Reply to: Labour cosying up to contractors

[jamesbrown]

I thought HMRC's estimates put PSCs at 200k? Or are they way off? That's what I'm asking.

I assume this is an estimate of the number of freelancers in the UK and hence an upper limit on the potential adoption of this new structure, not the number of Ltd companies with a single director (if that's what you mean by PSC). There's no legal definition of a PSC, so it's speculative how many might exist, but I think the evidence to the Select Committee (from HMRC) mooted 200k.

[tractor]

Why? Seriously - 1.75 million at most, average profits around £50k each, add 40% to CT rates and they take in a whole £35m a year extra. And piss off 1.75 million voters. Not forgetting it's not about tax income per se, it's about preventing artificial avoidance.

The objective is not about taxation, it's about opportunity and lack of interference.

Utter tosh!

IR35 was never, ever supposed to be a taxation measure; it was meant specifically as a deterrent and to a degree it worked but only insofar as it deterred some. Yes, there are many contractors who declare themselves inside and go brolly but many contractors didn't even (still don't) know IR35 existed much less how it worked. Many accountants can't even help because they don't understand employment law and all the other areas that are involved and some are positively dangerous in their advice. IR35 had no hope of catching those nor the belligerents who say 'The chance of me being investigated is so small it's not worth worrying about' and ignore it completely.

So in some measure, it worked. However it didn't solve the problem as far as HMG and HMRC see it, they want as many of us back in permiedom as they can get. The only way they can seriously hope to do that is by encouragement (coercion) and I suspect their aim with all this is to categorise us where the law is unable to by offering us a 'new vehicle' which they can then manipulate into a broadly neutral tax position, making it marginal whether we put up with the hassle of owning a company with minimal benefits.

You have to remember that our industry still works largely on the BoS model it always did, nothing has changed there, so those who sub contract and regularly substitute are in a very small minority. Those are the only ones that will benefit from this new vehicle that Labour and IPSE are promoting.

So that part of the Labour proposal is of no interest to me whatsoever and any organisation purporting to represent me in supporting the matter are entirely wrong. I am not self-employed. I don't want another company vehicle. I own a company and that is the way it will stay.

And piss off 1.75 million voters. Who are you trying to kid? They really cared about that when they introduced IR35 didn't they LOL. Do you really believe the stuff that you type? Or do you really think Labour have changed?

Edit:

Oh and I almost forgot, about this 'artificial avoidance' claim. You have to remember that the reason we use this business model stems from the '70's when we were railroaded into it to separate us from self-employed plumbers and decorators who routinely paid nothing into the system. Our model is an unintended consequence brought about by poor legislation on top of poor legislation.

They have had 45 years since then to tidy it up and make it fit for purpose. But they and now you, declare that we are artificially avoiding tax.

[Zero Liability]

I thought HMRC's estimates put PSCs at 200k? Or are they way off? That's what I'm asking.

[jamesbrown]

Just out of curiosity, what does the 1.75m figure relate to specifically?

1.75m companies * 50k average profit * 40% additional CT = 35m p.a. additional CT.

[Zero Liability]

Just out of curiosity, what does the 1.75m figure relate to specifically?

[malvolio]

Until we all get taken in by their sincerity and progressiveness, then they introduce a new 60% CT rate for these new 'corporate vehicles'

No thanks.

Why? Seriously - 1.75 million at most, average profits around £50k each, add 40% to CT rates and they take in a whole £35m a year extra. And piss off 1.75 million voters. Not forgetting it's not about tax income per se, it's about preventing artificial avoidance.

The objective is not about taxation, it's about opportunity and lack of interference.

[Zero Liability]

I find it very hard indeed to believe any of that. To Labour the idea of being an independent freelancer is completely anathema - these are the people that perceive us as scabs and tax evaders.

Well, it cuts both ways - they're manufacturers of dependence and tax leeches, when they aren't evading taxes themselves. However, they haven't got the luxury of a clear-cut majority and I think (and hope) their Lib-dem buddies are crippled as far as the next GE goes. They are the party of champagne socialism, like tractor put it.

