Originally posted by michaelC
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This is just extending the current fiction about Employers NI for employees, that it is paid by the company. Wrong. Anything a company pays to hire people, including Employers NI, is personnel cost. If HMRC take a bigger cut of "personnel costs" it leaves less for employee salaries. It's more politically palatable to say that basic rate employees pay 12% NI and 20% IT than it is to say that government is taking over 40% of the pot. So Employers NI lives on and will forever.
Red text above: True, again. This is positive. It probably will reduce the cases of IR35 poison provisions in the client-agent contract that the contractor never knows about until he's under investigation and it is used against him.
Blue text above: True, again, at least partly. Risk-averse clients will either use fewer contractors or be quick to dump people into IR35. If there aren't that many clients who do this, contractors will avoid these roles, and they will probably end up having to pay a premium for contractors for these inside roles, which wouldn't be a bad outcome. If many clients do it, there will be plenty of contractors who need the roles, and supply and demand will dictate that the contractors end up worse off.
But those who aren't so risk averse and want the cost benefit of tax-efficient services will be more IR35 aware, and contracts and working practices will be better for IR35.
Finally, green text above: You might be right. There are some things about this that could be positive. If enough clients decide they aren't going to throw everyone into IR35, and are instead going to be careful about protecting the independence of their contractors, then contractors in those roles can rest pretty secure. In general, the liability isn't theirs, anyway. And those clients who are risk-averse will pay for it. That's the good scenario.
The bad scenario is that a large proportion of roles that shouldn't be inside IR35 are deemed inside by risk averse clients. If that happens, a lot of NI tax is going to be paid that shouldn't have been paid, and if a lot of clients do it, it is likely to end up hitting the contractors rather than the clients.
And every role that is declared inside that shouldn't have been is likely to hit someone with higher rate tax which could have been legitimately deferred. And it also takes from contractors the ability to smooth out income between periods of high-paying roles and out-of-contract periods, as well, which again could result in painful tax consequences.
In short, there's some potential positives here but some very likely and very significant negatives.
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