FLCs - LFIG Proposal

[tractor]

...

The problem is that we haven't been arguing. We have simply being discussing it over multiple threads looking at potential flaws. While our local IPSE representative has been saying we don't need to worry our pretty little heads over such trifling matters....

Exactly, but I did mean him arguing.

It is difficult for anyone to argue with his position or his view because he won't state what it is despite being pressed to do so for weeks.

The emboldened part above will only happen when he underwrites my tax bill resulting from being forced into using a FLC and any additional unnecessary contract risks without limit and in perpetuity .

[tractor]

.....

I thought I'd better save this thread from falling off the page. I am sure Philip would appreciate it....

[malvolio]

Exactly, but I did mean him arguing.

It is difficult for anyone to argue with his position or his view because he won't state what it is despite being pressed to do so for weeks.

The emboldened part above will only happen when he underwrites my tax bill resulting from being forced into using a FLC and any additional unnecessary contract risks without limit and in perpetuity .

I thought I'd stated it pretty clearly, but there you go.

For clarity, and for the last time:

There is the Ross version which is pretty much the NL version that fails to recognise the freelance workforce and contains several unworkable elements, such as fixed salary/dividend split ad is IMHO simply a way to overtax existing freelance workers, not to help resolve the wider problem.

There is not an IPSE anything beyond a desire to discuss with Whitehall if an FLC is a viable option of itself, a viable interim solution pending the merger of PAYE and NICs (and not the administration of those which is what's currently being worked on by the Treasury) which is some way off or something that can be forgotten about because there is some other, better solution within the existing legislation (God knows what, but hey...)

So get worked up about the one that exists by all means, but perhaps not over the one that doesn't. Go back far enough through the various threads and you will see that position has not changed in the slightest: no hints, no prevarication, there is not an IPSE model for an FLC on the table.

HTH...

[TheFaQQer]

There is not an IPSE anything beyond a demand that the next government must introduce an FLC in their first Finance Bill, but we don't know whether we are in favour of one or not.

HTH...

FTFY.

IPSE demanded something that we don't even know whether we are in favour of. But if we didn't make that demand and say that we wanted it, we wouldn't be allowed to discuss it with the next government (whoever they may be).

But based on the track record, we are such good negotiators that we will get what we want and nothing bad will happen. If anyone doubts the ability of our negotiating team, you only have to look at how successful the optional Agency Regulations are in practice to see that there is nothing to worry about.

[tractor]

...

I thought I'd stated it pretty clearly, but there you go.

For clarity, and for the last time:

There is the Ross version which is pretty much the NL version that fails to recognise the freelance workforce and contains several unworkable elements, such as fixed salary/dividend split ad is IMHO simply a way to overtax existing freelance workers, not to help resolve the wider problem.

There is not an IPSE anything beyond a desire to discuss with Whitehall if an FLC is a viable option of itself, a viable interim solution pending the merger of PAYE and NICs (and not the administration of those which is what's currently being worked on by the Treasury) which is some way off or something that can be forgotten about because there is some other, better solution within the existing legislation (God knows what, but hey...)

So get worked up about the one that exists by all means, but perhaps not over the one that doesn't. Go back far enough through the various threads and you will see that position has not changed in the slightest: no hints, no prevarication, there is not an IPSE model for an FLC on the table.

HTH...

The part that I have emboldened is the first time anyone from IPSE has actually stated that they disagree with the fair salary/dividend split. I am still unable to determine whether that is your personal view or the IPSE view though . However, I have still yet to see anyone describe what they percieve the 'wider problem' to be. If you or anyone were able to do that, it may be that people would think your idea is something other than a solution waiting for a problem.

As for the second paragraph, how you square that up with the demands in the manifesto, I could not even begin to guess.

As a last point, if IPSE had rebutted Ross' proposal at the outset instead of letting it fester, I would imagine that we would all be sure that IPSE is still fighting the cause for contractors.

p.s. I am still waiting for you to explain to me how I am self-employed and how I have been deluded all these years thinking I wasn't?

