Reply to: HMRC's obsession with contractors

[threaded]

Carousel fraud is just another Emmanuel Goldstein. The Customs and Excise do not repay any VAT where they suspect carousel fraud, so they actually make money out of it. They've caused more than a few legitimate companies into liquidation because they've disrupted their cash flow.

The number of cases of proven carousel fraud can be counted on one hand.

The big joke is that in carousel fraud, chummy is selling on the parts and pocketing a proportion of the VAT, so it is the legitimate businesses at the end of the chain that lose, not the Customs and Excise!

Customs and Excise lose money only in that parallel universe of the Sun reader and Android Accountancy.

It is, in actuality, but another example of the taxation system being used to aid the big boys by stamping out their upstart competitors.

[NotAllThere]

History repeats itself. It has to, because no-one listens. - S. Turner

It was licensing that was used in the US to criminalise heroin. The federal government passed a law saying that you couldn't sell or manufacture heroin without a federal license. Then proceeded to not issue any licenses.

[OwlHoot]

I'll keep it brief (for me, that is).

I don't think HMRC are so much obsessed with contractors but with what they deem as 'unfair' tax avoidance in general.

It's true they have an infantile obsession with "fairness", but they do also hate self-emploment on principle, because for the purpose of tax collection they see it as inefficient and troublesome and more prone to tax evasion.

In their tidy little minds, all employment would be ideally through a couple of hundred large companies whose directors could be held to account, and those companies would have a couple of dozen subsidiaries answerable to the holding company etc, in other words a pyramid of responsibility (the same way a medieval sovereign collected tax, with a couple of hundred barons, each responsible for collecting revenue from their couple of hundred squires, who would each extract their dues from a couple of hundred peasants).

As people have said on here already, NL are determined to generate new means of tax revenues as they possibly can to pay for all their meddling interventions. Contractors are one of many targets, only we feel it worst because it affects us directly. But we've also seen news reports of old age pensioners being stung for extra taxation they were least expecting, despite being on a fixed income already and now their latest brainwave is to try to raise a levvy on cigarette smoking by charging a annual £10 smoking license to purchase cigarettes. If that is allowed to happen, god knows what else they will license on what are already legal activities. Coffee perhaps? Plenty of people drink that now, particularly now that the coffee revolution is upon us and we drink better quality coffee. But don't forget it's high in caffeine and can cause palpatations and possibly heart damage for some and be a drain on the NHS eventually. So I expect it's only a matter of time before that requires a license or attracts a tax levvy too.

Alcohol will be next thing firmly on our lord and master's radar screen. As I predicted long ago, I expect that, in time, people will no longer be able to pay for alcohol by cash or credit card in shops, off licenses or pubs and clubs. Instead, they will have to apply for a drinking licence to acquire alcohol permit cards for over 18s (a bit like the Oyster card and ID card all rolled in one) and drinkers will be able to top them up with cash like phone cards, but the card will have a unit limitation device embedded in them restricting the number of units a person can purchase in a week. Once the permitted number of units per week are used up, they won't be able to buy it at all unless they get some it from stores they had already or they scrounge it off someone else.

Exactly, I've been saying this for years - and ID cards are a no-brainer for rationing (or mandating where unpopular) and taxing practically every commodity. They're a wet dream come true for health nazis.

P.S. I wonder how long it'll be before brewing your own beer or wine will be made illegal. Curious how few people seem to do this, considering how expensive commercial alcoholic drinks are becoming.

[Denny]

Wonder if history would repeat it self, and we get a Robin Hood to fight and stand up against the tax man.

Oh wait, people had a chance to get rid of NL, but some how they voted NL again

That's because the Tories have never re-gained their lost ground and they are coming up with policies too similar to NLs. I wouldn't want to see the return of another Thatcher though, as she did irreperable damage to Britain's manufacturing industry and which NL has capitalised on ever since taking office. I just wish we had a government that was capable assessing the complexities of peoples' lives instead of coming up with over simplistic and unworkable policies such as the ones we're immediately affected by with IR35, Income Shifting and so on.

[SandyDown]

Wonder if history would repeat it self, and we get a Robin Hood to fight and stand up against the tax man.

Oh wait, people had a chance to get rid of NL, but some how they voted NL again

[Denny]

She's composing a contribution to this thread. Currently on page 7, so there's a while to go yet.

I'll keep it brief (for me, that is).

I don't think HMRC are so much obsessed with contractors but with what they deem as 'unfair' tax avoidance in general. They are putting plenty of measures in place to hit all kinds of business structures, including income shifting, which has received quite a lot of attention recently due to the unworkable proposals they have in mind. Income shifting isn't just about owner managed contractors, as you may well know, it hits all kinds of partnership style businesses, irrespective of size and number of employees and so on.

