Crackdown on personal service companies could raise £400m in tax

[d000hg]

I can't see what the government would gain by these 'proposals'; by us working as Contractors they get a lot more in corporation tax from us and VAT from the ClientCo than they would get if we were somehow forced to be Permie.

That isn't the proposal at all, only that our taxation works the same way, surely? e.g. you can still charge a day rate but you don't get to keep as much... so the CT you pay now would be taken a different way. AND they'd get the NI you avoid paying by being outside IR35.

[MarkT]

That isn't the proposal at all, only that our taxation works the same way, surely? e.g. you can still charge a day rate but you don't get to keep as much... so the CT you pay now would be taken a different way. AND they'd get the NI you avoid paying by being outside IR35.

Yeah but why would you be a contractor with all that risk, if you could be a permie and get the same money with holidays and job protection? Rates will go down, not up. The vast majority of contractors do this for the money, you have to remember that.

Anyway - the obvious way around this is to use a brolly, because they can't end PSCs and take away the T&S, surely?

[jamesbrown]

Because that would be logical and sensible - remember who you're dealing with here

It wouldn't really be that logical or sensible (in the same way that no time constraint is particularly logical or sensible, but I'm covering old ground here). More importantly, it wouldn't achieve their stated aim. For example, according to the PCG/IPSE 2011 benchmarking survey, only ~20% of contractors had been working with their clients for more than two years. Admittedly, that is largely due to the 24mo rule, but the same would apply in this context. The stated aim is to increase compliance (read: tax take), substantially. Let's not forget this. If they're going to introduce a ridiculous time constraint, and substantially increase tax take, it's going to be a harsh constraint. According to the same survey, around 30% of contractors either had multiple clients or had been working with the same client for 1-3 months.

[MicrosoftBob]

That isn't the proposal at all, only that our taxation works the same way, surely? e.g. you can still charge a day rate but you don't get to keep as much... so the CT you pay now would be taken a different way. AND they'd get the NI you avoid paying by being outside IR35.

That's assuming you'd bother to do the same job, I'd rather increase my Plan B, earn less overall and have more free time, if they're going to making contracting financially unattractive

[Tasslehoff]

That isn't the proposal at all, only that our taxation works the same way, surely? e.g. you can still charge a day rate but you don't get to keep as much... so the CT you pay now would be taken a different way. AND they'd get the NI you avoid paying by being outside IR35.

But we get Holidays, Pensions, Bonus, Sick Pay, Redundancy pay, Inductions, Training, Free Fruit and Tea, Car Parking, Xmas Do's etc?

[d000hg]

Yeah but why would you be a contractor with all that risk, if you could be a permie and get the same money with holidays and job protection? Rates will go down, not up. The vast majority of contractors do this for the money, you have to remember that.

Anyway - the obvious way around this is to use a brolly, because they can't end PSCs and take away the T&S, surely?

Why would you be getting the same money as a permie? Why would making it more expensive to be a contractor push rates down?

[d000hg]

That's assuming you'd bother to do the same job, I'd rather increase my Plan B, earn less overall and have more free time, if they're going to making contracting financially unattractive

Well yes but most contractors don't have plan Bs.

[jamesbrown]

I wonder how it would work contracting for clients outside the UK. Both based on site and working from the UK. I've done the latter quite a lot.

I'd like to know too, as the majority of mine are . If they have a UK subsidiary, it will be the same approach (most of mine don't). They cannot enforce compliance in these circumstances, so they will either need to accept that such arrangements are a low risk to them, much like the pre-conditions in the agency legislation for working from your own premises that are not under the control of the client (they probably won't accept this), or they will need to defer to the PSC for compliance. In all likelihood, there will be no explicit treatment of this scenario. Direct PAYE (DPNI) could also be an option and this seems to fit with what I understood you to have said earlier (i.e. being happy to operate as an employee, without employer's NI, as DPNI comprises PAYE plus employee NI only).

[Tasslehoff]

Going to be a long wait till the AS that's for sure.

[_V_]

Well yes but most contractors don't have plan Bs.

If this comes in, there's going to be lots of massive houses on the repossession market if they don't have a plan b....