New PCG IR35 Questionnaire

[Chugnut]

I don't agree on the growth thing. There are planty of businesses that exist and do not grow. Not because they can't but because their owners don't want the hassle/risk of doing so. How many back street garages are there that stay in place as a 1 man band. The one I use has a good reputation. The owner has been doing what he does forever - but he's not interested in setting up a chain of garages or opening up a site the size of your typical Kwik Fit. He's happy with the amount of work his business provides him and the level of the income that it generates. There are litterally thousands of businesses that are not looking to grow! I have no interest in taking somebody one, finding work for him, having the hassle of training and all the other rubbish I'd be expected to do. I'm happy for my business to tick over generating what it goes

In terms of the risk - as I said, it's a symptom of our industry that means most projects appear via agencies. A company the size of GSK is not going to want to deal with invoices from thousands on contractors when it can outsource this to a handful of agencies. From thier perspective its a no brainer. If you try cold calling one of these big companies you'll be directed to whatever agencies they have on their PSL. One of the supposed benefits of using an agency is the factoring service they provide - Yes this reduces the risk, but it's not uncommon for agencies to go under. A mate of mine lost £30k when an agency collapsed. It's not risk free using an ageny although it can reduce it significantly. But just because I have not had an invoice paid or because I work in a way that mitigates my risk somewhat has no bearing on if my business is a business or not.

I'm not going to flame you - I know where you are comming from on this and I agree with some of what you say, but to me it's an over simplistic view of business that all companies must strive for growth at all times. This simply is not the case.

My problem with the list the IR have produced is its all or nothing. have I lost 10% of my income, No so 0 points there!! Is there a risk that I could...most certainly, but still no points there!

Agreed. I can see why HMRC want to pigeon-hole everything neatly into easily classifiable entities and tax accordingly, but it's not an exact science; there’re too many variables in play.

My parents ran a successful business for many years, and as soon as they took on extra staff, you could see the attention to detail start slipping in proportion to the wage bill going up. It's not an automatic reaction to want to grow a business beyond the one-man band model if its working quite nicely as it is.

[scooby]

Agreed...

And its the knowledge economy which will help drive this country out of the tulip. So I just find it amazing how the government don't want to support it more.

They do, but to be fair shouldnt we all pay fair taxes in doing so? NLUK is really pointing out that there are contractors who do twist the system, and he is right, there are. This is why IR35 exists, and why HMRC are focusing on is a real business etc.

[dx4100]

A business is there to grow so isn't unreasonable to assume advertising is essential todo that. Again arguing we don't need it is again admitting we are not running a business that aims to grow and run like a business. The counter argument that a one man setup with no advertising or desire to grow is not a true business.

Again a true business would aim to grow and have a strategy of how to do so, targetting certain industries and delivering specific solutions is still a plan

There must be thousands of businesses out there happy not to grow. My builders who are building an extension for me have been ticking away for the last 20 years doing the same thing they have always done. This idea a business has to grow to be legit is just naff :P

[dx4100]

They do, but to be fair shouldnt we all pay fair taxes in doing so? NLUK is really pointing out that there are contractors who do twist the system, and he is right, there are. This is why IR35 exists, and why HMRC are focusing on is a real business etc.

I will pay any rate of tax I am mean't to be paying... I don't contract to save money on the tax. I do it to work the hours I want, have flexibility and so on... Plus the raw salary is always better regardless if you are IR35 in or out... So take home pay is something of a mute point really for me. But I don't want to just be gifting thousands in tax that I don't need to.

The concept of paying what is "fair" means nothing. I stand firm it isn't fair to treat me like a normal employee. A normal employee didn't spend £1000+ on software out their own pocket last week etc etc etc.

[scooby]

I will pay any rate of tax I am mean't to be paying... I don't contract to save money on the tax. I do it to work the hours I want, have flexibility and so on... Plus the raw salary is always better regardless if you are IR35 in or out... So take home pay is something of a mute point really for me. But I don't want to just be gifting thousands in tax that I don't need to.

The concept of paying what is "fair" means nothing. I stand firm it isn't fair to treat me like a normal employee. A normal employee didn't spend £1000+ on software out their own pocket last week etc etc etc.

Relax fella, never said you were twisting the system, I pointed out some do.

[dx4100]

Relax fella, never said you were twisting the system, I pointed out some do.

Yeah I know...

I wonder how many are contracting just for the tax saving. Given how many happily jump on the good ship Umbrella then I think it proves the point that a contractors main motivation lies outside of tax saving. Yet that the HMRC and governments have such a negative view of us all.

