Reply to: Sunday Times seeks case-study: why are you self-employed?

[DodgyAgent]

So, to sum up, has anyone contacted the OP?

Just asking, like.

I got some references out of him

[d000hg]

Yes but under the pseudonym PsychoCandy

[PerfectStorm]

It's always been my view that I'm generating VAT for collection. As an unpaid tax collector I don't benefit but HMG would be worse off without it if I was a permie.

Assuming you're on the flat rate scheme, you are a paid collector.

[Batcher]

Oh FFS... Someone at the bottom of the food chain pays the VAT.

It's always been my view that I'm generating VAT for collection. As an unpaid tax collector I don't benefit but HMG would be worse off without it if I was a permie.

[mudskipper]

I paid more tax last year than most of you invoiced.

Thank you - it's appreciated.

[MarillionFan]

Oh FFS... Someone at the bottom of the food chain pays the VAT.

Are you saying that you're a bottom feeder?

[malvolio]

VAT doesn't count. You invoiced it, clientco claimed it. Are you the Starbucks CEO?

Oh FFS... Someone at the bottom of the food chain pays the VAT.

[PerfectStorm]

The whole tax avoidance thing is bollocks anyway. I did a blog a while back where I worked out how much tax I generated for HMRC compared to a permie on a comparable salary. With VAT, CT, PAYE and NICs on an average year, I paid a lot more a year than he did...

Edit: Found it...

Assume an individual with a not unreasonable potential income of £75k, either as salary or as net profits from their business. And, for the sake of argument, we’ll assume that none of that money is going to be ploughed back into the business for growth or protection against future gaps in earnings.

An employee would pay roughly 39% in tax and a company owner using the minimum salary and dividends option would pay a mere 26%. Clearly unfair chaps, come on, play the game.

But – and I think it’s quite a big but – look at the actual numbers. Against that income, the employee would pay £29,250 in tax. The company owner, however, would pay £32,625. That’s £33,75 more than the employee does.

Not sure that sounds right to me.

Using current (i.e. end of 2014) figures:

Income of 75K as permanent staff:
Income tax: £19627
National Insurance: £4731
Total taxes paid by employee: 24,358
Optionally you could include Employers NIC: £9252 (2015)

Based on a 235 working day year, a contractor on a day rate of £320 would take £75,000 a year not including VAT
Corporation tax: £11,765
Dividend tax: £4,595
Total tax paid by sole director: £16,360
And that's without lessening this figure via any expenses...

And as the above said, cost of VAT is reclaimed...

[MarillionFan]

How's the vat thing count as paying more tax? You collect, they reclaim.

I pay more (real) tax in £ than I did as a permie, and take home more too. Sounds like a win/win.

I paid more tax last year than most of you invoiced.

HMRC is like Ched Evans. They know they've raped you but they're not going to admit to it.

[Zero Liability]

How's the vat thing count as paying more tax? You collect, they reclaim.

I pay more (real) tax in £ than I did as a permie, and take home more too. Sounds like a win/win.

It does have some perks. I like the fact that you can control how much of your ltd's money goes to covering things like vacations or a pension pot, if any at all.

[mudskipper]

The whole tax avoidance thing is bollocks anyway. I did a blog a while back where I worked out how much tax I generated for HMRC compared to a permie on a comparable salary. With VAT, CT, PAYE and NICs on an average year, I paid a lot more a year than he did...

Edit: Found it...

How's the vat thing count as paying more tax? You collect, they reclaim.

I pay more (real) tax in £ : p than I did as a permie, and take home more too. Sounds like a win/win.

[Zero Liability]

yes I think if they added the granting of employment rights to those IR35 caught the whole situation might be different as currently the employers / agencies lose nothing if you are IR35 caught so tend to supply contracts and conditions that are a long way from reality.

If you wanted to build SME ltds chopping one man bands off at the knees by arbitarily taxing them based on opinion hardly seems sensible.

80% of my immediate family had a business so I started one too, I made good money and had freedom to work more or less how I wanted. I was very happy. I'm not so happy or paying as much tax now I'm a permie.

Sure, if they billed the end client - who they allege is your "employer" - with the ErNI, retrospectively forced the end client to grant all benefits granted to permies etc., it'd be much more equitable. It'd also go down in flames as the clients begin wising up to what is going on. Which is why it doesn't happen. There is nothing equitable about IR35 in its current form, and most media reporting on contractors is highly slanted. It is a highly deceptive ruse to collect more tax, mostly preying on contractors who don't have someone in the know to defend them and asking the end client misleading questions, in the hope that they will balls it up... which again, you won't find the media reporting on.

Alternatively, they could move away from archaic, anachronistic definitions of the employee/employer relationship, of which the sole purpose these days is to try and justify taxing some individuals more than others... in turn, to cover the profligacy of politicians who can't control their spending, in order to buy the next election, and who themselves engage in, shall we call it, "tax planning". Besides, even regarding the mythical £2bn they supposedly "protect", doesn't the government waste far in excess of this each year?

And the other thing is, the people who the trash papers like the Daily Mail are aiming to incense could likely just become contractors themselves, except I guess some of them are too thick to put two and two together. If it's so great, go ahead, leverage your skills (or acquire them), and join in! (or at least stop pretending an ISA or pension is not the exact same type of action)

Luckily, it is so costly to enforce relative to any prospective yields, and the evidentiary bar HMRC has to jump over is so high, that at present there are ways to shield against it. But not if the FLC becomes a reality in tandem with the agency reporting requirements.

If they really are that yield hungry, they could go after MNCs. Not saying that they should, and it would probably cause far more damage in the long term than any good it did in the short term (much like their crusade against contractors), but it'd strain credulity a little less.

[MarillionFan]

The whole tax avoidance thing is bollocks anyway. I did a blog a while back where I worked out how much tax I generated for HMRC compared to a permie on a comparable salary. With VAT, CT, PAYE and NICs on an average year, I paid a lot more a year than he did...

Edit: Found it...

VAT doesn't count. You invoiced it, clientco claimed it. Are you the Starbucks CEO?

[PerfectStorm]

http://forums.contractoruk.com/gener...ays-times.html

Damn, I want to see the article now

[malvolio]

The whole tax avoidance thing is bollocks anyway. I did a blog a while back where I worked out how much tax I generated for HMRC compared to a permie on a comparable salary. With VAT, CT, PAYE and NICs on an average year, I paid a lot more a year than he did...

Edit: Found it...