Radio 4 Request – IR35 impact on the public sector

[Fred Bloggs]

+1. HMRC are merely playing to a general public who don’t see why others should pay less tax (in both monetary terms or percentage) than they do.

MS - if you think you can explain employers ni to the average income tax payer in a way that makes it sound like a contractor is hard done by go ahead - I’ve spent 10 minutes thinking of ways that don’t make us sound bad and I can’t find any.

^^^^ This with knobs on. Imagine this - The R4 presenter introduces the average contractor as an individual who earns north of GBP 100k a year, typically. But pays no employers NICs and no higher rate income tax at all. Tell me, exactly how does anyone imagine for a single nano second that this is going to sound good to the typical employee struggling on GBP 26 or 27k a year salary? I'm all ears waiting for the answer.

[Fred Bloggs]

And if nobody responds, the media cannot present our side of the story.

And you REALLY think that is a good idea? Read my other post ^^^^ up there and give me a straight answer, if you can please?

[jamesbrown]

+1. HMRC are merely playing to a general public who don’t see why others should pay less tax (in both monetary terms or percentage) than they do.

MS - if you think you can explain employers ni to the average income tax payer in a way that makes it sound like a contractor is hard done by go ahead - I’ve spent 10 minutes thinking of ways that don’t make us sound bad and I can’t find any.

It cuts both ways.

Certainly, an IT contractor on something north of 100k is at an inherent disadvantage in trying to explain the iniquity of this, so they shouldn't bother trying.

Also, if you're explaining, you're losing. That's true, to an extent, with anything related to tax. If you're on a high income and you're explaining, you're definitely losing, because the baseline assumption is that you're on the fiddle.

But if you're on a modest income, I think there's some scope for getting a message across.

I think the only message that has any hope of being heard is the following: you're taxed like an employee, but you don't get most of the benefits/rights of employment. I think that's pretty easy to understand as being iniquitous.

Once you start explaining the details of employment taxes, eyes will obviously glaze over, and most employees have no clue that they are effectively paying Employer's NI. We all know this complexity is no coincidence.

[Fred Bloggs]

It cuts both ways.

Certainly, an IT contractor on something north of 100k is at an inherent disadvantage in trying to explain the iniquity of this, so they shouldn't bother trying.

Also, if you're explaining, you're losing. That's true, to an extent, with anything related to tax. If you're on a high income and you're explaining, you're definitely losing, because the baseline assumption is that you're on the fiddle.

But if you're on a modest income, I think there's some scope for getting a message across.

I think the only message that has any hope of being heard is the following: you're taxed like an employee, but you don't get most of the benefits/rights of employment. I think that's pretty easy to understand as being iniquitous.

Once you start explaining the details of employment taxes, eyes will obviously glaze over, and most employees have no clue that they are effectively paying Employer's NI. We all know this complexity is no coincidence.

Try this - If a person were on a fixed term contract at big co for a year and getting the normal big co salary for that year (this is now very, very common) and you are sat next to him/her on a one year hourly rate contract with your Ltd Co and maybe on 50 to 100% more money why do you think you are entitled to not pay the same tax and NICs as the FTC guy? Shouldn't you actually be paying much, much more than him/her?

[SueEllen]

Try this - If a person were on a fixed term contract at big co for a year and getting the normal big co salary for that year (this is now very, very common) and you are sat next to him/her on a one year hourly rate contract with your Ltd Co and maybe on 50 to 100% more money why do you think you are entitled to not pay the same tax and NICs as the FTC guy? Shouldn't you actually be paying much, much more than him/her?

The FTC person has some employment rights such as holiday pay. Unfortunately the actual rights they have apart from the minimum completely depends on the employer.

[eek]

The FTC person has some employment rights such as holiday pay. Unfortunately the actual rights they have apart from the minimum completely depends on the employer.

And those minimum rights except for holiday pay are worth virtually nothing

[mudskipper]

The PS has said you are effectively an employee.

But they're not going to give you holiday pay, sick pay, pension, redundancy etc.

The legislation says that the fee payer is responsible for Employers NI, but this is being passed on to the worker.

In short, they are dodging their responsibilities. Doesn't matter if I'm on £100 an hour or £10 an hour.

There are plenty of examples of people who aren't well paid who have fallen foul of this.

[Fred Bloggs]

The FTC person has some employment rights such as holiday pay. Unfortunately the actual rights they have apart from the minimum completely depends on the employer.

Correct, they also likely get a pension contribution too. That's still going to be a hard sell to Joe Public when he wants to know why you aren't paying your ERNIC. I think you know that too, really.

[jamesbrown]

Try this - If a person were on a fixed term contract at big co for a year and getting the normal big co salary for that year (this is now very, very common) and you are sat next to him/her on a one year hourly rate contract with your Ltd Co and maybe on 50 to 100% more money why do you think you are entitled to not pay the same tax and NICs as the FTC guy? Shouldn't you actually be paying much, much more than him/her?

I think you’re looking at this bass akwards. There are all sorts of iniquities in the labour market, whether you’re an employee, a worker, or self-employed. These rules are exploited in all directions and for various reasons, which render comparisons (“who is screwed the most”?) pretty useless.

The question is simple: if you’re treated like an employee, is it reasonable to not have the rights of being an employee? The correct answer is: no. If someone is doing the same job as an employee, they should be an employee. It is not reasonable for the gov’t to tax someone like an employee without giving them a contract of employment. Afterall, they design the rules. They’ve baked in a different tax treatment of various types of labour.

The propaganda war is a different matter. You don’t choose a highly skilled, highly paid contractor to represent the case to the general public, even if the principle is no less sound. Employment taxes and employment rights for employees.

[malvolio]

Try this - If a person were on a fixed term contract at big co for a year and getting the normal big co salary for that year (this is now very, very common) and you are sat next to him/her on a one year hourly rate contract with your Ltd Co and maybe on 50 to 100% more money why do you think you are entitled to not pay the same tax and NICs as the FTC guy? Shouldn't you actually be paying much, much more than him/her?

If you are paying the correct taxes across the board then you will be. People need to stop looking at percentages and look at actual money. For many years my total annual tax bill was well above the average national wage. As I've said many times if I'm a tax dodger I'm a really bad one.