Reply to: Rally to abolish IR35

[Steven@Parasol]

I propose to create a collective petition to Osborne briefly explaining our view on IR35 - which I believe should distinguish IT contractors from disguised employees.

Anyone? Malvolio perhaps?

I believe there was a website where you can file public petition. number10downingstreet or something.

C'mon! lets rally! Screw working class! Freedom to middle class! Abolish unions! Free cheese to mice!

There has been a lot of IR35 action already on the new Govt website asking which laws should be reviewed/removed etc.

A good opportunity for all involved, be it contractors via or in addition to PCG action, forum members, and service providers individually and as part of the FCSA, to have a say.

The PCG has about 20,000 members and the FCSA represents the interests of service providers who currently look after 50,000 contractors. That's a hell of a lot of contractors that could be mobilized to demonstrate just how unclear and in need of a thorough review the IR35 legislation actually is.

I would guess that it impacts on far more people then most of the laws contributors will be flagging up!

End IR35 immediately — HMG - Your Freedom

[northernladuk]

I am my own boss.

My company decides it's direction and strategy. With strategy in place it works out how to achieve that strategy (enter new markets, training, capital expenditure etc).

It might sound daft to you, but it's a mindset and a way of life to me.

I look anyone and everyone in the eye when I hand out my Ltd company business card.

Looking at the audience posting in this thread I don't see this as daft at all. This is they way it appears we all work, just engaged in an interesting discussion. The ones my points are aimed at are the one post numpties we seem to be knee deep in here at the moment, some of which have been contracting awhile and still haven't, and I expect, won't understand the difference.

[thunderlizard]

As with Malvolio and Cojak, plus you are in theory at least able to grow the business and make some profit (though it's darn tricky if an agency is in on the deal).

[cojak]

I am my own boss.

My company decides it's direction and strategy. With strategy in place it works out how to achieve that strategy (enter new markets, training, capital expenditure etc).

It might sound daft to you, but it's a mindset and a way of life to me.

I look anyone and everyone in the eye when I hand out my Ltd company business card.

[malvolio]

Ask yourself this: If you could engage in the exact same tax avoidance strategies working through a brolly or a LTD, which one would you choose?

What are the advantages of running a LTD other than tax avoidance?

Assuming that's a serious question...

I work for myself, I set my own rules and conditions, I am in total control of my income and expenses, I can plan what to do with my money free of any other organsiation's rules and I have a degree of protection against liability claims. I get more flexible pension planning and I can't be sacked or embuggered by someone changing the rules behind me. And I don't need anyone's permission to do things.

I freelance because I don't want a boss nor to be an FTE. It's nothing to do with money or net income, and I could almost certainly get more as a permie at my level.

And anyway, I'm not indulging in any tax avoidance strategies. I pay all taxes due on my gross income in full accordance with the law. What, exactly, do you think I'm avoiding?

HTH

[Wanderer]

It's about time we stopped assuming that a Ltd Co with one worker is some kind of tax dodge. It isn't.

Ask yourself this: If you could engage in the exact same tax avoidance strategies working through a brolly or a LTD, which one would you choose?

What are the advantages of running a LTD other than tax avoidance?

[northernladuk]

It's about time we stopped assuming that a Ltd Co with one worker is some kind of tax dodge. It isn't.

Am in agreement with these points and not wishing to fight but with my devils advocate hat on I would say in a decent number of cases it is. As much as we don't like all this there is does have to be said there is a large area where people are not seeing themselves or understand how to work as a business and don't understand any further than trying to fudge a contract to 'look' out of IR35 and thats it. It doesn't do those that are many favours and incurs this type of attention.

Maybe it is just an opinion but in these cases hiding behind a LTD and IR35 fudged contract IS a tax dodge.

I totally agree it is wrong to assume and then penalise of that false assumption though.

Have I just stated something we all understand and was a waste of time to bring up again ?

