Does anyone else feel like they are being financially ripped by the tax-man

[eek]

This is the key bit for me. Getting tax relief on travel and accommodation makes it a double whammy for most. Inside should mean that you have to pay yourself PAYE through your own company to the tune of, say, half of the day rate revenue from the month. While that may seem like a hassle, it could all be connected up with a decent accounting package linked to your company account and sumbit a compliance report to HMRC and/or whoever your company is paid by to prove that you are operating correctly.

Can't be done without changing the commute rules for employees and that couldn't be done nowadays.

This mess is completely unavoidably - we just need to watch it play out...

[northernladuk]

Permies aren't threatened with the sack every 3 months, emails sent out that you will be leaving on x date, handover to different teams - then whatever internal politics where not able to do so etc

Nor are contractors.
But many perms leave with less than 4 years at a client as well. And HMRC will look at the overall duration and reality of the situation and see through all you've just put.

The main reason for carrying on is advice from my accountant and also HMRC recently published statement that they won't be going after previous years.

So you are happy just to stick your head in the sand again. Worked really well for you that for 4 years.
Are you happy with that bearing in mind it's a 6 figure sum of your money on the line here? Very few people on here are.

As surely, I'm not the only caught in this predicament, there must be 10'000's of contractors if not more, who have been with the same client for many years and are continuing inside IR35 post April. I can't imagine everyone is leaving post April?

No they aren't but there are raft of other mitigations in place in different situations. Some are leaving, other people are taking different roles, swathes have PSC bans so no SDS etc.. So straight outside to inside with long terms behind them still sticks out like a sore thumb at the top of the list. Not many on that list have that length of time at their clients and them that do will have done more diligence than you.

But you keep denying the situation you are in. Seems to be the way you've run your whole contracting career so far so I am sure you'll be fine.

The client has simply used the HMRC CEST tool - which has been widely reported as flawed and will pretty much always give a inside IR35 verdict.

But sometimes the gig is clearly inside and the CEST is not only right but the situation is so glaringly obvious it's fairly irrelevant.

[BolshieBastard]

Permies aren't threatened with the sack every 3 months, emails sent out that you will be leaving on x date, handover to different teams - then whatever internal politics where not able to do so etc

The main reason for carrying on is advice from my accountant and also HMRC recently published statement that they won't be going after previous years.
As surely, I'm not the only caught in this predicament, there must be 10'000's of contractors if not more, who have been with the same client for many years and are continuing inside IR35 post April. I can't imagine everyone is leaving post April?

The client has simply used the HMRC CEST tool - which has been widely reported as flawed and will pretty much always give a inside IR35 verdict.

Oh dear, you have no idea, yes my lambo is a 11 year old car with 210k miles, still the old girl has been quite reliable. I've only started earning this rate on this contract. I had been out of work for 6 years and only in recent years have turned my life around. First contract, I was on £150 p/d with agency taking half. Please don't make such comments when you have no idea of the persons circumstances. Oh and kids go to state school. And no I can't just up-sticks and move as have family members who are dependent on me.

[dsc]

The main reason for carrying on is advice from my accountant and also HMRC recently published statement that they won't be going after previous years.
As surely, I'm not the only caught in this predicament, there must be 10'000's of contractors if not more, who have been with the same client for many years and are continuing inside IR35 post April. I can't imagine everyone is leaving post April?
The client has simply used the HMRC CEST tool - which has been widely reported as flawed and will pretty much always give a inside IR35 verdict.

I'd suggest doing more research rather than carrying on with the "advice" you've been given, seeing as it's your ass on the line if they go retrospective on you. HMRC only said they won't go after people IF there's no suspected fraud and I'm sure that HRMC classes almost everything as fraud, especially carrying on for 4 years claiming to be outside when in fact inside. CEST doesn't always give an inside result, but it doesn't really matter as HMRC will ignore CEST results if it says outside, and will use it against you if it suits them. They also don't care that you can be dropped at any point, that you work from home etc. as by default they class everyone inside and it's up to you to convince them and the tribunal otherwise. They will basically claim you are under control or some sort of supervision, that there's a mutuality of obligation, especially as you've taken every extension offered and that you haven't got the right of substitution (even though it's on your contract, but your client will most likely say they would never accept a sub).

