Another one from the IR

[Spacecadet]

might as well go back to using a fecking brolly

except for all the other little bits not connected to the main contract that i need to invoice for.

[Buffoon]

...let's face it hardly any contractors are ambitious to do this...

Well, actually .....

It's too late for me. Short of nuLieBore being sent to the gallows and compensation for the damage that they have done, I'm off out of here this year for good.

[The Lone Gunman]

Well said Denny. I am inclined to agree.

If this legislation gets any worse I am pulling out of IT or I am upping sticks and moving abroad. I am not going to become an employee in this business in the UK.

I wish we could get enough contractors together for us to all take a week off to attend a seminar on contracting.
If we all pissed off for a week then maybe someone would notice just how vital we are.

[expat]

Do I realy have to go through this again?

No, you don't have to. I know all this. I have used exactly the same example myself (with Accenture instead of EDS as it happens), to make the points that it makes.

It contains some good points but the question of the difference between investing and working is not one of them. The "profit" of the contractor's Ltd Co is not profit on invested capital. That is the crucial point about what I am trying to say.

You seem to think that, because I am arguing with you, I am saying that you should be taxed more than share investors. I am not saying that, because I do not believe that. I am simply saying that they are different things.

[BlasterBates]

The answer to this I think is this:

Two contractors set up two independent companies. Both hold shares in the other. That means your dividends are paid to you by a company where you don't work.

Requires a lot of trust though, and that both parties are earning roughly the same, but legally they couldn't touch you because either party is not legally obliged to pay dividends if they don't want to.

[expat]

It's only a matter of time before contracting becomes unsustainable as a career option.
....
My answer is simple and would put an end to all this uncertainty and nonsense. Allow contractors who genuinely operate as owner managed businesses exempt from IR35 but who clearly don't intend to grow their business (let's face it hardly any contractors are ambitious to do this) to freelance as owner managed businesses just like any other sole trader.

I agree with you completely on the latter point. when I was contracting in France that was exactly what it was like. The French taxman is not known for throwing money away, but the French tax system's strong reach meant that they had no need to make these distorting non-factual assumptions: they could let you be self-employed because they'd get their tax anyway.

Likewise in the UK: just let us be self-employed, and IR35 would wither.


However I don't agree with your first point. Contracting will remain sustainable, you may just make less net money than you were accustomed to thinking that you would. that won't stop me: I'm a contractor because I don't want to be an employee, not as a way of escaping paying social contributions.

[expat]

The answer to this I think is this:

Two contractors set up two independent companies. Both hold shares in the other. That means your dividends are paid to you by a company where you don't work.

Requires a lot of trust though, and that both parties are earning roughly the same, but legally they couldn't touch you because either party is not legally obliged to pay dividends if they don't want to.

Hmm, do you really think that HMRC and the courts never look through transparent arrangements to see the reality behind?

Couldn't touch you? If you believe that....

[BlasterBates]

Hmm, do you really think that HMRC and the courts never look through transparent arrangements to see the reality behind?

Couldn't touch you? If you believe that....

Why not, HM Tax so far have failed to get contractors for IR35 in spite of seeing through the transparent arrangements behind one man Ltd companies.

[expat]

I see your point on invested capital as the bona fide reason for rewarding by divi payments. However, the type of business we are in doesn't require invested capital except the time and effort and training we put in to make ourselves marketable to end-clients who want our services on a no MOO basis. Also, we need to consider that EBs insist that we use a limited co structure and that clients insist on using EBs to hire contractors.

That alone is reason enough to justify paying out divis and salary all the time the situation remains the way that it is.

I'm not trying to have the last word (honest!) but it's all part of not being allowed to be self-employed. If we were, then clients and EBs would be ok with that.

I'm quite sympathetic to the idea that it's all Hector's fault for screwing us up in the first place. Let us be self-employed, and slap the NIC tax on all income or on none.

[BoredBloke]

"the type of business we are in doesn't require invested capital except the time and effort and training we put in to make ourselves marketable to end-clients who want our services on a no MOO basis."

Surely that is the investment. If I want to learn something I have to sit down and plough through it - I do this on my time, when I could actually be working. So If I book onto a cource for a week, I give up my fees for that week. This is a loss to my company and what I would argue is the investment, plus the cost of the course etc. It is hard to quantify how long it takes to get some information into your head. If we didn't invext in our skills we would see our incomes drop in the process. Just how many Windows 3.1 or Novell 3.11 support people are there out there these days?