Reply to: Ir35

[ASB]

Fact is if you're contracting. You're not a disguised employee. You get no sick pay, no paid holidays, no job security and fewer employee protections than your permie counterparts and as such should not be paying full wack contributions.

I'm not trying to defend IR35 - but you do get those benefits. you just get them in a different way (rolled up in the rate) and have to manage them youselves.

If you look at, say, a 50k a year position the actual cost to the employer is probably something like:-

50k salary
6k er's NI
5k pension
5k bonus
6k car

total 71k. Given the norm of 25 days holiday, 9 days bank holiday, 5 days sick this buys 221 days. Effectively £320 per day = 43 ph.

A commensurate contract postions would probably be paying around 50 p/hour. Our the same cost plus a 20% premium. This representing a risk premium for the contractor and flexibility fee for the engager.

[VectraMan]

If you're a one man band then they could at least make the system fairer by expecting you to pay the normal PAYE and NI but cut out the employers NI which if you're a limited company you should by no means
be paying IMO.

Somebody has to pay the employer's NI. If you're suggesting the client does, then they'll just reduce your rate by 12.9%, and it'll make no difference. Thinking that employer's NI doesn't affect you because it's the employer that pays it is permie thinking.

But yes it is beyond insanity that there's no answer to the question of how much tax you should pay without it having to boil down to a judge's opinion. Imagine if there was the same situation with regular employees, all 20 odd million of them.

[pisces]

This IR35 thing bugs the hell out of me, How the hell did this ludicrous ruling ever come into place. Oh I forget, New fecking labour

Fact is if you're contracting. You're not a disguised employee. You get no sick pay, no paid holidays, no job security and fewer employee protections than your permie counterparts and as such should not be paying full wack contributions. That's before you've even counted the costs and hassle of running your own business.

If you're a one man band then they could at least make the system fairer by expecting you to pay the normal PAYE and NI but cut out the employers NI which if you're a limited company you should by no means be paying IMO.

[Lewis]

I did not realise there was insurance that could cover all tax, bills and cover for a start. Also I guess I just wanted an easy life away from running my own company but it seems the only way to make a lot of money in contracting is to do so.

Sorry only scanned thread, didn't realise you were not running your own company. But anywhow, now you know there is insurance out there.

[Damo1176]

I did not realise there was insurance that could cover all tax, bills and cover for a start. Also I guess I just wanted an easy life away from running my own company but it seems the only way to make a lot of money in contracting is to do so.

[Lewis]

I am paying a lot of money for piece of mind but piece of mind it is. I reckon it's costing me in the region of £5k a year to sleep easier.

You release you could get full IR35 insurance which covers you for all tax you might have to pay, interest and penalties for around 300 quid. Or insurance that covers all your legal fees which would almost guarantee an IR35 win for 100 quid (see QDOS, PCG, Accountax etc..)

Why pay £5,000 per year when you could sleep easy for £300?!

[Damo1176]

Ah ok so the tax bill you'd have to save for as it were and pay if found inside....makes sense I suppose, I'd just be wary of ever spending it LOL! Guess in a high interest account it's not so bad. I like someone elses idea of the offset mortgage and using it for that :-)

1stcontact looked exactly that way to me yet they say they are legit and one person here I know uses them. I would have thought this was a lot more risky than employing your own acocuntant and runnig it yourself.

[Bluebird]

The money you pay for insurance is to cover the cost of representation for an investigation not the cost of any subsequent bill.


You could be outside, but if investigated and found outside you'd still have some costs incurred which is what the insurance covers.

If you are inside, the insurnace costs will again cover your represnetation but not you're tax bill - you'd still have to pay that.

1stcontact looks like MSC [ to me anyway ] which means they're employee's / clients / contractors should pay 100% PAYE

[Damo1176]

I am paying a lot of money for piece of mind but piece of mind it is.

I reckon it's costing me in the region of £5k a year to sleep easier. Although saying that do have less to do and think about as well than if I ran my own limited company but put it down to me just being a scaredy cat! Others don't fully appreciate what would be involved if caught and others will blindly go on.

I cannot see the government having outlawed MSCs now won't then go to see what more they can crack down on, I guess as time goes on the more likely it *might* be you get caught.

Trouble is in contracting many companies take them on because they know a project or a job has a short life span and don't want an FTE on the books they have to re-house somewhere else in the near future. IR35 should operate as a direct deterrant for people leaving a company as a permie and starting contracting the next day as a tax evasion for the employee and NI evasion for the company. Not the people that are employed genuinely as a short term stop gap or as project people etc.

:-( maybe I should do some reading into it and see if I can handle running my own limited company.

One last question I saw a company called 1stcontact that say they are running legit, yet despite you being the director it would seem payrol etc is handled by them. PSC??

[malvolio]

ISTR one was by someone who represented himself and thereby commited legal suicide, one was on an obscure technicality and one was pretty well genuinely caught. They were also a long time ago and would probably not have been lost if they were taken on again.

As for support staff, there is no reason at all they should be any more IR35-caught than any other contractor. Even the requirement to be onsite at fixed times can be squared away.

Repeat after me - you only pay IR35 if you really want to...

[Old Greg]

Indeed. You could do everything wrong, but you still *probably* won't get investigated and will get away with it as a result. Some people don't like the uncertainty and pay up when they might not have had to; some people are more than happy to risk it given the much larger rewards. Most of us take steps to minimize the risk but live with the fact that there still is one.

It kind of lurks at the back of my mind at times, and I'll have the money put by to cough up if necessary, but I've had my contract checked and in any case the odds seem to be with us. I wonder what the circumstances were of the 3 cases lost by the PCG.

[VectraMan]

The vast majority of us "smell inside too much" but after 5 years of the same debates and not many people getting nicked have just learned to get on with it.

Indeed. You could do everything wrong, but you still *probably* won't get investigated and will get away with it as a result. Some people don't like the uncertainty and pay up when they might not have had to; some people are more than happy to risk it given the much larger rewards. Most of us take steps to minimize the risk but live with the fact that there still is one.

[rootsnall]

This is precisely what I am thinking about IT support positions. Smells inside too much.

The vast majority of us "smell inside too much" but after 5 years of the same debates and not many people getting nicked have just learned to get on with it.

[chicane]

I am in a similar position right now but I won’t be staying at this client for more than 4 months. That is pretty short isn’t it ? I am hoping this can support my outside clause.

IR35 is not particularly related to contract length. If you go on site with a client for a week, with no particular target deliverables set at the beginning of the week (ie as a general dogsbody), you could potentially be viewed as a deemed employee.

[Damo1176]

Yawn. Your pointless post is about 5 years too late.

Sorry in that case, just I'm new to the game and so newly frustrated with all the regs