As for masses of contractors simply bending over and going PAYE / inside at the same client - yes that is indeed true and exactly what HMRC wants / will be going after, they will make millions out of retrospective investigations and announce this IR35 change as a massive success.

Hand in your notice asap and look for another, most likely inside, contract elsewhere as that reduces the risk of retro investigation significantly.

[Graham1967]

OP,

The changes coming next month have been years in the planning. Unfortunately you and you are not alone have not realised that as the owner/director of a business you must assess the risks to your business.

I warned many Permie-Tractors years ago that change was coming. The response was in nearly all cases "Oh I leave all that to my accountant." Believe me your accountant does not know you, he does your books and information you provide. End of. It says as much in the preface of your accounts.

You need to grasp how serious the situation is. You are a disguised employee not in business of your own accord. You've done 4 years at one location, and because of the changes due in April, you are looking to go PAYE at the very same. No business owner would contemplate such a scenario because of the known tax implications.

You need to be gone and then worry about finding a new role. The alternative is a trap door set by HMRC, and they are just waiting for it to drop.

[Jolie]

Those on £15k will hardly have to pay any tax at all.
In any case, you have clearly missed the point entirely, how can paying 56% tax, leaving you with 44%, be considered fair or right! The Tax Man is never greedy right?
I'm all for paying tax - but it needs to be reasonable and fair - otherwise what is the point in aspiring to do well in life.
When over half your income is going in tax!
And as for 40 hours, you have no idea of the hours I put in.
So if you think I'm being greedy for having the temerity to have the greater share of my hard earned - then wait till you find about how much tax the likes of Amazon, Google etc pay - yet HMRC doesn't appear to be going after them - HMRC showing just how fair they are!

Very well put!

I get sick of hearing all the "think about all those earning £15k" bulltulip posts.

Another thing that annoys me is that people don't know our individual cirumstances, how much effort we have put in, money invested and sacrifice to get to this level, only to be penalised for daring to make something of our lives.

I think the majority of people don't mind paying taxes to help those less fortunate than us, but there comes a point where it becomes counter productive, and IR35 is one of those times.

Is it fair that we should pay more taxes, just because we succeed and increase our income? Sure it is, but we would have paid more tax anyway. To have tax rates of 20,40,45,60% and NI rates on top of that is ridiculous, and that's without the taxes we pay going about our every day lives.

The fact is the middle income earners are penalised more than any other.

However, that being said, depending on your situation, there are other choices.

Life is about the choices you make, if you're not happy with your life, it's time to make better choices.

We now live in a global economy, we don't have to stay here and put up with it, there are plenty of other places to work where our contribution is more welcome.

Sometimes when a government pushes it's people for more than their fair share, they end up losing it all.

[BrilloPad]

Very well put!

I get sick of hearing all the "think about all those earning £15k" bulltulip posts.

Another thing that annoys me is that people don't know our individual cirumstances, how much effort we have put in, money invested and sacrifice to get to this level, only to be penalised for daring to make something of our lives.

I think the majority of people don't mind paying taxes to help those less fortunate than us, but there comes a point where it becomes counter productive, and IR35 is one of those times.

Is it fair that we should pay more taxes, just because we succeed and increase our income? Sure it is, but we would have paid more tax anyway. To have tax rates of 20,40,45,60% and NI rates on top of that is ridiculous, and that's without the taxes we pay going about our every day lives.

The fact is the middle income earners are penalised more than any other.

However, that being said, depending on your situation, there are other choices.



We now live in a global economy, we don't have to stay here and put up with it, there are plenty of other places to work where our contribution is more welcome.

Sometimes when a government pushes it's people for more than their fair share, they end up losing it all.

I am sick of these glorified typists thinking they are important. You are not one of the elite. Inequality is growing - and you will be at the lower end.

Why should you have any say in what is fair? Fair is determined by HMRC.

I wish you and all the other permietractors would go abroad. Oh wait, the rest of the world has plenty of typists who earn far less than you already. When you get that feel free to come back to the UK and suck up your permie roll.

I do hope this thread gets moved to general. I am fed up with being nice.

