You can now almost Smell the end of IR35 - New announcement!

[d000hg]

Which means:

IR35 inside people will pay less tax.
IR35 outside people will pay more tax.

Fantastic.

What exactly were you hoping for? That they'd say "you fellows grossing £100k a year, you deserve a tax break"? Helping proper small businesses makes economic sense as they might grow and employ people, but what are the gains of being nice to contractors whose companies don't employ anybody - even working 25 weeks a year on £300/day, you're grossing nearly £40k and if you think anybody's going to feel sorry for you earning what the majority would consider an aspirational salary in 6 months, think again.

[ChimpMaster]

There's no doubt in my mind that we will end up paying more tax under the son of IR35. It will have been clarified, but not to the advantage of contractors - after all, this is the government's chance to get more tax out of small businesses, seeing as they have failed to screw them under IR35.


I just hope that they take into account the fact that we receive no benefits. We are not "employees" earning £100k with pensions/holidays/sick pay/training etc. We get none of that - so a monetary value must be assigned for this before we are taxed on the remainder. Otherwise it just would not make sense.

[BolshieBastard]

In theory, HMRC could investage contracts up until April 2011 (when we assume the new rules will come into force), under the existing IR35 guidelines - and can do so for a further 6 years.

However, I'd be surprised if they did. It would require a lot of effort on their part to take it to court - and there's no point in proving precedent etc.

Nice thinking but naive where HMRC are concerned. HMRC already have it in their tax manuals that the tax take under IR35 has little to do with deciding whether to undertake an IR35 investigation.

As the number of successful IR35 investigations, from HMRC's point of view, is very small, its also clear the amount of tax 'recovered' compared to the total cost of investigations is a negative amoutn ie it costs them more to investigate than the tax they recover.

[malvolio]

Can we please forget about "Son of IR35"? The review is of the whole taxation of small businesses, my guess is that the result will not be anything to do with what we have now. Let's also remember that HMG now contains a lot of people who were freelances and businessmen of one kind or another rather than a collection of washed up political wonks and polytechnic lecturers; they have an idea how the real world works.

I've said before that I simply want to be allowed to work through my own small company. I've yet to see any hint that I will be prevented from doing so. And if taxes go up - which they will anyway, for everyone - so what? At least I'll know what I owe and that the guy next to me owes the same.

[Scrag Meister]

And if taxes go up - which they will anyway, for everyone - so what? At least I'll know what I owe and that the guy next to me owes the same.

WMS

[d000hg]

There's no doubt in my mind that we will end up paying more tax under the son of IR35. It will have been clarified, but not to the advantage of contractors - after all, this is the government's chance to get more tax out of small businesses, seeing as they have failed to screw them under IR35.

No, it's not. IR35 isn't about small businesses but (to practical purposes) self-employed individuals. It's perfectly clear that most contractors are not businesses.

It's not clear to me if the government want to single out contractors from 'real' small businesses or not. If they don't we might not get hurt because many small 'proper' businesses run on very low income and need all the help they can to survive. If they do, then we might get penalised because as much as you go on about sick pay and benefits, a £300/day rate worked over the majority of the year is a net income most could only dream of.

[malvolio]

No, it's not. IR35 isn't about small businesses but (to practical purposes) self-employed individuals. It's perfectly clear that most contractors are not businesses.

It's not clear to me if the government want to single out contractors from 'real' small businesses or not. If they don't we might not get hurt because many small 'proper' businesses run on very low income and need all the help they can to survive. If they do, then we might get penalised because as much as you go on about sick pay and benefits, a £300/day rate worked over the majority of the year is a net income most could only dream of.

The challenge is to frame things in such a way that freelances like me can get on with their jobs without hindrance while preventing employers making employees into contractors to save on employement costs and employees turning into contractors to gain business tax benefits while having no business credibility. Most freelance workers have a company becuase they have to work through agencies, not becuase they want to save taxes. After all, MyCo predated IR35 by several years.

Also it's worth remembering that my last full year's accounts showed I paid a tax bill from all sources of roughly double the national average gross income. If I'm a tax avoider, then clearly i'm a very bad one. Or looking at it another way, I'm making roughly four times the contribution to the national economy than someone doing the same job as a permie.

[Brussels Slumdog]

IR36

Most freelance workers have a company becuase they have to work through agencies, not becuase they want to save taxes. .

Most IT Freelance workers have a company to pay less but most importantly to pay less Social charges and in the UK it's easy to set up. The main problem with IR35 is that it simply divides us all into two camps. Those outside IR35
and those inside IR35. The fact is that we are all in the same camp dispite all the cleaver legal advice.
The next IR may put us all in the same camp.

[contractorcontractor]

Most IT Freelance workers have a company to pay less but most importantly to pay less Social charges and in the UK it's easy to set up..

Really? Did you carry out a survey?

Many contractors I know use a Ltd company to take control of their own affairs, cut costs and own the fruits of their own labour.

Labour's idea that contractors should pay someone to be their boss is an odd one - born of jealousy and union influence.

The unions dont like contractors. Labour was/is controlled by the unions, primarily Unite.

[malvolio]

Most IT Freelance workers have a company to pay less but most importantly to pay less Social charges and in the UK it's easy to set up. The main problem with IR35 is that it simply divides us all into two camps. Those outside IR35
and those inside IR35. The fact is that we are all in the same camp dispite all the cleaver legal advice.
The next IR may put us all in the same camp.

Well it's a viewpoint. Thankfully my sources are rather better informed than yours seem to be...

Separation between IR35 caught and IR35-not-caught is simple. You're caught if your current client and your immediately previous employer are the same company, for a period of one year. Under any other situation, you are pursuing a legitimate business.