David Gauke Comments on Newsnight / BBC / Freelances / Multiple contracts

[rawly]

Well, the BBC story continues to evolve after an article in The Times this morning. This is a new article where the BBC defends it's policy and there's also an analysis of the Pro's and Con's of using a PSC:

BBC News - Tax arrangements reports 'misleading' says BBC

Also the Blog of the Chief Financial Officer has a longer explanation:

http://www.bbc.co.uk/blogs/abouttheb...rvice-co.shtml

[ASB]

Taking the premise that working for a period at 1 client = "treat as salary".

Where is the difference between me doing that personally (happens to be via a PSC) and the employees of Accenture, CG et al who are normally on long term assignment at 1 client.

I find it very difficult to draw a genuine distinction. It is the same working pattern which is the model used by all the large outsourcers and consultancies.

[Greg@CapitalCity]

The difference is you enjoy tax advantages of using a PSC that the employees of Accenture don't.

This of course kicks off a conundrum - to avoid "morally wrong" tax avoidance when starting up your own Accenture-style business, you must pay yourself entirely in salary while you start taking on your own employees and building up your business, which means you must avoid the tax reliefs set-up to encourage entrepreneurs to start up their own small business.....

While the debate of PSC's (and paying cash for your local builder) rages on, I suspect nothing will change due in part to the point you make ASB.

[Weltchy]

The difference is you enjoy tax advantages of using a PSC that the employees of Accenture don't.

Would we not be equivalent to shareholders in Accenture, who do enjoy the same tax advantages?

[BlasterBates]

IIRC the latter scenario was also covered in one of the examples in the guidance associated with the business entity tests where the contractor was deemed inside for the main contract but outside for the other stuff. But the fact that you're juggling several clients simultaneously isn't a "big pointer outside" from anything official I have read, so I'm not sure about your first statement.....

This was a treasury minister speaking so I think this viewpoint does have credence.

You probably won't find any tribunal cases where HMRC were persuing a contractor with several clients.

But yes theoretically they could go after you. As the minister indicated though, they most probably wouldn't.

[Greg@CapitalCity]

Would we not be equivalent to shareholders in Accenture, who do enjoy the same tax advantages?

Yes, except Accenture itself is not a PSC, so IR35 does not apply.

[meanttobeworking]

So putting aside the legal differences, what is the MORAL difference between someone operating a PSC and having one client at a time, and a person owning and running a one-man-band manufacturing company that lands one massive order that takes up 100% of his time and resources fulfilling that single order for a period of six months.

[Greg@CapitalCity]

So putting aside the legal differences, what is the MORAL difference between someone operating a PSC and having one client at a time, and a person owning and running a one-man-band manufacturing company that lands one massive order that takes up 100% of his time and resources fulfilling that single order for a period of six months.

This is why IR35 is so incredibly hard to legislate. In a knowledge economy I think its unfair an entrepreneur selling services could be taxed differently from an entrepreneur selling widgets.

[ASB]

The difference is you enjoy tax advantages of using a PSC that the employees of Accenture don't.

This of course kicks off a conundrum - to avoid "morally wrong" tax avoidance when starting up your own Accenture-style business, you must pay yourself entirely in salary while you start taking on your own employees and building up your business, which means you must avoid the tax reliefs set-up to encourage entrepreneurs to start up their own small business.....

While the debate of PSC's (and paying cash for your local builder) rages on, I suspect nothing will change due in part to the point you make ASB.

I do understand that Greg. It does make it all very difficult to try and think what is "right".

In terms of the consultancy they pay their employees the "going rate" and pocket the difference. This of course accrues eventually to the benefit of the partners/shareholders.

The problem is the PSC - in an IR35 world - can't do the same. Leaving aside the question of what would be the "going rate" it does seem unfair to effectively tax the PSC on a different basis.