IR 35 Contractor vs Permie Vs Business

[BlasterBates]

Having explored some German / European opportunities I think atleast Germans have a separate category.

No it´s no different in Germany, even freiberuflers can be disguised employees.

The main difference is that social security is not a tax, but the fact that the officials work in a different office is little comfort. One saving grace is that generally self-employed disguised employees don´t pay fines or penalties if caught, they just pay the social security they "should have paid" (or not depending on your view).

There are no European countries I´m aware of that easily allow you to avoid Social Insurance. In Switzerland virtually all contractors pay it and they´re very strict, Luxembourg was the same.

If anything I would say Britain probably is probably the most liberal in allowing you to avoid it, though marks to Germany for not prosecuting freelancers.

[GB9]

Does IR35 still exist?

According to Margaret Hodge (millionaire socialist) we are all tax dodging permies who are morally reprehensible and should pay our fair share. IR35 is not required.

Strangely she seems to have developed this attitude further since she lost power, having done little about this whilst in Government.

[northernladuk]

Now THIS sockie is more like it!

[martinluther]

Wrong views, though. IR35 hasn't changed since day one, nor has the case law. The BETs are a nonsense, as you have noticed, and the Alexander review is political posturing and a demonstration of incompetence, lack of knowledge of exsiting laws and a total failure to realise that it's is the clients that create the problem, not the worker: if the clients didn't deliberately take on disguised employees we wouldn't need IR35.

Nor is IR35 going away until someone at Westminster realises that the freelance sector earns £24bn a year for UK PLC despite HMG's best efforts and probably a lot more if they could just get on with it. Meanwhile all we can do is try to ensure HMRC are pointed at the non-businesses and leave us genuine freelances alone.

I dont think BET is nonsense, infact I think BET are correct, but then government must abolish IR35 because as long as IR35 stays, it would always be tied back to its own history and case laws. Instead government should have 3 tiers.

a. Ltd companies only for Business passing BET, where all the nonsensical stuff like substitution clause should be removed. Let them increase the capital requirement to atleast 10K or 20K, so that frivolous LTDs are restricted. A 20 dollar Ltd is ridiculous overhead on government to monitor and its all paid by taxpayers.
b. Genuine Contractor, Freelancing taxed at 20 to 30 percent to account for the real income risk that contractors run. This will also help government to save cost on employment tribunals etc. All employment rights should cease for contractors opting for 20%-30% tax regime. This should also then discourage sham arrangements. It can be administered by explicitly forfeiting the employment rights for the contractors.
c. And then proper employment.

You are right though. Its not going to happen. Too many vested and corrupt influence on Government and HMRC.

[malvolio]

Maybe HMRC has been too busy with the lobby groups which like Turkeys cant be voting for Christmas, hence we now have even more stupid IR35.

My views.

Wrong views, though. IR35 hasn't changed since day one, nor has the case law. The BETs are a nonsense, as you have noticed, and the Alexander review is political posturing and a demonstration of incompetence, lack of knowledge of exsiting laws and a total failure to realise that it's is the clients that create the problem, not the worker: if the clients didn't deliberately take on disguised employees we wouldn't need IR35.

Nor is IR35 going away until someone at Westminster realises that the freelance sector earns £24bn a year for UK PLC despite HMG's best efforts and probably a lot more if they could just get on with it. Meanwhile all we can do is try to ensure HMRC are pointed at the non-businesses and leave us genuine freelances alone.

[martinluther]

They are after their tax money.

I don't know the case in question but if theoretically you could run a business of 50 people but then personally take a contract on where you act and are treated like a permie, so should be paid as a permie. Devil is in the details.

The case is listed in HMRC website. ....... "but if theoretically" is exactly that, all theory devoid of any truth in practical world.

Also this "contract to contract basis" is almost completely contradicted by the business entity test, as most of the tests listed in it ( The ones that make a business low risk) can only be assessed over multiple contract. I think this business entity test is probably more correct reflection of a true business but they should remove this contract specific tests such as "Substitution clause", but rather rely more on actual effort to run and grow the businesses. What muddies the water is the case studies and the case histories.

On the whole NLUK, I think the problem seem to be that of failure of HMRC to recognise the third reality, existence of a freelancer, which is not fully a proper business nor an employee. Hence this confusion. Having explored some German / European opportunities I think atleast Germans have a separate category.

Maybe HMRC has been too busy with the lobby groups which like Turkeys cant be voting for Christmas, hence we now have even more stupid IR35.

My views.