[malvolio]

I will live with that argument when

a) you can define a break point at which a company owner can move from being penalised for taking entirely legal dividends as a reward for his efforts,

b) you can define exactly why I should not operate a UK limited company that supplies my services to a range of clients and allows me to work seven months a year - my average working days over the last 15 years - without having to sell the house every three months

c) you can define why Philp Green can legally take a £1.2bn dividend out of a company that just posted a £700m net profit, and pay no tax on it at all.

It's about time we stopped assuming that a Ltd Co with one worker is some kind of tax dodge. It isn't.

[philip@wellwoodhoyle]

My position entirely. I have learned to live with IR35 and I wish that nobody had kicked up such a big fuss over it to be honest. IR35 compliant businesses are going to be worse off under son of IR35, I'm sure.

That's my worry for sure. There's no doubt that IR35 was fundamentally flawed and had anyone in power possessed a brain cell, would never have been brought in. BUT, the fact is that there is an inequality and arguably unfair benefit for those running a limited company, whether or not they be contractors. At the moment, the low salary:high dividend route makes ANY business trading through a limited company a lot better off than a business operated as a sole trader or partnership, mostly because of the avoidance of NICs. On top of that is the possibility to divert income to spouses to use their personal allowance and BR band which is again a lot easier to do for a limited company than for a sole trader or partnership. The new government are committed to "replacing" IR35 with something fairer and more easily understood - that doesn't mean getting rid of it. At the very least, the "tax" (including NICs etc) should be made more comparable between limited companies and sole traders/partnerships which means some form of tax increase for all limited companies operating the low salary:high dividend strategy. I think its certainly going to apply to all limited companies, to make it fair, so it's not going to be as bad as IR35 but somehow they're going to find a way to get another, say, 10% out of those taking low salaries. There are many possibilities - bringing back ACT (and at a higher rate) on dividends, investment income surcharge, bring back close company apportionment, or even the nuclear option of finding a way to charge NIC on company profits rather than salary for director/shareholders. I don't see the son of IR35 to be simply a watered down version still purporting to only affect the same groups of people originally targetted by IR35.

[Fred Bloggs]

First though....

Persuade me that "something" needs to be done in the first place. I run a legitimate UK Limited company, providing a service to a range of clients. Why can't I simply be allowed to get on with it?

My position entirely. I have learned to live with IR35 and I wish that nobody had kicked up such a big fuss over it to be honest. IR35 compliant businesses are going to be worse off under son of IR35, I'm sure.

[thunderlizard]

What happens if you get a client who wants you to do desktop support on a shift basis 100% of the time for the next 2 years

Capita does a lot of that without being worried about IR35.

[malvolio]

You can.

What happens if you get a client who wants you to do desktop support on a shift basis 100% of the time for the next 2 years?

Because that what a lot of contractors do...

And that proves what? That the contractor is happy to swap a consistent income stream for some illusion of freedom? Does it matter how he provides that service to the guy with the cheque book? What is he doing that disadvantages anyone at all - he is presumably getting a decent screw for his work, his client has no need to provide a raft of extra services and benefits. The only person losing out is the taxman, but only if you assume that x hours effort by a worker under any circumstances has to equate to £y income to the Exchequer. And that is not a supportable proposition.

[Moscow Mule]

First though....

Persuade me that "something" needs to be done in the first place. I run a legitimate UK Limited company, providing a service to a range of clients. Why can't I simply be allowed to get on with it?

You can.

What happens if you get a client who wants you to do desktop support on a shift basis 100% of the time for the next 2 years?

Because that what a lot of contractors do...

[thunderlizard]

It's unfair, unclear and doesn't even do the job it was designed for. Time to offer a solution.
Option 1 - 2 year rule, as for expenses, after 2 years your are perm and you know you are - cough.
Option 2 - 20% expenses, cough on the rest. Perm benefits are worth at least 25-50% on top of salary, this evens things a little but is still very generous from us.
Simples.

If those rules applied to all companies, rather than just small ones, that would be fine by me.

[malvolio]

First though....

Persuade me that "something" needs to be done in the first place. I run a legitimate UK Limited company, providing a service to a range of clients. Why can't I simply be allowed to get on with it?