The S58 vs IR35 debate

[LisaContractorUmbrella]

I am Lisa - I believe that you started the IR35 debate in the NTRT thread and caused it to veer off-course.

I'll let you off Cojak Certainly not my intention - just thought it was relevant as an illustration of the way that the media has made 'tax avoidance' a moral crime despite the fact that it is not a crime in law (yet)

[TheCyclingProgrammer]

In fact who are you trying to kid? We all know that's a MASSIVE reason people choose contracting over perm.
You chime up constantly and moralistically on this thread (God knows why) and then you have the front to suggest that you are just going along with the significant tax break associated with a PSC because you are legally required to!
If you are a 1 man band then you are flaunting the intention of IR35. We can claim to have followed the law at the time. Getting round IR35 with a specifically worded contract is wilful flaunting of the law.

What nonsense. The "intention" of IR35 was to stop employees from resigning and returning doing the same job under the same circumstances the following week as a "contractor" to save tax. There are plenty of one man bands - freelancers, consultants, contractors, whatever - who are in business on their own account and whose relationship with their clients cannot be construed to be within IR35 whatsoever. *That* is why IR35 is the pain that it is.

Edit: was this moved from Scheme Enquiries forum? Suddenly some of the responses here make sense.

[jbryce]

...doing the right thing....

Just a quickie - can someone sanity check this....
If a contractor goes through an Umbrella then IR35 is totally not an issue and, assuming that the Umbrella is not a total scam, HMRC are unlikely to have cause to investigate.
The Umbrella approach still allows the contractor world to continue and gives the companies that use contractors all the benefits of flexibility, competitiveness, etc. that the economy requires.

I use a Ltd company because it gives me a financial advantage; I organise my affairs to avoid IR35 so that I can operate in this way.

So, am I a nasty Tax Avoider?
Morally, should I be using an Umbrella?

[lucozade]

Just a quickie - can someone sanity check this....
If a contractor goes through an Umbrella then IR35 is totally not an issue and, assuming that the Umbrella is not a total scam, HMRC are unlikely to have cause to investigate.
The Umbrella approach still allows the contractor world to continue and gives the companies that use contractors all the benefits of flexibility, competitiveness, etc. that the economy requires.

I use a Ltd company because it gives me a financial advantage; I organise my affairs to avoid IR35 so that I can operate in this way.

So, am I a nasty Tax Avoider?
Morally, should I be using an Umbrella?

Don't think you won't be hounded by HMRC just because you are in an umbrella.

Big collections of contractor type staff are easy pickings especially if they make a mess of your expenses.

[speling bee]

OK, which Mod is responsible for me questioning my sanity - saw this thread in my name and couldn't for the life of me remember starting it

I am Lisa - I believe that you started the IR35 debate in the NTRT thread and caused it to veer off-course.

Now you're going to really confuse her.

[eek]

Morally, should I be using an Umbrella?

If you like risk then possibly. Personally, I don't want anyone unnecessarily between the end client and myself as there are more chances for things to go belly up. A badly run umbrella going belly up (which happens every so often) is too much of a risk for me to take...

[jbryce]

If you like risk then possibly. Personally, I don't want anyone unnecessarily between the end client and myself as there are more chances for things to go belly up. A badly run umbrella going belly up (which happens every so often) is too much of a risk for me to take...

A fair point given compusource.

[eek]

A fair point given compusource.

Clearly you are new to this contracting game. There were an awful lot of such examples between 1990 and 2005....

I'm sure some cowboys set up in 2001 just to do a runner when the opportunity arrived.

[speling bee]

If you like risk then possibly. Personally, I don't want anyone unnecessarily between the end client and myself as there are more chances for things to go belly up. A badly run umbrella going belly up (which happens every so often) is too much of a risk for me to take...

The problem I see with brollies is that if the client doesn't pay the brolly, then the contractor has nobody to sue. Or do I have that wrong?

[TheFaQQer]

The problem I see with brollies is that if the client doesn't pay the brolly, then the contractor has nobody to sue. Or do I have that wrong?

The contractor would need permission from their employer to sue the agency. The employee could try going after the umbrella via employment tribunal, though (but I think that is unlikely to succeed, personally)