The S58 vs IR35 debate

[screwthis]

No they operated through a limited company because the law requires them to. For contractors the tax benefits are merely a side benefit (albeit a financially worthwhile and significant benefit).

It's true that most contractors don't have a choice but to contract through a limited company however if they are taking the tax benefit then they are taking it. The "side benefit" is certainly not legally forced on individuals with high morals such as yourself. How many contractors do you know that don't tick the IR35 does not apply box?

[jbryce]

No they operated through a limited company because the law requires them to. For contractors the tax benefits are merely a side benefit (albeit a financially worthwhile and significant benefit).

One could work through an Umbrella and that would satisfy the Law and make us Contractors bullet proof from HMRC enquiries. It's not quite as tax effective or flexible of course......

[screwthis]

Side benefit....laughable

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.

[DonkeyRhubarb]

I thought if you run a Ltd company you have to be on minimum wage and take the rest as dividends.

Or have I misunderstood the law?

[BrilloPad]

Please create your own thread if you want to discuss this and then create a link to it from here. By now we really should not need cojak involved for this sort of stuff.

[d000hg]

No they operated through a limited company because the law requires them to.

No it doesn't. Clients - or more typically - agents require you to come through a company (Ltd/umbrella) rather than as a sole trader but that's a practicality not a legal requirement.

[eek]

No it doesn't. Clients - or more typically - agents require you to come through a company (Ltd/umbrella) rather than as a sole trader but that's a practicality not a legal requirement.

Grr.

Let's repeat the basics again for the Nth time (I know its slightly offtopic BP but it is relevant).

When the Government last looked at agencies using tricks to reduce costs (back in 1978) the consequence was a change in the law that stopped agencies employing people on a "self-employed" basis. To get around that agencies started requiring contractors to use a separate entity through which to supply their services and the PSC company came into existence.

So while its true that a contractor doesn't need to be a limited company, an agency supplying a contractor does require another entity (PSC or umbrella) to act as a firebreak between themselves and the actual contractor.

Its possible to go direct as a self employed person (a few freelance designers I know do exactly that). However if you want to work via an agency (as most IT contractors do) you do need an umbrella / PSC.

There is then a separate question regarding the tax benefits of a PSC, the resultant politics of envy that created IR35 and the subsequent panic that lead people into various tax saving schemes. However, that was never a point I wished to discuss, I just wanted to point out why PSC companies came into existence.

One could work through an Umbrella and that would satisfy the Law and make us Contractors bullet proof from HMRC enquiries. It's not quite as tax effective or flexible of course......

It also adds another element of risk (the umbrella going belly up). Those who have been around a long time would never risk giving control of their money to someone else...

[tax is taxing]

Focus

Shall we just not get distracted by IR35 on this forum please?

Could this discussion be moved to another thread?

It is difficult enough already.

[eek]

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.

Well the reason is that I actually feel sorry for you lot (God knows why as a lot of you act in ways that make a most people think you deserve everything you have received (and more)).. But when I do popup on here its usually to correct a misunderstanding (as this discussion over PSCs shows).

However if you want to attack me, lets show the intent of IR35:-

The aim of the legislation is to eliminate the avoidance of tax and National Insurance Contributions (NICs) through the use of intermediaries, such as Personal Service Companies or partnerships, in circumstances where an individual worker would otherwise -

For tax purposes, be regarded as an employee of the client; and
For NICs purposes, be regarded as employed in employed earner’s employment by the client.

and this is why I've never feared it:

I don't want to work for people long term I fix projects that are failing, move them back of track and leave for the next disaster... Today is a prime example, UAT is finished and I'm out the door, others are staying as they still have things to do, thankfully I don't so that's the end of it...

So I don't flaunt IR35, as I work on a project by project basis and move on. However, that is why I actually care about those people who are suffering under these schemes as while I know my working practices don't fall under IR35 I understand how others whose practices do, potentially, fall under IR35 ended up in the schemes and mess they are currently in....

[OnYourBikeGB]

Well the reason is that I actually feel sorry for you lot (God knows why as a lot of you act in ways that make a most people think you deserve everything you have received (and more)).. But when I do popup on here its usually to correct a misunderstanding (as this discussion over PSCs shows).

However if you want to attack me, lets show the intent of IR35:-



and this is why I've never feared it:

I don't want to work for people long term I fix projects that are failing, move them back of track and leave for the next disaster... Today is a prime example, UAT is finished and I'm out the door, others are staying as they still have things to do, thankfully I don't so that's the end of it...

So I don't flaunt IR35, as I work on a project by project basis and move on. However, that is why I actually care about those people who are suffering under these schemes as while I know my working practices don't fall under IR35 I understand how others whose practices do, potentially, fall under IR35 ended up in the schemes and mess they are currently in....

Hmmm, working on a project by project basis and then moving on is hardly a solid basis to claim you are outside of IR35. I hope you've got a bit more in your armoury than that. Otherwise you might be getting a bit of what people think that you deserve.