[JamJarST]

Yeah I know...

I wonder how many are contracting just for the tax saving. Given how many happily jump on the good ship Umbrella then I think it proves the point that a contractors main motivation lies outside of tax saving. Yet that the HMRC and governments have such a negative view of us all.

All you have to do is monitor the posts and questions on here to see how many contractors are trying to avoid and sometimes evade as much tax as possible. I also have known many contractors that clearly were disguised employees/tax dodgers. I don't think it is surprising at all that we attract the attention of HMRC. To be fair though, HMRC aren't saying people are inside IR35 if they fail the questionaire, they are merely saying passing some of thise tests would make investigation less likely/necessary.

[cojak]

They do, but to be fair shouldnt we all pay fair taxes in doing so? NLUK is really pointing out that there are contractors who do twist the system, and he is right, there are. This is why IR35 exists, and why HMRC are focusing on is a real business etc.

IR35 is not 'fair' or sensible because of this:

AFAIC the tests merely demonstrate that HMRC remain convinced that a business is something that makes and sells things. The whole model of the knowledge economy and a workforce of highly-skilled and independent experts is so far beyond their Janet and John vision of the economy that they have ignored it completely when trying to define a business.

I do not have a problem being taxed as an independent knowledge worker. I do not want to be taxed as a permie.

Let's pass on working for my own Ltd for the moment (although if it's included it helps).

I have risks - I can be fired at a moment's notice, my client can go bust meaning I don't paid.
I have to find my own work, if that work isn't there I don't get unemployment benefit.
If I have an accident or am ill I don't get sickness benefit.
I take care of my own capital - I use my own laptop, printing etc.
I take care of my own legal obligations regarding tax, employment laws, insurance etc.

The benefits to clients:
Skilled experience and knowledge that they can pick up and put down as their business requires.
No HR guff required other than the usual H&S compliance.

Tax me on that - if that happens I'd be satisfied.

[LisaContractorUmbrella]

I think maybe the key to all this is to go back to why the legislation was introduced in the first place. HMR&C were of the opinion that some people who were running a single person limited company were operating more as an employee than a legitimate business. The problem, right from the start, has been that contractors fall somewhere in the middle between an employee and a business and HMR&C don't like it. Contractors have gradually become embroiled in the centre of the legal mess that has brought tax law and employment law together; you can be an employee for tax purposes but not for employment protection purposes and vice versa and it has caused confusion on many levels within the industry - look at the AWR regs. Unfortunately, unless HMR&C can accept that there are employees, corporations and contractors this situation will only get worse.

From their point of view this industry is a target for scrutiny under avoidance rules because there are so many people who are prepared to bend or even break the rules. The new tests haven't even been published yet and people are trying to find ways around them rather than genuinely thinking about how they could change their current way of working to behave more like a business and therefore comply with what's required. With the best will in the world, how many people outside of this industry would view a contractor doing a job alongside a permie, at the same site for a couple of years, with no employees, no special tools required etc etc as a 'business' - I think most people would say that they are behaving like an employee so, if they had to pick one or the other, that's what they'd be.

[JamJarST]

I think maybe the key to all this is to go back to why the legislation was introduced in the first place. HMR&C were of the opinion that some people who were running a single person limited company were operating more as an employee than a legitimate business. The problem, right from the start, has been that contractors fall somewhere in the middle between an employee and a business and HMR&C don't like it. Contractors have gradually become embroiled in the centre of the legal mess that has brought tax law and employment law together; you can be an employee for tax purposes but not for employment protection purposes and vice versa and it has caused confusion on many levels within the industry - look at the AWR regs. Unfortunately, unless HMR&C can accept that there are employees, corporations and contractors this situation will only get worse.

From their point of view this industry is a target for scrutiny under avoidance rules because there are so many people who are prepared to bend or even break the rules. The new tests haven't even been published yet and people are trying to find ways around them rather than genuinely thinking about how they could change their current way of working to behave more like a business and therefore comply with what's required. With the best will in the world, how many people outside of this industry would view a contractor doing a job alongside a permie, at the same site for a couple of years, with no employees, no special tools required etc etc as a 'business' - I think most people would say that they are behaving like an employee so, if they had to pick one or the other, that's what they'd be.

Spot on! The only correction I would make is that HMR&C were of the opinion that some people who were running a single person limited company were operating more as an employee than a legitimate business, because they were. We all know of the cases of people that walked out on Friday as an employeee and came back on Monday as a contractor.