[nomadd]

I know... I couldn't resist and realised halfway though but in for a penny in for a pound hey.

We wouldn't have you any other way.

[northernladuk]

Yes, I think it is.

Still, 10/10 for effort.

I know... I couldn't resist and realised halfway though but in for a penny in for a pound hey.

[nomadd]

I can't even begin to explain all that.....

You seriously need to try get it.. It's not hard. 15 years ago it was pretty black and white and the days of proper contracting but times have changed and you have to change with it else you will be up to your neck. It isn't just how you handle yourself it is the change in how the clients perceive you that you have to keep on top of. Many clients just see it is the normal way to resource now so you better learn what it is about quick to keep yourself out of it.

That you are not masquerading as a contractor to get access to the tax advantages when really you are a permie and should be taxed as one. They are after their tax money.



I don't know where to start with this one Forget temps.. try not to compare that. Different kettle of fish and you will complicate matters. They are trying to find out if you are a permie that is pretending to be a proper business and avoid tax. Your last sentence sums it up.



Because your working practices may deem it so. So many people come on here and want to change the way they are paid from permie to LTD because they get to keep more but keep doing the same job. If we all did that HMRC would lose a packet. So there job is to prove you are a permie.



That is a bit of a throwaway statement. There must be reasons. It is on a contract by contract basis. I don't know the case in question but if theoretically you could run a business of 50 people but then personally take a contract on where you act and are treated like a permie, so should be paid as a permie. Devil is in the details.



It's you that is drunk. How can you call something a pile of... when you don't have a grasp of the reason it exists let alone the complexities of it.

But this is yet another sockie isn't it.

Yes, I think it is.

Still, 10/10 for effort.

[Malcolm Buggeridge]

But this is yet another sockie isn't it.

Hi BP

You willun!

[northernladuk]

But this is yet another sockie isn't it.

[northernladuk]

I am really confused what does the HMRC want to prove?

That you are not masquerading as a contractor to get access to the tax advantages when really you are a permie and should be taxed as one. They are after their tax money.

Does it want to prove that someone is Permie disguising as a contractor or is it trying to prove someone is Temp/Permie posing as contractor. I have been contracting for over 15 years and have not quite understood this. Temp is more or less same thing as contracting? Or Temp is Employment and Contracting is Business.

I don't know where to start with this one Forget temps.. try not to compare that. Different kettle of fish and you will complicate matters. They are trying to find out if you are a permie that is pretending to be a proper business and avoid tax. Your last sentence sums it up.

One more thing I cant understand if a contractor is not protected by employment rights, how can then HMRC turnaround and claim otherwise.

Because your working practices may deem it so. So many people come on here and want to change the way they are paid from permie to LTD because they get to keep more but keep doing the same job. If we all did that HMRC would lose a packet. So there job is to prove you are a permie.

WTF....it seems so complicated. Reading through the case law, apparently you can still be IR35 in, even if you employ 50 people (that is kind of ridiculous for HMRC to claim in its case study).

That is a bit of a throwaway statement. There must be reasons. It is on a contract by contract basis. I don't know the case in question but if theoretically you could run a business of 50 people but then personally take a contract on where you act and are treated like a permie, so should be paid as a permie. Devil is in the details.

It it just me drunk on Friday evening or IR35 is still that same pile of ......

It's you that is drunk. How can you call something a pile of... when you don't have a grasp of the reason it exists let alone the complexities of it.

[northernladuk]

You seriously need to try get it.. It's not hard. 15 years ago it was pretty black and white and the days of proper contracting but times have changed and you have to change with it else you will be up to your neck. It isn't just how you handle yourself it is the change in how the clients perceive you that you have to keep on top of. Many clients just see it is the normal way to resource now so you better learn what it is about quick to keep yourself out of it.

I can't even begin to explain all that.....

[adubya]

This is why IT35 is a crock.

[martinluther]

I am really confused what does the HMRC want to prove?

Does it want to prove that someone is Permie disguising as a contractor or is it trying to prove someone is Temp/Permie posing as contractor. I have been contracting for over 15 years and have not quite understood this. Temp is more or less same thing as contracting? Or Temp is Employment and Contracting is Business.

One more thing I cant understand if a contractor is not protected by employment rights, how can then HMRC turnaround and claim otherwise.

WTF....it seems so complicated. Reading through the case law, apparently you can still be IR35 in, even if you employ 50 people (that is kind of ridiculous for HMRC to claim in its case study).

It it just me drunk on Friday evening or IR35 is still that same pile of ......