Deductions at source planned for 'controlling persons'

[Wanderer]

If you work for a company and are deemed to have a large amount of control over its running, you're going to have tax and NI deducted at source.

Squarely aimed at people like the student loans dude!

I can see their point. Imagine a director of a very large company setting up a PSC and having their remuneration paid into that which would allow them to structure their tax affairs much more efficiently than if they were paid PAYE. If all of the board of directors were in on the game then there wouldn't be anyone to block it either.....

Now you would think that IR35 would cover this situation, wouldn't you but maybe it doesn't. Of course this doesn't mean that IR35 is a failure or anything, noooo....

The tax and NI deductions will be the responsibility of the company as well and not the individual so bye bye PSC

Nice try, but I think you will find that it doesn't apply to most of us "micro businesses" as we don't employ more than 10 people or have a balance sheet of over 1.7m.

[LisaContractorUmbrella]

Of course, HMRC could simply conduct IR35 investigations on all the ones affected and collect a large chunk of tax back. Say 2400 people for an average of 5 years at what £30k a year including pens and interest? That's £360m. Not much I know, but still......

Or is that just too obvious?

There you go being logical again - this is HMR&C we're talking about here

[simondolan]

He then gets the perm job with a decent pension, and the Daily Mail have a story this time next year bemoaning the fact that the company has taken on 250 extra staff and given them massive pensions - all out of public funds!!!

Can't win really

Of course, HMRC could simply conduct IR35 investigations on all the ones affected and collect a large chunk of tax back. Say 2400 people for an average of 5 years at what £30k a year including pens and interest? That's £360m. Not much I know, but still......

Or is that just too obvious?

[Clare@InTouch]

Although HMRC are still yet to adequately define what a 'controlling person' is, I suspect that most of us will be able to pass the test. After all, even most Project Managers don't have any real control over budgets, strategy and staffing - the client deals with that.

And for the 2,400-odd who are caught, I imagine the conversation will go something like this;

HMRC: 'Person X is a disguised employee! Tax Him! TAX HIM!!!!'

Gov. Dept: 'Sorry X, HMRC now says you're an psuedo-employee and need to be taxed at 50% on your day rate of £500. We're not going to give you a pension, holidays, sick pay etc as you're not really an employee'.

Person X: 'Fine by me. By the way, did I tell you that my day rate has just gone up to £750? Just found out I have an additional business tax to pay. You either pay it, or make me a permie with a take home pay equivalent to my current day rate, or I walk away taking all my knowledge and skills with me'.

He then gets the perm job with a decent pension, and the Daily Mail have a story this time next year bemoaning the fact that the company has taken on 250 extra staff and given them massive pensions - all out of public funds!!!

Can't win really

[vince14]

Although HMRC are still yet to adequately define what a 'controlling person' is, I suspect that most of us will be able to pass the test. After all, even most Project Managers don't have any real control over budgets, strategy and staffing - the client deals with that.

And for the 2,400-odd who are caught, I imagine the conversation will go something like this;

HMRC: 'Person X is a disguised employee! Tax Him! TAX HIM!!!!'

Gov. Dept: 'Sorry X, HMRC now says you're an psuedo-employee and need to be put on the payroll. You'll get a pension, holidays, sick pay etc as you're now legitimate'.

Person X: 'Fine by me. By the way, did I tell you that I'll only accept a pay packet which keeps my take home pay the same as my current day rate? You either pay it or I walk away taking all my knowledge and skills with me'.

Gov. Dept: 'Oh Noes! We can't lose you - you know how it all works! Here, have a salary of £250,000'.

[malvolio]

Any chance of doing a summary or giving us a clue rather than just a link?

www.pcg.org.uk.

Two articles, one on this idiotic and financially incompetent proposal and one on why it's not needed if Whitehall stopped trying to break its own rules. Both make interesting reading.

[LisaContractorUmbrella]

The tax and NI deductions will be the responsibility of the company as well and not the individual so bye bye PSC

[Clare@InTouch]

If you work for a company and are deemed to have a large amount of control over its running, you're going to have tax and NI deducted at source.

It doesn't apply to smaller businesses, those with under 10 employees and a balance sheet under £1.7m.

Squarely aimed at people like the student loans dude!

[northernladuk]

Any chance of doing a summary or giving us a clue rather than just a link?

[Alan @ BroomeAffinity]

Deductions at source planned for 'controlling persons' | AccountingWEB