FLCs, back in business

[Zero Liability]

The OTS doesn't seem too keen on the idea at present. More below:

OTS employment status review tries to avoid IR35 :: Contractor UK

[TheFaQQer]

According to ontractorCalculator:

The OTS has considered the concept of the freelancer limited company, saying: “We have also looked at the idea of a ‘third way’ – an intermediate status between employed and self-employed. Overall we are not recommending it as a way forward but we do not dismiss it and would welcome further input addressing some of the issues we highlight.”

So they don't recommend it at the moment, but if there was some detail then they could well suggest it is something to do.

[mudskipper]

The detail of ipse's proposal is due during the first quarter, so guess we should get something soon to at least know what it is we might be dealing with.

[tractor]

.....

No government will merge tax and NIC as if a government wants to put personal taxes up they will muck around with NIC as it's "not a tax".

Plus NIC's are ONLY used for the state pension and the NHS.

Of course it is.

[SueEllen]

No government will merge tax and NIC as if a government wants to put personal taxes up they will muck around with NIC as it's "not a tax".

[Zero Liability]

They came up again as part of the OTS review of employment status... not directly related to contractors, but it doesn't look like the FLC trojan horse will vanish.

Advisers back OTS recommendations on employment status - 04 Mar 2015 - Accountancy Age

Of particular interest to many is what the OTS described as a "third way", which many suggest could be a freelancer limited company, which would afford the self-employed greater protection and help simplify their affairs.
But whatever the details, all stakeholders appear relieved the area is receiving due attention and is being taken seriously, particularly in the run-up to the Budget and the general election. The overriding feeling from advisers is that we've not only reached a point where reform is overdue, it's vital if we want the country to keep up in the global economic race and continue to compete viably.

Also here.

IR35: The 'Third Way' - Contractor Weekly

This involves the introduction of a new category of worker, a 'third way' between the employed and self-employed, acknowledging that some workers do not fit easily into either of the two traditional positions and that they should be subject to a modified set of tax rules. Freelancers might fall into this 'third way' and who might be seen as people who have chosen this route of working and want certainty over their status.

However, this middle status would mean that those covered by it would have to accept the tax consequences that were part way between employed and self-employed. The Freelancer Limited Company idea, for instance, whereby the entity agrees to a fixed but fair salary:dividend split to ensure that some income is exposed to PAYE and NIC.

The OTS is not keen on this concept due to the many difficulties in establishing it fairly, although it has not ruled out returning to the idea should its proponents be able to address some of the OTS's concerns.
Where there are any 'quick wins' that can be adopted from this report then it may be possible for these to be taken forward quickly. However, it is likely that should the report point towards significant reforms, these would be for the next government to consider.

I think this bit below goes without saying and they have been banging this drum for years now...

Reiterating its recommendations made in its Small Business Review, the OTS emphasises that by merging tax and NIC would remove many of the anomalies within the tax system and contribute significantly to simplifying issues around status by reducing the differentials.