Reply from MP about IR35 Reforms

[malvolio]

Yes but that risk was always there, IR35 did not create that risk. I would say the rates you want should reflect that risk, buying an insurance coverage is a probably better idea.

The issue they want to tackle is the hidden employees who take advantage of the situation. They don't bring flexibility to the job market. They are of no advantage to businesses. Why should they be treated specially. A client and an employee can both play this game and avoid paying tax to hmrc.
(this has actually happened, people have been forced to become 'self-employed' by companies overnight, for tax purpose)

This is bad situation for contractors too. I don't want people to hog same role year after year and get treated differently, their risk is substantially less after 2 years I would say. This is unfair to permies.
No wonder everyday a permie wants to become a contractor.

You really need to distinguish between three things here; forced incorporation which is the employers offloading costs and risks, Friday to Monday which is the worker and the employer combining to cheat the tax system and "disguised employment" which is nothing of the sort but merely a supplier who is satisfying the needs of his client so well his services are retained long term.

One is sharp business practice, one is marginally evasive and one is good commercial sense. Sadly HMG treats all three the same, when only two of them need fixing.

It is too simplistic to say a contractor with a long term gig is taking an "unfair" advantage; his risks do not change, he still need to manage his income as best he can to cover those risks and he does not gain any rights or benefits, so why should he be victimised by the tax system?

[Acme Thunderer]

If you or another close member of your family gets cancer (or some other chronic illness) then you will understand why IR35 is a problem.

I know contractors and employees who have had to take a year of work because of illnesses like this. Those who are employees who work for decent companies are given lots of time off and can use the private healthcare provision provided by the employer to get treated quickly. If you are a contractor you have to rely on your savings so you better make sure you have some.

That’s why I have taken out a critical illness care plan.

[malvolio]

That’s why I have taken out a critical illness care plan.

Arguably, that's not enough. When I duffed my knee I had the option of a 3-4 month wait on the NHS for a first appointment or a little over a week for an MRI scan and surgery via my health insurance. The injury wasn't critical but did limit my mobility (irritating and very tiring when commuting long distances on planes and trains as I was). You need to worry about the apparently little stuff; it often isn't all that little. Companies don't offer BUPA out of the goodness of their heart, but to keep down the waiting times to get their people back. We really ought to do the same.

[SueEllen]

Yes but that risk was always there, IR35 did not create that risk. I would say the rates you want should reflect that risk, buying an insurance coverage is a probably better idea.

The issue they want to tackle is the hidden employees who take advantage of the situation. They don't bring flexibility to the job market. They are of no advantage to businesses. Why should they be treated specially. A client and an employee can both play this game and avoid paying tax to hmrc.
(this has actually happened, people have been forced to become 'self-employed' by companies overnight, for tax purpose)

This is bad situation for contractors too. I don't want people to hog same role year after year and get treated differently, their risk is substantially less after 2 years I would say. This is unfair to permies.
No wonder everyday a permie wants to become a contractor.

Heard of Enron? Heard of Lehman Brothers?

Companies like that used to use contractors long term. They got contractors to hire other contractors as it was cheaper and easier than using agencies to get good services provided to them. They also had a habit of having payment terms with contractors that were over 30 days e.g. 90 days. So when they went bust what did you think the contractors got? What do you think the employees got?

And if you don't know then look up what rights employees have if an employer suddenly goes bust.

[fatboyslim]

Heard of Enron? Heard of Lehman Brothers?

Companies like that used to use contractors long term. They got contractors to hire other contractors as it was cheaper and easier than using agencies to get good services provided to them. They also had a habit of having payment terms with contractors that were over 30 days e.g. 90 days. So when they went bust what did you think the contractors got? What do you think the employees got?

And if you don't know then look up what rights employees have if an employer suddenly goes bust.

If you imply that long term employment of contractors is bad for all of us, including taxman, I would agree. Hope this legislation will discourage such practice, if people still want to do it, its upto them.

[northernladyuk]

Well, I emailed her three weeks before the budget and it's taken until now to garner a response... But here it is:

She has probably been holed up in a hotel room with a permie colleague.

[fatboyslim]

You really need to distinguish between three things here; forced incorporation which is the employers offloading costs and risks, Friday to Monday which is the worker and the employer combining to cheat the tax system and "disguised employment" which is nothing of the sort but merely a supplier who is satisfying the needs of his client so well his services are retained long term.

One is sharp business practice, one is marginally evasive and one is good commercial sense. Sadly HMG treats all three the same, when only two of them need fixing.

It is too simplistic to say a contractor with a long term gig is taking an "unfair" advantage; his risks do not change, he still need to manage his income as best he can to cover those risks and he does not gain any rights or benefits, so why should he be victimised by the tax system?

As with many other things in life, a minority of people spoil it for rest of us.
Things are being tightened across the board, not specific to contractors.
I am not sure what test HMRC can do to objectively check if somebody is employee or contractors. BTW why is HMRC allowing this whole contractor thing in first place? Its to provide flexibility in job market so that companies can grow easily, right? Not because they need to balance the habit of a risk taker by rewarding him somehow in another way.
If tomorrow, nobody wants to go contracting and businesses protest, they will go back and balance it again, to create a favourable ecosystem for contractors.

I dont think HMRC should bother about how much risk any individual takes(unless it favours them), you want to bunjee jump or invest in bitcoin now, up to you, am sure you got the risk/reward thing sorted yourself. They should focus on taxation and creating a favourable environment for more tax that they can use for all sorts of things we need.

[malvolio]

You don't really understand the issue do you...

HMRC do not dictate policy. It's not them who are attacking contractors while simultaneously demanding a flexible skilled workforce.

[BrilloPad]

You don't really understand the issue do you...

HMRC do not dictate policy. It's not them who are attacking contractors while simultaneously demanding a flexible skilled workforce.

There I disagree. I believe it is HMRC who do not understand contractors and think we are glorified typists.

They seem to be able to dictate what MPs do. Though it should be the other way round.

[SueEllen]

If you imply that long term employment of contractors is bad for all of us, including taxman, I would agree. Hope this legislation will discourage such practice, if people still want to do it, its upto them.

You have shown by these choice of words you don't really understand contracting do you?