It's easy to get paranoid about HMRC's motives to persecute one man band limiteds out of sheer vindictiveness and to support bigger consultancies who are trying to grab all the business. But I think that is less likely than a sanctamoneous government taking the moral high ground with all of us, in the name of 'fairness' of course, to treat everyone like children and to discourage independent thought, no matter who they are - unless, of course, they can donate generously to the NL party funds or are classified as 'big business.' Effectively, NL are trying to sanitise the UK population and force us into becoming healthy, clean living, economically efficient automatons that utilise few natural resources as possible, and can maximise tax revenues whilst being less of a drain on the state. To achieve that the government want to spy on us all as if they were the playground monitor. Meanwhile the powers that be can still carry on their own merry way, accountable to no one unless rumbled, in order to join forces with the US to consolidate what has rapidly become a globally focused political elite which has already taken root in America for quite some time now.

As people have said on here already, NL are determined to generate new means of tax revenues as they possibly can to pay for all their meddling interventions. Contractors are one of many targets, only we feel it worst because it affects us directly. But we've also seen news reports of old age pensioners being stung for extra taxation they were least expecting, despite being on a fixed income already and now their latest brainwave is to try to raise a levvy on cigarette smoking by charging a annual £10 smoking license to purchase cigarettes. If that is allowed to happen, god knows what else they will license on what are already legal activities. Coffee perhaps? Plenty of people drink that now, particularly now that the coffee revolution is upon us and we drink better quality coffee. But don't forget it's high in caffeine and can cause palpatations and possibly heart damage for some and be a drain on the NHS eventually. So I expect it's only a matter of time before that requires a license or attracts a tax levvy too.

Alcohol will be next thing firmly on our lord and master's radar screen. As I predicted long ago, I expect that, in time, people will no longer be able to pay for alcohol by cash or credit card in shops, off licenses or pubs and clubs. Instead, they will have to apply for a drinking licence to acquire alcohol permit cards for over 18s (a bit like the Oyster card and ID card all rolled in one) and drinkers will be able to top them up with cash like phone cards, but the card will have a unit limitation device embedded in them restricting the number of units a person can purchase in a week. Once the permitted number of units per week are used up, they won't be able to buy it at all unless they get some it from stores they had already or they scrounge it off someone else.

[swamp]

Billions of pounds have been siphoned off through carosel fraud. The figures suggested are staggering.

HMRC's response has been to make double, tripple checks on anyone getting VAT reg. Doesn't really affect the likes of us; we get VAT reg in the end, just delayed and a PITA.

Frankly with all the money lost through VAT (carousel) fraud, I wonder why HMRC even bother with IR35.

[PAH]

I don't understand that.

If your turnover is above limit (or about to be) that 'VAT status' is automatically conferred up you (lucky you!). And woe betide you if you don't sign up to it.

OTOH, anyone 'in trade' can apply (and generally be approved) for VAT regsitration, even if their turnover is three and tuppence every four years.

Since when was 'VAT status' hard to achieve? Hard to bloody escape morelike!

I read somewhere that with all the VAT fraud (carousel in particular) where companies were closing down and starting up under a new company before paying due VAT, it wasn't as straightforward to become VAT registered as it once was. Whether this is just more paperwork and hoops to jump through, I don't know.

[bogeyman]

VAT Status?

It's already harder to get VAT status isn't it, compared to 4 or 5 years ago?

I don't understand that.

If your turnover is above limit (or about to be) that 'VAT status' is automatically conferred up you (lucky you!). And woe betide you if you don't sign up to it.

OTOH, anyone 'in trade' can apply (and generally be approved) for VAT regsitration, even if their turnover is three and tuppence every four years.

Since when was 'VAT status' hard to achieve? Hard to bloody escape morelike!

[Paddy]

All these news stories about new measures Hector is putting in place makes me wonder - why are contractors getting so much attention?

Don't they have other areas where they could try and close 'loopholes'.

Is it just because they think we're easier to come after than super rich and big businesses?

Hector is obsessed with IT contractors, why? Because big business ie: Outsourcing and Solutions Companies want it all their way. They have influence on the government and want independent IT contractors stamped out.

I have had various business in the past and none have them have been hounded by hector in the way that IT is. However some other businesses are hounded in different ways because of the influence of big business on government policy.

[Pinto]

where's Denny?

She's composing a contribution to this thread. Currently on page 7, so there's a while to go yet.

[PAH]

where's Denny?

Building me an outside toilet. I miss them so much this time of year.


Edit: Actually, didn't she disappear about the same time as AtW? Anyone else not present and correct?

[SandyDown]

where's Denny?

[malvolio]

You also miss the point. IR35 is not about you actually being an employee, it's about you being taxed as though you were. The financial liabilities are still all yours.

[VectraMan]

I agree. Working through a limited within IR35 puts you at a disadvantage compared with a permie being paid the same. .

That's silly. Somebody has to pay it. The "permie being paid the same" as you put it, isn't being paid the same, he's being paid ~13% more to allow for employer's NI. It doesn't matter if the client pays the 13% and we get less, or if we pay the 13%, it works out the same.

Contract rates are quoted before employer's NI, and permie rates are quoted after employer's NI. It doesn't mean one or the other pays less tax.