The great IR35 swindlle

[Wanderer]

I've said it before and I'll say it again. If agencies and clients would engage with self-employed rather than a ltd (ie remove the legislation that says tax liabilities can be passed to the agent etc) then 99% of contractors wouldn't incorporate.

Hmm.

If you are currently LTD, then you'd pay ~10% more tax to go self employed, even more if you are engaging in a few tax avoidance measures like retaining funds in the company for a rainy day or income splitting. For the incorporated worker, they would leave themselves open to unlimited liability as self employed too. Big win for HMRC - 10% more tax coming in but I can't see it catching on.

I don't see that adding up to 99% of contractors, somehow. The hassle of running a company can be easily mitigated by hiring an accountant to do it all for you.

If you are currently umbrella then you would pay ~13% less tax (no employer's NI) if you went self employed. Big loss to HMRC. A fair number of self employed people wouldn't pay tax at all, work for a year or two and then leave the country while others would under declare their earnings and have no money when HMRC eventually caught up with them. Big enforcement headache and more loss for HMRC.

[richy]

Which just happens to be the main problem for most contractors.

I have little doubt that your working practices are aligned, along with most of the long serving hardcore members of this board.

But many contractors really struggle to enforce the working practices component, expecially in the current climate where fear of being benched makes it harder to be assertive about these things.

What govt should have done is rationalise the employed/self-employed/ltd-co-director tax/takehome so there was roughly negligible difference between them. The easiest way is to set corp tax at 30%. Another alternative is to lower income tax so that ni+incometax match corp tax.

[richy]

HMRC vs "ir35industry"

Who's made the most over the last 10 years out ltd co contractors? HMRC, or ir35industry?

As malvolio said at the beginning of the thread, HMRC has taken in £12m since 2000. I bet P*G, Q**s and the rest have raked in plenty more than that tiny sum.

Now.. back to the scam. Fearmongering is classic stuff, propaganda perfected over the centuries. Adam Curtis docu "The Power of Nightmares" is as good an example as any.

what we need is massive simplification of the process of doing work. Ditch the red-tape that accountants, solicitors, patents, ir35 industry are thriving on.

[malvolio]

Who's made the most over the last 10 years out ltd co contractors? HMRC, or ir35industry?

As malvolio said at the beginning of the thread, HMRC has taken in £12m since 2000. I bet P*G, Q**s and the rest have raked in plenty more than that tiny sum.

Now.. back to the scam. Fearmongering is classic stuff, propaganda perfected over the centuries. Adam Curtis docu "The Power of Nightmares" is as good an example as any.

what we need is massive simplification of the process of doing work. Ditch the red-tape that accountants, solicitors, patents, ir35 industry are thriving on.

PCG haven't raked in anything. Which bit of "not for profit" don't you understand? They have mdoest reserves for fighting another Arctic, but the bulk of their income is from membership fees and they haven't changed for years.

Apart from that, what do you suppose the OTS was set up to do? And how difficult do you think it is unravelling the complete horlicks that Brown made out of what was a rational taxation system?

[qul]

PCG haven't raked in anything. Which bit of "not for profit" don't you understand? They have mdoest reserves for fighting another Arctic, but the bulk of their income is from membership fees and they haven't changed for years.

Apart from that, what do you suppose the OTS was set up to do? And how difficult do you think it is unravelling the complete horlicks that Brown made out of what was a rational taxation system?

I was intrigued by this, so looked into their last set of accounts and these do show they had a reserve of £250k for legal battles etc. But they were also sitting on £2.7m cash as at 30/4/2011.

Whilst their income is £3.3m, they had £3.2m admin expenses, so its true that they don't make much profit/surplus. Directors remuneration/service fees and rent are quite low, but possibly they spend a lot on insurance and paying for the helplines etc, and maybe spend a lot on employees.

[BolshieBastard]

Which just happens to be the main problem for most contractors.

I have little doubt that your working practices are aligned, along with most of the long serving hardcore members of this board.

But many contractors really struggle to enforce the working practices component, expecially in the current climate where fear of being benched makes it harder to be assertive about these things.

Totally agree too many cntractors ignore this. You only have to read through the thread I started why clients want contractors then treat them like employees.

