the forums that know more about scratching their arse than running a business. How can the experts help us in a difficult field when many of us don't understand the way they work. If we could do it properly first time we wouldn't need the experts.

[Steven@Parasol]

As Parasol are an umbrella I'm not surprised you are quiet on the IR35 front!

Sorry ClearSky Accounting is part of our Group.

[prozak]

.

contractors do generate wealth and assocaited tax payments via both CT and VAT)

You know this is an excellent point. And one not considered by many.

I just did a little calc thing at that IR35 calculator website and here is what i found.

For a contractor that generates 100k of revenue a year

1. The equivalent salary is 111532
2. The tax on 11532 is £42536 (employee NI + PAYE)
3. The total tax paid for the contractor CT+VAT is 48004

Conclusion: We pay more tax than a permie.

The reality is even more stark as the permie rate for a 500 odd a day contract is a lot less than 111k.


So HMRC should be encouraging us to contract and forget about IR35.

[prozak]

With regard to the tax that contractors pay, I paid far and away more tax in the last year through VAT and CT on my Ltd Co than I even earned in my last staff job. I suppose I'm still an IR35 tax dodging scumbag contractor, but if I went back to a staff role the chancellor would lose £000's every year from me alone. I don't expect politicians to start to understand that, they have other agendas.

oops. didn't see this before I posted my dodgy analysis.

[craig1]

You know this is an excellent point. And one not considered by many.

I just did a little calc thing at that IR35 calculator website and here is what i found.

For a contractor that generates 100k of revenue a year

1. The equivalent salary is 111532
2. The tax on 11532 is £42536 (employee NI + PAYE)
3. The total tax paid for the contractor CT+VAT is 48004

Conclusion: We pay more tax than a permie.

The reality is even more stark as the permie rate for a 500 odd a day contract is a lot less than 111k.


So HMRC should be encouraging us to contract and forget about IR35.

Although I agree with the principle of your point, it's not 100% right. VAT is a transparent tax for the vast majority of B2B relationships, if you didn't pay that VAT then your client would from their upstream business transactions, be it B2B ones of their own or B2C ones that generate the primary VAT liability, all you're doing is reducing their VAT liability and increasing yours, a nil sum game for you and HMRC. The only people who really pay VAT are the punters at the far end of the chain of transactions who can't reclaim their VAT expenditure.

[prozak]

Although I agree with the principle of your point, it's not 100% right. VAT is a transparent tax for the vast majority of B2B relationships, if you didn't pay that VAT then your client would from their upstream business transactions, be it B2B ones of their own or B2C ones that generate the primary VAT liability, all you're doing is reducing their VAT liability and increasing yours, a nil sum game for you and HMRC. The only people who really pay VAT are the punters at the far end of the chain of transactions who can't reclaim their VAT expenditure.

Financials and insurance companies don't charge VAT do they?

Any other companies that don't charge VAT?

Do they get the VAT back in another way?

[rd409]

You know this is an excellent point. And one not considered by many.

I just did a little calc thing at that IR35 calculator website and here is what i found.

For a contractor that generates 100k of revenue a year

1. The equivalent salary is 111532
2. The tax on 11532 is £42536 (employee NI + PAYE)
3. The total tax paid for the contractor CT+VAT is 48004

Conclusion: We pay more tax than a permie.

How did you calculate the CT + VAT figure? My calculations comes to 38946.
The reality is even more stark as the permie rate for a 500 odd a day contract is a lot less than 111k.


So HMRC should be encouraging us to contract and forget about IR35.

How did you calculate the CT + VAT figure? My calculations comes to 38946. Did you put in 20% as VAT, that you charge? The reality is the you pay 14.5% or whatever , and the client can reclaim 20%, so the Hector is losing if not making minimal for VAT. For CT; did you consider minimum salary, and other expenses that can be deducted?

Being a ltd company means you pay considerable tax if you plan your income. No one on this board, pays themselves full amount in salary or even salary/dividend.

Coming back to the point, I prefer the IR35 to stay as it is. I dont mind paying couple of hundreds every year for insurance, and some efforts in making sure, my working practices are compliant.