I don't think being left wing and pro union is at all irreconcilable with contracting.

It is, if you think employment rights that the "labourer" or "worker" can't surrender in exchange for operating with a lower tax burden, as a business. To be fair, if I were them, I'd be trying to tackle it from the vantage point of the discrepancy between NIC/PAYE, but then knowing Labour (or the Tories, or lib dems), the next step would be to hike up taxes, because "obviously" spending can't be cut (and if they do cut it, they'll start with vital services the govt has monopolised, to make the point that they "can't" be cut.)

They're irreconcilable as far as Labour's agenda goes, but then as a political party, consistency isn't going to be their strong point and "pragmatism" wins the day.

If Labour wins and subject to a number of other "if" statements sufficient to make an Excel spreadsheet blow up, they deliver on such a promise, maybe it'll lead to a marked improvement over IR35, but I think they realise it is ineffective and will instead seek other, subtler ways to get contractors to pay up what they want. Nor does it inspire any desire in me to see them win, particularly since there's no reason to think much else of what they do would be positive. It's just a lot less worse than what I thought they might have in mind, unless further details emerge to prove me wrong on that. Methinks that there's little scope to argue that IR35 is cost-efficient, effective or fair (the HoL review did not do much to vindicate it, at all), or that the boost in self-employment is largely down to people being 'forced' to go into it, so they're changing their tack, to find other ways to resolve this little problem.

They need to fight zero hours contracts without pissing off their big business friends'.

Could be that too. Not to mention that the public sector itself relies more heavily on freelancers these days.

[tractor]

...

I find it very hard indeed to believe any of that. To Labour the idea of being an independent freelancer is completely anathema - these are the people that perceive us as scabs and tax evaders.

While their members, leader and ex-leaders all run limiteds for their private jobs, speaking engagements and so on and Blair logs down half a million a year admin costs and doesn't know what they are. Firmly 'Do as I say ...' , merchants.

It's like getting into a bed of vipers, getting in with that lot.

FFS.

[vwdan]

I find it very hard indeed to believe any of that. To Labour the idea of being an independent freelancer is completely anathema - these are the people that perceive us as scabs and tax evaders.

I don't think being left wing and pro union is at all irreconcilable with contracting.

[RasputinDude]

I find it very hard indeed to believe any of that. To Labour the idea of being an independent freelancer is completely anathema - these are the people that perceive us as scabs and tax evaders.

[jamesbrown]

The IR35 HMRC business rules which gives you points for concurrent clients...

The point is that it has very little bearing in terms of IR35 case law (this applies to the BETs more generally), so it's very odd to single this out. It has no practical significance at present and would continue to have no practical significance.

Edit: come to think of it, I don't recall that this factors in the BETs either!

[eek]

didn't think to come here and ask what CUK thought.

That's probably for the best really... Can you imagine what a manifesto written in general would contain....

[Zero Liability]

Until we all get taken in by their sincerity and progressiveness, then they introduce a new 60% CT rate for these new 'corporate vehicles'

No thanks.

Yes, I wouldn't waste a vote on them, but it's a reversal of their previous attitude on the face of it. Unless this is what they mean by 'scrutinising'. It could just be a backhanded way of ridding of IR35 which is blatantly unfit for purpose, and finding another way to rake in contractor income. Or they could just be vote hungry, as the polls show a very slim lead over the Tories and Milliband is an unpopular twat.

Still, if they're poised to potentially win, it's worth keeping an eye on them.

[TheFaQQer]

Someone has copied IPSE's manifesto. Or vice versa

The acknowledgements section says thanks to the PCG (now IPSE), so there will have been some work on that.

They thank shout99.com but didn't think to come here and ask what CUK thought.

[eek]

Eh? As opposed to...?

The IR35 HMRC business rules which gives you points for concurrent clients...