House of Lords review & IR35, PCG

[Zero Liability]

So any thoughts on where the consultation may lead now that they've gone away to deliberate on the matter? I don't think HMRC made a very good showing for itself, it came across as very sloppy and incompetent with the figures.

[jamesbrown]

For anyone interested in the latest testimony (big business first half, HMRC second):

Player

[GB9]

So any thoughts on where the consultation may lead now that they've gone away to deliberate on the matter? I don't think HMRC made a very good showing for itself, it came across as very sloppy and incompetent with the figures.

It depends on whether or not they have been primed to come out with a specific answer.

The Labour Luds will no doubt have had it in the ear from the Hodge witch. I think she is concerned that too many plebs are becoming wealthy which doesn't suit her champagne socialist style of being one of the people but from an elevated position. The Tories will have been told to look like they are hitting the better off. The rest will have had to attend to claim their expenses.

Based on the evidence, hardly anyone seemed to think that PSCs are evil other than HMRC, (who showed themselves as incompetent), Giant (who admitted they are losing business), and a couple of industry reps who clearly wanted cheaper resource (Oil and Gas from memory). Oh, and one contractor who was clearly miffed that people doing the same role as him were doing so paying dividends through a PSC whereas he was PAYE.

Either way, I suspect its going to cost us.

[Zero Liability]

Agreed on Hodge, she is a vile individual, however in the end HMRC's only purpose is to gather revenue, and they will try and get as much as possible, irrespective of its effects on the economy. Wasn't she involved in a controversy re: her family business minimising their tax bill and then admitting to know little of how much tax it actually pays, or of UK tax law more generally? She is another loud-mouthed idiot that tinkers in things she doesn't understand.

It does look difficult to predict what will come out of it, but HMRC did an abysmal job putting a case for it forwards. Messed up the figures, showed a very poor cost:benefit ratio and you could also question whether the (rather pitiful) amount they're "protecting" is even accurate, which in turn is based on the assumptions they use. Like you say, the only people they had on their side where blatantly self-interested union reps, umbrellas like Giant and industry HR reps like Dr Thom. The message from private industry and the public sector seemed to be the legislation is costly, arbitrary, doesn't deliver much tangible benefit and that the economic benefits offered by using PSCs are considerable, such that they are not merely 'tax avoidance' devices. Surely it should highlight to them that the real problem is with the antiquated NIC system and its separation from PAYE? Oh well. As you say, it depends on what their agenda is.

If the goal is to prevent PSCs from being used in the public sector, I am not sure what they hope to gain from it, as if the alternative was to hire permies surely the cost would be much higher, with their generous benefits and pension entitlements?

[malvolio]

If the goal is to prevent PSCs from being used in the public sector, I am not sure what they hope to gain from it, as if the alternative was to hire permies surely the cost would be much higher, with their generous benefits and pension entitlements?

It wasn't, it was to stop the abuse of the system by senior civil servants using pretend Ltd Cos to bypass the Civil Service pay scales (£220 a day is the baseline Senior Civil Servant salary divided by 260 days, which shows you how sophisticated their thinking really is). Danny Alexander's reaction led to the idiot rule which was then applied by other idiots in the simplest way they could think of, which was to apply it to everyone and not just the pseudo-contractors in key permanent positions. To that you then add the attention seeking Hodge creature and a few conversations in the Lords' bars over a large brandy about these ruddy tax dodging contractors and there you are.

It's also a perfect example of why lobbying works. This was all done outside the consultation process; that only kicked in with the recent committee, which is trying to fix a fait accompli. The Alexander Review was a typical ignorant knee jerk reaction to a poorly understood question and the issuing of a guideline, not a formal review. As I said elsewhere recently, the time to kill these things is before they start; you can't if Lib Dem ministers insist on reacting without thinking.

[Waldorf]

From what I saw of it, no-one on the committee understood what a PSC was or how the contracting world operates. In fact watching it has convinced me that it is time to abolish the House of Lords and be done with an unelected chamber. No need to replace it with anything, just an elected Commons of full time professionals.

[zoco]

and the argument that "we shouldn't have to pay NI because we take more risk" is a ludicrous one. .

Hang on a second, the issue that most people have, I think you'll find, is having to pay employer's NICS when IR35 caught.

How is this fair? I mean they've deemed you as a disguised employee and you get taxed as such but then, when they figure they can get even more money out of you, they have no problem treating you as a business to get the employer's NICS.

That's what's unfair. They want to have their cake AND eat it.

[LisaContractorUmbrella]

Hang on a second, the issue that most people have, I think you'll find, is having to pay employer's NICS when IR35 caught.

How is this fair? I mean they've deemed you as a disguised employee and you get taxed as such but then, when they figure they can get even more money out of you, they have no problem treating you as a business to get the employer's NICS.

That's what's unfair. They want to have their cake AND eat it.

No, what they are saying is that your business is an employer and therefore you have a legal obligation to pay employer's NI and that you are an employee of that business and should be taxed as such

[jamesbrown]

No, what they are saying is that your business is an employer and therefore you have a legal obligation to pay employer's NI and that you are an employee of that business and should be taxed as such

Exactly. IR35 is just the mechanism.

[Zero Liability]

No, what they are saying is that your business is an employer and therefore you have a legal obligation to pay employer's NI and that you are an employee of that business and should be taxed as such

But they are saying you're a disguised employee of the end client. With none of the benefits, and the PSC must pay employer's NICs on top of this.

Practically speaking, it's easier to go after contractors' PSCs than potentially well-heeled end clients' legal departments. I think this, more than anything, is what drives the whole situation.