[malvolio]

The part that I have emboldened is the first time anyone from IPSE has actually stated that they disagree with the fair salary/dividend split. I am still unable to determine whether that is your personal view or the IPSE view though . However, I have still yet to see anyone describe what they percieve the 'wider problem' to be. If you or anyone were able to do that, it may be that people would think your idea is something other than a solution waiting for a problem.

It's my opinion and/or interpretation, nobody else's.

As for the second paragraph, how you square that up with the demands in the manifesto, I could not even begin to guess.

I don't have to. However it aligns to what I've been told elsewhere by people who do know what they're talking about.

As a last point, if IPSE had rebutted Ross' proposal at the outset instead of letting it fester, I would imagine that we would all be sure that IPSE is still fighting the cause for contractors.

Why? It's nothing to do with them. It wasn't IPSE (nor me, come to that) that tried to establish the link between themselves and the Ross concept either.

p.s. I am still waiting for you to explain to me how I am self-employed and how I have been deluded all these years thinking I wasn't?

So who is your employer then? For the last time, in this context, "self-employed" is merely shorthand for "not an employee", i.e. one of the near 5 million workers currently uncategorised by the taxation system.

[tractor]

...

It's my opinion and/or interpretation, nobody else's.


I don't have to. However it aligns to what I've been told elsewhere by people who do know what they're talking about.


Why? It's nothing to do with them. It wasn't IPSE (nor me, come to that) that tried to establish the link between themselves and the Ross concept either.


So who is your employer then? For the last time, in this context, "self-employed" is merely shorthand for "not an employee", i.e. one of the near 5 million workers currently uncategorised by the taxation system.

lol someone else can tell him today, I am preparing my election statement for the CUK CC.

[PhilipRoss]

LFIG Proposals

this is a quick post to let you know that I have seen this thread and will do my best to engage, hopefully later today or this evening time allowing.

thanks for putting this up.

Philip

Right... apologies for the delay....now I can't promise to have all the answers, nor to have necessarily thought it all through in total, but here we go.

1) How influential are your proposals?
That is not for me to say, I can only guess, but I have got them in front of the Labour front bench. Our report attracted a lot of attention and the recent summit on self-employment that the labour BIS team held was I hope inspsired by the report. Our aim has been to get freelancing on the agenda, this close to an election get it with one party and the others follow. I know our report got waved at the Tories.

- Who do you envisage using the new FLC - will it be contractors like us, self employed professionals like social workers, self-employed businesses like plumbers, low paid self employed like cleaners?
I think self-employed professionals to start with, but also as a vehicle to help precariat workers. For contractors there are the issues of IR35 and for the low paid issues around forced-self employment. Not sure that there are big problems to solve for plumbers.

- What will be the benefits of using a FLC over a limited company?
According our idea it would be to give you a by on some of the IR35 issues such as substitution and the need to have concurrent contracts. It would recognise that you are an individual doing a piece of work. The idea would be to value and recognise you as a freelancer.

- What will the likely tax implications be?
If you are a single person running a company, you still be the single shareholder. It would still be a limited company but under our idea it would be like registering a community-interest-company, there you create a limited conpany and then register it as a community-interest not-for-profit. For us instead you'd register it as a freelancer company. You would agree to pay a certain salary-dividend split. Of course if you have a limited company and your spouse doesn't work and you have made her and your three kids all shareholders and you take all your income as dividends, then you won't be as well off. But you are probably on the same contract terms and when they come for you under the FLC you'd be ok.

On the otherside of the coin I'd say do you need to go to an umbrella firm for tax safety? No you could have an easy to use FLC instead and be on the road to controlling your own destiny.