My current client's HR wanted me to attend an employee oriented 'roadshow.' You know the story but the number of contractors who responded 'oh if the client is paying you to attend, what's your beef' while others tried to see it as an 'opportunity to win further business' (the possibility for this never existed) was a bit of an eye opener.

[v8gaz]

I was intrigued by this, so looked into their last set of accounts and these do show they had a reserve of £250k for legal battles etc. But they were also sitting on £2.7m cash as at 30/4/2011.

Whilst their income is £3.3m, they had £3.2m admin expenses, so its true that they don't make much profit/surplus. Directors remuneration/service fees and rent are quite low, but possibly they spend a lot on insurance and paying for the helplines etc, and maybe spend a lot on employees.

Every member costs a premium from the underwriters. The BoD are elected members and get a stipend of 17k, much of which is spent on the cost of being on the BoD. There is a modest staff, but they really could do with more staff, given the long list of things that need sorted out that they cannot allocate resources to - I'm talking about client/agency education and that sort of thing that would make our life much much easier.

Also, campaign such as taking a few full page ads out to change public (and therefore MP) perception on the value of contractors aint cheap - a full page ad in a heavyweight paper is around 250k.

PCG has NO SHAREHOLDERS, so there are NO DIVVYS taken out to make anyone rich. Everything spent is staff wages or cash spent to make freelancing a nicer place to be. For everyone.

All in all PCG is bloody good value -however they could do a lot more if the coat-tail hangers on (the ones that get the intangible benefits for free) would stup up a tenner a month (what's that, what you earn for the first Monday dump of the month?) and join up.

[malvolio]

Every member costs a premium from the underwriters. The BoD are elected members and get a stipend of 17k, much of which is spent on the cost of being on the BoD. There is a modest staff, but they really could do with more staff, given the long list of things that need sorted out that they cannot allocate resources to - I'm talking about client/agency education and that sort of thing that would make our life much much easier.

Also, campaign such as taking a few full page ads out to change public (and therefore MP) perception on the value of contractors aint cheap - a full page ad in a heavyweight paper is around 250k.

PCG has NO SHAREHOLDERS, so there are NO DIVVYS taken out to make anyone rich. Everything spent is staff wages or cash spent to make freelancing a nicer place to be. For everyone.

All in all PCG is bloody good value -however they could do a lot more if the coat-tail hangers on (the ones that get the intangible benefits for free) would stup up a tenner a month (what's that, what you earn for the first Monday dump of the month?) and join up.

There's also a weird bit of accounting logic in there that means PCG have to report their membership contributions as a debt, since theoretically they may have to give it all back at some point. It's not going to happen, but if it isn't presented that way in the accounts, then the auridtors won't pass them. Which is not an option, they're not the EU

So OK, so as a result there's a couple of million in there that can't be spent. then again, how much do you suppose another Arctic would cost? Bearing in mind last I heard they still hadn't got all the costs back...

And speaking for myself, after 7 years on the CC, I've made precisely zero from the PCG ; if anything I've spent my money on their behalf.

Fnially, WV8S - every contractor has benefitted from what the PCG has acheived, it would be good if some of them could put something back. What you get for £220 Plus membership makes that decision a total no-brainer.

[d000hg]

PCG haven't raked in anything. Which bit of "not for profit" don't you understand? They have mdoest reserves for fighting another Arctic, but the bulk of their income is from membership fees and they haven't changed for years.

Exactly why do you think people join the PCG?
When my membership lapsed they phoned and focused strongly on how I was not insured against IR35 any more.
And they push the point on their site, you MUST avoid gaps in your membership to be covered. They are CLEARLY using IR35 advice/protection as a strong aspect of their value to contractors.

[malvolio]

Exactly why do you think people join the PCG?
When my membership lapsed they phoned and focused strongly on how I was not insured against IR35 any more.
And they push the point on their site, you MUST avoid gaps in your membership to be covered. They are CLEARLY using IR35 advice/protection as a strong aspect of their value to contractors.

Well it's worth following up, which I will do, but I think the message is "are you sure you want to give up your protection from HMRC?". Obviously the more PCG members the better, but it's not about getting income since PCG is self-suppropting as it stands and has been for a while.

So I'm not sure exactly what it is you're worried about: they're simply making sure you've gone from being protected to not being protected and there are good reasons for doing so.