Reply to: Victory is close on IR35 - happy days

[Old Greg]

IPSE is a bunch of incompetent liars that try to secure their income by spreading rumours. Boycott them.

At least they're not a bunch of competent liars that try to secure their income by spreading rumours.

[MasterBait]

IPSE is a bunch of incompetent liars that try to secure their income by spreading rumours. Boycott them.

[SimonMac]

This is a trap that will cause collapse of the economy in the not so long term. You cannot tax yourself into prosperity.

It's nothing to do with prosperity, it's taxing our wayout of the tulip

[elsergiovolador]

Next budget will have legendary tax increases - most likely it won’t matter how income earned - will be taxed the same

This is a trap that will cause collapse of the economy in the not so long term. You cannot tax yourself into prosperity.

[Old Greg]

The other difference that the Irish model makes is that you're not always looking over your shoulder at IR35.

7 weeks ago, I was working on a project as a PM. I'm now working as something like a product owner and design lead for a new Covid 19 related project. No worrying about SoW etc. And I don't get pulled into BAU work any more than I would in the UK.

[Old Greg]

Right, as I said, the question of legitimate business expenses needs to go beyond travel to capital and human resources and, as a minimum, it should be possible to get relief within year. Sure, across years is trickier, but I think we're talking about a minority of a minority and perhaps that could be mitigated too (if there is no tax advantage of "money boxing" there is probably no reason to prevent it completely).

Treatment of other business expenses are very similar in Ireland as with UK. Only real difference in effect is private transport for commute to regular client site.

So if MyCo buys a laptop for €1,000 + VAT, it just reclaims the VAT, and then I deduct 1,000 from my pre-tax salary for the month. Similar enough to UK. Likewise if I employ someone. I do buy another contractor Ltd's services each month and sell them on - all same as UK but we have a friendly agreement to keep things tight around year end.

[jamesbrown]

It is a weak-ish argument but not irrelevant. Where I would agree with Mal, if I understand his intent correctly, is that this isn't about warchests, but people who want (for example) to establish company cash reserves so they can expand, perhaps by taking on an employee who will need paying at the end of every month before the company is paid. In Ireland, this is easy enough to do in year but is a pain if you want to build up cash reserves across tax years.

However, I would say this disadvantage is outweighed by the advantages. And it could work perfectly well with the 25 month rule.

Right, as I said, the question of legitimate business expenses needs to go beyond travel to capital and human resources and, as a minimum, it should be possible to get relief within year. Sure, across years is trickier, but I think we're talking about a minority of a minority and perhaps that could be mitigated too (if there is no tax advantage of "money boxing" there is probably no reason to prevent it completely).

[d000hg]

Next budget will have legendary tax increases - most likely it won’t matter how income earned - will be taxed the same

Maybe the one after that... cranking up tax while everyone is still reeling won't help much. Might get a year to recover first.

[AtW]

Next budget will have legendary tax increases - most likely it won’t matter how income earned - will be taxed the same

[Old Greg]

Personally, I find that to be a weak argument. Whether a warchest is in a company account or a personal one is largely irrelevant. Obviously, the size of that warchest does depend on cumulative taxation over a period of time, but I think we can separate tax rates from tax structures. I would not advocate high taxation of employees or the self-employed (in the broadest sense of that term). I agree that business expenses are an issue, though, and that needs to be dealt with, not only for travel but capital and human resources for companies that do want to grow.

It is a weak-ish argument but not irrelevant. Where I would agree with Mal, if I understand his intent correctly, is that this isn't about warchests, but people who want (for example) to establish company cash reserves so they can expand, perhaps by taking on an employee who will need paying at the end of every month before the company is paid. In Ireland, this is easy enough to do in year but is a pain if you want to build up cash reserves across tax years.

However, I would say this disadvantage is outweighed by the advantages. And it could work perfectly well with the 25 month rule.

[Old Greg]

Starmer and fairness are not easy bedfellows. Look at his history.

However, two issues in that model, ignoring any "interesting" interpretations : travel is not tax deductible for journeys to your place of work, and HMG are not going to change that for 30-odd million employees, and it legislates against you trying to grow your business (some people want to do that, oddly enough) or reserving untaxed gross for bench time and sickness. Levelling out your income is a major benefit of the current LtdCo model

The legislating against business growth is the main disadvantage. No system is perfect. But look where you're going to end up with current trajectory.

[b0redom]

Personally, I find that to be a weak argument. Whether a warchest is in a company account or a personal one is largely irrelevant. Obviously, the size of that warchest does depend on cumulative taxation over a period of time, but I think we can separate tax rates from tax structures. I would not advocate high taxation of employees or the self-employed (in the broadest sense of that term). I agree that business expenses are an issue, though, and that needs to be dealt with, not only for travel but capital and human resources for companies that do want to grow.

This. I have a chunk in personal cash, a B2L and also a stocks and shares ISA I've got a bit in the company. If the brown stuff hit the fan I initially woudln't give a stuff where the money was as long as I could get my mitts on it, I certainly wouldn't want to be worrying about ER + MVL in order to get money out in a tax efficient way.

[jamesbrown]

it legislates against you trying to grow your business (some people want to do that, oddly enough) or reserving untaxed gross for bench time and sickness. Levelling out your income is a major benefit of the current LtdCo model

Personally, I find that to be a weak argument. Whether a warchest is in a company account or a personal one is largely irrelevant. Obviously, the size of that warchest does depend on cumulative taxation over a period of time, but I think we can separate tax rates from tax structures. I would not advocate high taxation of employees or the self-employed (in the broadest sense of that term). I agree that business expenses are an issue, though, and that needs to be dealt with, not only for travel but capital and human resources for companies that do want to grow.

[malvolio]

Agreed. But the travel expenses are not an intrinsic part of the Irish system. Ireland just has a different view of what travel is tax deductible, and takes this view within the context of public transport being tax deductible for all employees. IMO the Irish model of sole trader / proprietary direct NIC class and divis taxed as income would work perfectly well alongside the 24 month rule.

It's the kind of think that Keir Starmer should get behind to present a tax fairness / backing the self-employed image. He could even make an eco-friendly version of this which reduced the mileage rate for private vehicles for 24 month rule commuting.

Starmer and fairness are not easy bedfellows. Look at his history.

However, two issues in that model, ignoring any "interesting" interpretations : travel is not tax deductible for journeys to your place of work, and HMG are not going to change that for 30-odd million employees, and it legislates against you trying to grow your business (some people want to do that, oddly enough) or reserving untaxed gross for bench time and sickness. Levelling out your income is a major benefit of the current LtdCo model

[Old Greg]

Interesting. Of those, I think the major issue there, in the UK context, would be taxation of travel expenses. Absent that, it would make many contracts in the regions nonviable. There's a strong argument to do something on that vs. employees in order to maintain a flexible labour market.

Agreed. But the travel expenses are not an intrinsic part of the Irish system. Ireland just has a different view of what travel is tax deductible, and takes this view within the context of public transport being tax deductible for all employees. IMO the Irish model of sole trader / proprietary direct NIC class and divis taxed as income would work perfectly well alongside the 24 month rule.

It's the kind of think that Keir Starmer should get behind to present a tax fairness / backing the self-employed image. He could even make an eco-friendly version of this which reduced the mileage rate for private vehicles for 24 month rule commuting.