A FLTD would offer more certainty over status for both tax and employment purposes. As it could still be a limited company, it would continue to interface with existing tax and employment law and regulations (such as Section 44 and other Agency workers directives). By using this Freelancing Limited Liability Company (FLTD) there would be the following advantages:
• No need to specify a substitute
• No need to have multiple or concurrent clients on the go
• Contracts under seven months automatically considered as genuine freelance
• The ability to register for benefits between contracts
• The improved ability to gain tax credits for sickness, maternity, paternity and other leave
• Limited liability status
• Simplified accounting
• Ability to pay expenses, including training, and carry monies over to future years
• Ability to employ other staff
• Right to comparison with other suppliers (See Charter iv))

The FLTD would have the following limits:
• Single shareholder as the principal employee
• A fairly defined minimum salary/dividend split

- Will the use be optional, or will businesses meeting certain criteria need to use it?
Optimal to use it, but you'd have to meet some criteria:-
The criteria for registration could be a single shareholder who is the key income generator. Once registered, it would identify the operator as a freelancer. They would be restricted from many of the abuses for tax avoidance as they wouldn’t be able to have their spouses or others as shareholders. However, their status as a freelancer would be recognized and it would support the charter principles (ix) that they do not need to ‘have concurrent clients or be able to supply a substitute, provide their own equipment, have a distinct work address or even grow their businesses, to prove their status as a freelancer’.

- If optional, will those not using it come under closer scrutiny than at present?
i don't know, but given that a swathe of people would be freer of scrutiny they could have more man-power to do so. But that isn't the intention.

- If optional, what sort of safeguards do you envisage to make sure it really is optional?
Lots of scrutiny, I wouldn't trust them. I'd say a strong voice for freelancers would help you. But I'd fall back and that this change wasn't a reactionary one to just address tax or stop abuses, but was a pro-active to build a model for freelancers

Hope that helps explain some of my thinking. I read stuff that suggests that some secret deal has been struck with HMRC, if only I could be so powerful.

I was of course many years the PCG External Affairs director and many direct confrontations with the old paymaster general on these issues.

What I do know from reading the commentary on these ideas elsewhere is that the accountants don't seem to like it, which perhaps recommends it all the more

Philip

[TykeMerc]

Thanks for your response it's interesting.

I think you will find the majority of people on here who have reacted with utter horror and deep cynicism over the nature of your proposals are NOT the accountants, but people like myself who are professional contractors.

To me it's simply offering HMRC a big stick to smack us with, as soon as we're out from the protection of the masses of Ltd companies into a specialised subset then the gloves will be off.
The "optional" element will rapidly end up the same as the "optional" Opt Out of the agency regulations, you have the option of do it or forget getting put forwards for contracts by a lot of agencies.

[BolshieBastard]

Well Im a cynic so I give this idea a big fat zero

A FLTD would offer more certainty over status for both tax and employment purposes. As it could still be a limited company, it would continue to interface with existing tax and employment law and regulations (such as Section 44 and other Agency workers directives). By using this Freelancing Limited Liability Company (FLTD) there would be the following advantages:
• No need to specify a substitute

I dont need to specify a substitute now I just need to have the ability to use one.

• No need to have multiple or concurrent clients on the go

I dont need to do this now but if this goes in, then if I dont have concurrent clients, Im seen as shafted?)

• Contracts under seven months automatically considered as genuine freelance

Im frequently told being at one client for years isnt a sign of being part and parcel of their organisation so why this arbitary '7 months'? Why not 12, 18, 24 or more?

• The ability to register for benefits between contracts

I can sign for JSA Conts now

• The improved ability to gain tax credits for sickness, maternity, paternity and other leave

I gain NI credits now

• Limited liability status

I have this now

• Simplified accounting

This is debateable. I think you'll still end up having to use an accountant and I dont believe accountants would charge substantially less for this.

• Ability to pay expenses, including training, and carry monies over to future years

I can do this now

• Ability to employ other staff

I can do this now

• Right to comparison with other suppliers (See Charter iv))

Hu?

The FLTD would have the following limits:
• Single shareholder as the principal employee
• A fairly defined minimum salary/dividend split

Sorry but anyone who believes the dividend \ salary split will be fair, 50/50 or anything close is a mug.