Reply to: Tories won't Scrap IR35

[Bagpuss]

How come no discussion on the article on the front Page? I though this was a contracting site!

Hopes among self-employed voters that the Tories' promised review of IR35 may scrap the contentious law have been dashed, after the party said repealing it was not viable.

In an email to a CUK reader, a high-ranking official at Conservative HQ said that revoking the legislation, introduced by Labour in 1998, could result in "unintended consequences."

Although the Tory review team still sees revoking IR35 as an "option", the senior official said it was only one of the potential outcomes, and one that industry doesn't want.

[Babbage]

You need to learn your history. It's S134c (now S44/7 ITEPA 2006) which makes the intermiediary comapny - i.e. the agency - liable for your tax if you default on paying it yourself that forces us to incorporate.





Actually I would, as would most right-thinking people. I'm not in this game to save paying taxes, I'm in it because I prefer being a freelance. The biggest challenge we face in getting rid of IR35 is the vast number of contractors who reinforce the view that the Company is simply a tax saving vehicle of no real worth.

As he says, but also this gives some history about why we have to have a ltd co:
THE WORKING-CLASS OWNER-OCCUPIED HOUSE OF THE 1930s

I would personally be quite happy to be a sole trader with insurance, just like Lloyds names are allowed to be, mind you they didnt have the insurance bit...

[malvolio]

Yeah, sole-trader is the 'right' way to work as a self-employed person, from a theoretical view. It's also less complicated, you just do a personal tax form each year.

But, sadly most companies won't do this. Or should that be, most agencies?

You need to learn your history. It's S134c (now S44/7 ITEPA 2006) which makes the intermiediary comapny - i.e. the agency - liable for your tax if you default on paying it yourself that forces us to incorporate.

ous question - not a wind-up. If IR35 was "simplified and clarified" such that we were all caught by it, would you be happy with that.

Actually I would, as would most right-thinking people. I'm not in this game to save paying taxes, I'm in it because I prefer being a freelance. The biggest challenge we face in getting rid of IR35 is the vast number of contractors who reinforce the view that the Company is simply a tax saving vehicle of no real worth.

[Addanc]

If they aren't going to scrap it, lets have a simple definition of Employed that applies across the board; i.e. no cherry picking of when it applies and when does not.

[vetran]

Only way you are going to convince them is if you prove that it costs more to prosecute than it raises. Freedom of information requests about the take and cost would make sense if the Tories win.

A little certainty would be nice but it needs to be balanced with a sensible sliding scale that builds business, the Australian legislation made sense the more customers you have the less intrusive the tax.

[VectraMan]

But 'clearer' is only ever going to mean 'tightening' - otherwise they might as well scrap it, which as you've said - they're simply not going to do.

The intention of IR35 is very clear - and would catch 90% of contractors. It's the implementation that's very poor. Do you really want them to improve the implementation of it.

Serious question - not a wind-up. If IR35 was "simplified and clarified" such that we were all caught by it, would you be happy with that.

Obviously I'd rather it wasn't there, but the uncertainty is the worse thing about it. There's a whole industry grown up around IR35 advice, insurance, etc., not to mention the PCG, all of which is a waste of our time and money. We all might think we're doing the right thing, but none of us can be really sure that we won't have to find a large extra amount of tax in six years time when somebody reinterprets and backdates the rules.

We'd all like to pay less tax, but at least if the amount of tax you have pay is clear you can make decisions on that basis.

[centurian]

It wasn't likely they were going to bring in a tax cut, which scrapping IR35 would be. However, I hope that they'll a) review the legislation and make it a bit clearer, and b) put pressure on HMRC to only persue people where it's economically justified.

But 'clearer' is only ever going to mean 'tightening' - otherwise they might as well scrap it, which as you've said - they're simply not going to do.

The intention of IR35 is very clear - and would catch 90% of contractors. It's the implementation that's very poor. Do you really want them to improve the implementation of it.

Serious question - not a wind-up. If IR35 was "simplified and clarified" such that we were all caught by it, would you be happy with that.

[d000hg]

For genuine self employment, it still is. A sole trader/partnership pays less employees NI than an 'employee' and no employers NI at all.

IR35 was introduced (rightly or wrongly) to crack down on those that simply wanted to declare themsevles as being self-employed.

Also the reason why big business likes IR35 is that it shifts responsibility for NI onto the LtdCo directors - not ClientCo.

Yeah, sole-trader is the 'right' way to work as a self-employed person, from a theoretical view. It's also less complicated, you just do a personal tax form each year.

But, sadly most companies won't do this. Or should that be, most agencies?

[threaded]

Big businesses were supporting IR35, and the Tory party is traditionally seen as the "party of big business".

The initial increases in NI and pressure to run through a LtdCo rather than being self-employed was introduced under the Tories. On the going rates in the mid 1990s, self-employed status was the route to take from an accountant's view.

They're all parties of big business now. Governments are going the way of 'City States' and being replaced in the power hierarchy by Multinationals. It is a natural consequence of letting the banks get out of control.

[VectraMan]

It wasn't likely they were going to bring in a tax cut, which scrapping IR35 would be. However, I hope that they'll a) review the legislation and make it a bit clearer, and b) put pressure on HMRC to only persue people where it's economically justified.

[centurian]

Big businesses were supporting IR35, and the Tory party is traditionally seen as the "party of big business".

The initial increases in NI and pressure to run through a LtdCo rather than being self-employed was introduced under the Tories. On the going rates in the mid 1990s, self-employed status was the route to take from an accountant's view.

For genuine self employment, it still is. A sole trader/partnership pays less employees NI than an 'employee' and no employers NI at all.

IR35 was introduced (rightly or wrongly) to crack down on those that simply wanted to declare themsevles as being self-employed.

Also the reason why big business likes IR35 is that it shifts responsibility for NI onto the LtdCo directors - not ClientCo.

[Sysman]

Anyone who thought the Tories were ever serious about scrapping IR35 are at best delusional.

Big businesses were supporting IR35, and the Tory party is traditionally seen as the "party of big business".

The initial increases in NI and pressure to run through a LtdCo rather than being self-employed was introduced under the Tories. On the going rates in the mid 1990s, self-employed status was the route to take from an accountant's view.

[NickFitz]

There are a lot of things the Tories aren't going to do, even though people allow themselves to be deluded into thinking they will.

[threaded]

Anyone who thought the Tories were ever serious about scrapping IR35 are at best delusional.

They might say it to win a few votes though. Which is the best you can expect really.

[minestrone]

I think it was discussed in a thread although not really that much.

I don't think the tories are going to win anyway.