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

[lukemg]

Why don't they just say >50% of revenue in a year from one client = caught - simples...

[Mr.Whippy]

Why don't they just say >50% of revenue in a year from one client = caught - simples...

And what if you work 4 months for one client and then 3 months for another and decide to go travelling for the remaining 5 months of the year you'd be caught.

Not a good solution at all.

[deckster]

Why don't they just say >50% of revenue in a year from one client = caught - simples...

Because it's a rubbish test. I have worked at at least one consultancy who have signed big deals that amount to well over 50% of the total company revenue for a single project. There may well be 20 people working from the consultancy on that project, so it would be a nonsense to suggest that they're IR35 caught - but they would under your rules...

Or, from a more contractor-centric point of view...2 identical contracts, one 6 months and a week, one 5 months and three weeks. The second is IR35 clear and the first is caught? Barking.

[VectraMan]

Because it's a rubbish test. I have worked at at least one consultancy who have signed big deals that amount to well over 50% of the total company revenue for a single project. There may well be 20 people working from the consultancy on that project, so it would be a nonsense to suggest that they're IR35 caught - but they would under your rules...

It doesn't apply to consultancies as the people doing the work are employees, not necessarily shareholders who get dividends.

But it is a rubbish test. Nobody would want a renewal, which doesn't really help anyone. And if you do 6 months at one client for £350 a day, and have 10 clients for 6 months at £349 a day, then you've failed the test.

[notpacino]

I spoke to my accountant a few days ago. He said they have heard from Hector that in future IR35 will be based on projects rather than contract wording and behaviour, and that if you can show you are working on defined projects then you are outside IR35.

He also said that it costs Hector around £100 to get £10 in from IR35 at the moment.

[Ignis Fatuus]

Why don't they just say >50% of revenue in a year from one client = caught - simples...

Why don't they just remove the artificial reason why people want to do the thing that IR35 is designed to stop them from doing?

Integrate NIC with income tax. Then let people work as employees of the end user, or through Ltd Cos, or as self-employed sole traders, as they like. It's make no difference to revenue.

[Lumiere]

Why don't they just say >50% of revenue in a year from one client = caught - simples...

like that:

You provided your services through a service company if:

* you performed services (intellectual, manual or a mixture of the two) for a client (or clients); and
* the services were provided under a contract between the client(s) and a company of which you were, at any time during the tax year, a shareholder; and
* the company’s income was, at any time during the tax year, derived wholly or mainly (that is, more than half of it) from services performed by the shareholders personally

?

[swamp]

like that:


You provided your services through a service company if:

* you performed services (intellectual, manual or a mixture of the two) for a client (or clients); and
* the services were provided under a contract between the client(s) and a company of which you were, at any time during the tax year, a shareholder; and
* the company’s income was, at any time during the tax year, derived wholly or mainly (that is, more than half of it) from services performed by the shareholders personally

?

Make your wife the shareholder.

[Lumiere]

Make your wife the shareholder.

And lose £33K of tax free money every year ..

[NotAllThere]

In Switzerland, dividend income is taxed - there is no tax credit. The only way to take money out of the company is via expenses and salary. The advantage of this over IR35, is that expenses are entirely tax deductable - not just those amounting to 5% of income.

Taxing dividend income in this way in the UK in one fell swoop, would be political suicide. But the government might reduce the tax credit over time, eventually leading to the abolition.

HMRC's problem is NI avoidance. I think IR35 is unfair, as the same individual pays more tax than an employee, and can't claim the same expenses from the business. So how about

For companies with fewer than x shareholders, where the shares are of the same class.
1. EENIC on dividend income
2. Remove ERNIC for any employees who are also one of the above shareholders.

This way, you can have your expenses deducted, but pay the same tax as any other employee.