Reply to: HMRC lose ir35 case

[xoggoth]

It seems from that that they often seek to apply the standard conditions of a company in taking on contractors when in fact, they do not always apply. I have more than once been taken on by a different route via contacts with different conditions, working part time due to other contracts etc. Essential to document all these things.

[Not So Wise]

These people a losers who refused to accept to be contractor (see below).

Highly critical and unfair to classify them as "losers", if anything (especially if they give value for money) they are the next stage for contracting, growing for "one man band" doing one project at a time, to small company doing many projects at once. Your attitude smells like the one permies have for contractors

in my definition are under IR35

And by Hectors definition as well, intensionally. But by Hectors definition everyone is under IR35 unless they are either an de-facto employee on PAYEE or have quite a few people working for them.

But what Hector wants is not nessarly what hector gets. If that was case everyone would give all their money to hector and then hector would decide what was minimum they needed to live on, give them that back and keep the rest. This is why the courts > Hector

I believe that 'contractors' are self-employed

They are, but once again we are all limited instead of registered self employed because hector forced us to go that way. You try registering as self employed and then getting a single agency to take you on or a single company with access legal council to take you on.

You won't get far (I know because I tried years ago) because of the possible legal ramifications hector created for anyone using registered self employed persons

Really the simple fact is Hector would like everyone to be controlled, classified as employee and thus on PAYEE and feeling like the government is being nice with things like ISA's

If you are not a large company with lots of employees or one of those employees, aka Self employed, Entrepreneur, Contractor you are quite simply not very welcome in this country by the tax man

[SueEllen]

Last post was : 17th January 2008, 11:24
I am no Denny neither I am Jesus. Just irritated that most of you still dont get the real problem.

It's Denny.

[Archangel]

Last post was : 17th January 2008, 11:24
I am no Denny neither I am Jesus. Just irritated that most of you still dont get the real problem.

You need to get out more, but OK, I'll bite, what us the REAL problem then genius?

[maxima]

Last post was : 17th January 2008, 11:24
I am no Denny neither I am Jesus. Just irritated that most of you still dont get the real problem.

[r0bly0ns]

Have you been drinking?

You resurrected an old thread just to post nonsense?

Are you Denny?

Definately not, I managed to read nearly all of the post

[TheFaQQer]

Have you been drinking?

You resurrected an old thread just to post nonsense?

Are you Denny?

The post is far too short, not argumentative enough, and doesn't berate Mal. Can't be denny.

[Archangel]

Have you been drinking?

You resurrected an old thread just to post nonsense?

Are you Denny?

[maxima]

for simplicity I divide people on contractors, consulters and others.

Consulters are those who does 'proper' business - have office, hire people (even temporary for a project), advertise themselves or anyhow goes directly to end-client. I would say there are few dozen of such businesses in London which run by average Joe and employs 2-3 people. (I dont mean big consulting businesses). These people a losers who refused to accept to be contractor (see below).

Contractors (me for instance) are one-guy bands which effectively sells his/her own arse (knowledge, experience, health) to end-client through agents. There are thousands of them in London.

As I said a year ago and repeat it now (especially after reading this document - http://www.inlandrevenue.gov.uk/pdfs/ir56.pdf) - all contractors in my definition are under IR35 however they pose to be businesses, buying IR35 insurances and including fictious clauses in their contract (c'mon - how many of those used substitute in past 5 years? 2?)

I believe that 'contractors' are self-employed but the way we sell our services are different from what 'regular' businesses do (and that is defined at that pdf).

I said before and repeat now - current legislation lacks definition/clarification/instruction for a form of self-employement de facto and historically created by us - 'contractors' and end-clients who need that specific services which can be delivered by us only and not temp/perm employees.

This lack in the law hasnt been covered artificially as it is another possibility to skin the cow for the government.