PS you could actually do SOMETHING to fight HMRC. But instead why not just rant and moan into the ether....

[Old Greg]

Those on £15k will hardly have to pay any tax at all.
In any case, you have clearly missed the point entirely, how can paying 56% tax, leaving you with 44%, be considered fair or right! The Tax Man is never greedy right?
I'm all for paying tax - but it needs to be reasonable and fair - otherwise what is the point in aspiring to do well in life.
When over half your income is going in tax!
And as for 40 hours, you have no idea of the hours I put in.
So if you think I'm being greedy for having the temerity to have the greater share of my hard earned - then wait till you find about how much tax the likes of Amazon, Google etc pay - yet HMRC doesn't appear to be going after them - HMRC showing just how fair they are!

I can't believe there's not a folk song about this.

#prayforgummibear

[escapeUK]

£500 * 220 = £110,000.

If you feel "financially raped" by paying tax on that, then boo bloody hoo. Try working 40 hours a week for £15,000 like a lot of people have to.
Societal greed is sickening.

What nonsense. Not a single one of us joined the job market on £110k. Personally when I started work I was getting £120 a week! That a princely sum of £6240, and there was still tax to pay!

Even back then I was writing computer systems for that company, in my own time, for free on a computer that I saved £1000 to buy! Learning, polishing my skills, solving problems. So lets not imply that our big earnings now are due to some magic, or that we are amazingly lucky. The money we earn is from blood, sweat and tears, and is often at the expense of our health and sometimes relationships.

So don't you dare tell me that someone on £15k doing a very easy job, somehow deserves to get our money via the grossly unfair tax system. They are more than welcome to do what we did, learn, work hard, and build up their salary. Then surprise surprise, they won't be wanting half their income stolen either!

I am sick of these glorified typists thinking they are important. You are not one of the elite. Inequality is growing - and you will be at the lower end.

Why should you have any say in what is fair? Fair is determined by HMRC.

There is no inequality. But there is stupid lazy people who are just not worth much. Then there is people like us, who fought to get where we are. We all have equality in opportunity. My first job was not much more than a typist -an office bod working in sales.

Fair is no more determined by HMRC, than what is a crime is determined by the police. Both just follow the rules given them by politicians that we elect so in a sense, fair is determined by society. Although obviously that doesn't seem to be working so well.

Oh dear, you have no idea, yes my lambo is a 11 year old car with 210k miles, still the old girl has been quite reliable. I've only started earning this rate on this contract. I had been out of work for 6 years and only in recent years have turned my life around. First contract, I was on £150 p/d with agency taking half. Please don't make such comments when you have no idea of the persons circumstances. Oh and kids go to state school. And no I can't just up-sticks and move as have family members who are dependent on me.

Sadly, there will always be people who think its "fair" to steal what you have, because you worked hard and they did not. How dare you succeed? I worked at one place where a director drove a rather nice Porsche. This was always a topic of conversation amongst the general staff. "He's come in the Porsche again". "Must be nice earning so much". Bitter. Sad. Jealous. What they didn't see if that he was always the first in, when I had to work late, everyone else had long gone, and he was still there hours later. We'd be the last to leave, and he would lock up every day. We'd discuss something Friday, Monday he'd arrive with loads of work he'd done over the weekend. Having nice things isn't magic, its visible signs of working your ass off.

It would seem to me you should continue on in this role, while very actively looking for a new role closer to home. personally I would have made it clear to the client company that a decision of inside would lead you to be looking elsewhere and they would be losing your experience or perhaps say that a significant rate increase will be required to offset the financial loss. If you have been there a while its likely you are valued and losing you will have a financial cost to them. Talk to senior people, never accounts. Good luck!

[Jolie]

Why should you have any say in what is fair? Fair is determined by HMRC.

PS you could actually do SOMETHING to fight HMRC. But instead why not just rant and moan into the ether....

I determine what's fair in my life. I adjust my life and make changes based on things I consider to be unfair.

However, I didn't say it was unfair, if you check my post, I said it was ridiculous. I also didn't moan about it. I am not one to come on forums and whine about my situation.

It wasn't a rant either, I was simply giving support and an alternative option to the OP.

If you choose to fight HMRC, then I applaud you and offer any assistance I can give.