[beaker]

It sounds like you can't simply cannot declare yourself outside of IR35 with any confidence unless: -

a) the agency supplies you the upper level contract (very unlikely since it is technically nothing to do with you) and the outside-IR35 indicators are present in both.

b) the agency supplies you confirmation in writing that nothing in the upper level contract will invalidate any terms in your lower level contract with regard to your IR35 position.

c) go direct - very difficult in many cases.

If you can achieve any of the above then I think you're there. Certainly defensible by PCG, QDOS, etc. Otherwise, it now seems that your own contract is worthless and all the working practices questionnaires in the world won't overrule the upper level contract.

I also think there is small print in the insurers docs which will void any payment in the event of other issues coming to light which would have prevented cover being offered in the first place. I would say this includes contradictory terms in the upper level contract.

Using Ardesco's analogy, I would never consider a builder to be my employee whether he worked in a team, on his own, subbed or didn't sub, but I would expect to check his work (called a snagging list FFS!) and provide updates on progress. Who wouldn't? Still not my employee though.

The builder analogy is an interesting one. You wouldn't hire a builder as an employee unless you intended to keep him around until forever for an ongoing stream of work. Without regarding the specifics of IR35, surely this is the key?

Does the client want a contractor to deliver a specific piece of work (probably within a specific time) for a cost (either fixed or T+M) and then say thank you very much, goodbye or do they want a temp, who will work like any other employee, fits in with the team, doesn't cause any fuss, accepts work as it comes and hangs around until the work level drops off or they are replaced with a permanent employee.

I know which one the agency would rather sell in. IMO contracting through an agency is not how a legitimate business would run, unless the contract for services is directly between the client and the contractor.

[Chugnut]

Agreed. Assuming the 64K dividend is split 50-50, Hector would be looking to see the non-working spouses contribution to the business...

And what's the say the next line they'll start pursuing aggressively is the "unrealistic market rate salary" bollox again.

The fact that you follow your accountants paid-for professional recommendation in good faith to legally minimise your tax bill seems to count for diddly squat in HMRC's eyes. They're NOT listening.

[ratewhore]

Whilst the above is perfectly legal, given the Revenue's increasingly aggressive stance on avoidance year on year, then an investigation in (say) 3-4 years time into the above method will be challenged with the adopted HMRC mindset at the time it's investigated, not the time it was adopted.

Agreed. Assuming the 64K dividend is split 50-50, Hector would be looking to see the non-working spouses contribution to the business...

[Chugnut]

Depends on circumstance. Personally my non working spouse held a major shareholding. In the 100k example:-

Salary 2 x 5k. NI/TAX nill.
Gross profit = 90k. CT = 18k. Net = 72k
Dividends = 64k.

Higher rate tax nil. Retained earnings 8k - later extraction via ESC16 with no CGT.

Could have extract the 8k bringing 2k higher rate tax. Total tax paid in this scenarios would be 18k CT + 2k higher rate.

Extreme, possibly. But it was achievable. And won't be from March of course.

Whilst the above is perfectly legal, given the Revenue's increasingly aggressive stance on avoidance year on year, then an investigation in (say) 3-4 years time into the above method will be challenged with the adopted HMRC mindset at the time it's investigated, not the time it was adopted.

[ASB]

eh? What about salary and the associated PAYE/NI for starters?

Depends on circumstance. Personally my non working spouse held a major shareholding. In the 100k example:-

Salary 2 x 5k. NI/TAX nill.
Gross profit = 90k. CT = 18k. Net = 72k
Dividends = 64k.

Higher rate tax nil. Retained earnings 8k - later extraction via ESC16 with no CGT.

Could have extract the 8k bringing 2k higher rate tax. Total tax paid in this scenarios would be 18k CT + 2k higher rate.

Extreme, possibly. But it was achievable. And won't be from March of course.

[ASB]

Well you originally implied they would get more tax from a permie than from a contractor which isn't necessarily true.

It wasn't my intention to imply that (though the top of my head example obviously gave that impression inadvertantly). It was only my intention to suggest that the difference may - in a lot of cases - be less marked.

It obviously depends on the individual circumstances, how tax efficient the contractor can potentially be.