Reply to: Contributing to the contractor calculator campaign ...

[JohntheBike]

BTW, informed opinion appears to be that an increased tax take from the 2020 changes are almost certainly a fantasy. If anything they will lose tax income by reducing people's spending power, offshoring work to save money ( ) and greater employment costs to clients leading to reduced CT income.

yes, but it's like trying to quantify the savings from a redundancy campaign by a large organisation. The cost and savings of a redundancy campaign are readily calculable. What isn't calculable is any loss in company revenue due to poorer response to customer's requirements or market forces.

It's the same here. An initial increase in tax take is clearly predictable, although the actual figures presented by HMRC are questionable , but the nett cost to HMG isn't. HMRC have already claimed an increase in tax take from the public sector, even prior to a complete taxation cycle. I guess they will claim that any perceived reduction in corporation tax take will be down to the reduction in the rate.

Those who believe that reasoned argument will in any way affect HMRC's stance, are deluding themselves.

[malvolio]

BTW, informed opinion appears to be that an increased tax take from the 2020 changes are almost certainly a fantasy. If anything they will lose tax income by reducing people's spending power, offshoring work to save money ( ) and greater employment costs to clients leading to reduced CT income.

[JohntheBike]

That would be a first wouldn't it :

it's just an opinion

[northernladuk]

. I may be wrong,

That would be a first wouldn't it :

[JohntheBike]

...but it does not affect the primary law under which the case is being held, only rulings made under that law.

We don't want to clarify when HMRC may be able to prosecute under IR35 or any other variant, we want IR35 out of the equation altogether for people who are genuinely independent workers.

Agreed, but HMRC are never going to allow any case to go to a high enough court which might risk a judgement against them. So the war will be reduced to "minor" skirmishes where individuals will have to pick the right time and circumstances to fight HMRC.

In that respect, I think it is unlikely any campaign by organisations opposed to IR35 will necessarily help any individual in the fight against IR35. I may be wrong, but there still appears to me to be a groundswell of opinion opposed to using the ET/EAT to fight IR35. HMRC will continue to justify its approach, not only with regards to IR35, but also many other issues, e.g. the loan charge, where they can see a potential increase in tax take, which will be the case with the new IR35 rules.

[malvolio]

The EAT is the Employment Appeal Tribunal, i.e it is an appeal court and sets case law, which can be relied upon in other cases.

...but it does not affect the primary law under which the case is being held, only rulings made under that law.

We don't want to clarify when HMRC may be able to prosecute under IR35 or any other variant, we want IR35 out of the equation altogether for people who are genuinely independent workers.

[JohntheBike]

Wrong on several levels. ETs and EATs do not set case law precedents, only high court appeals do that. Without such a precedent, nothing will change. Secondly cases will settle rather than risk going to appeal - Winchester is a prime example of that - just to prevent clear precedents being created and so hampering HMRC's predations. All we end up with a series of small claims that will meander on for years and allow exploitation by agencies and vendors of interesting get-out-of-jail-free schemes..

As for larger organisations, they are all trying to get clarity and common sense into a taxation system that totally fails to recognise the existence of working people who are not employees. How they achieve that, and whatever levers that use to achieve it, is actually not all that relevant.

"I'm about to retire so let's take on a debilitating, all-involving seven year court case at my own expense". I don't think so...

The EAT is the Employment Appeal Tribunal, i.e it is an appeal court and sets case law, which can be relied upon in other cases.

edit

ask yourself the question, when HMRC claims "we have case law in our favour for this issue" were all of these cases settled in the High Court? or were some settled in the Appeal Court, which is the same level as the EAT?

[malvolio]

ET and EAT costs are eminently affordable, especially if anyone has a modicum of common sense and presents the case themselves.

What I'm saying is that if anyone who is deemed inside by the new regulations and is still with the same client after April 2020 and they wish to challenge that decision, then they can do so in the ET, and cannot lose. There are only three outcomes, employed, a worker or self employed, or possibly the client would settle out of court, as they did in the Winchester case. Any one would clearly challenge an inside IR35 decision. How could a client defend such a case when they had already declared that the contractor was a disguised employee, especially if they use CEST to make that determination.

It would only take someone with nothing to lose to mount such a case, e.g someone who was about to retire, or leaving contracting for any other reason. However, if the case were handed to a high profile anti IR35 campaigner organisation, the way in which the case might be managed, might not be in the best interests of the contractor. I am talking from experience BTW.

Wrong on several levels. ETs and EATs do not set case law precedents, only high court appeals do that. Without such a precedent, nothing will change. Secondly cases will settle rather than risk going to appeal - Winchester is a prime example of that - just to prevent clear precedents being created and so hampering HMRC's predations. All we end up with a series of small claims that will meander on for years and allow exploitation by agencies and vendors of interesting get-out-of-jail-free schemes..

As for larger organisations, they are all trying to get clarity and common sense into a taxation system that totally fails to recognise the existence of working people who are not employees. How they achieve that, and whatever levers that use to achieve it, is actually not all that relevant.

"I'm about to retire so let's take on a debilitating, all-involving seven year court case at my own expense". I don't think so...

[JohntheBike]

A test case to resolve this will take several years and at least £2m. Have you the funds to support that level of risk?

ET and EAT costs are eminently affordable, especially if anyone has a modicum of common sense and presents the case themselves.

What I'm saying is that if anyone who is deemed inside by the new regulations and is still with the same client after April 2020 and they wish to challenge that decision, then they can do so in the ET, and cannot lose. There are only three outcomes, employed, a worker or self employed, or possibly the client would settle out of court, as they did in the Winchester case. Any one would clearly challenge an inside IR35 decision. How could a client defend such a case when they had already declared that the contractor was a disguised employee, especially if they use CEST to make that determination.

It would only take someone with nothing to lose to mount such a case, e.g someone who was about to retire, or leaving contracting for any other reason. However, if the case were handed to a high profile anti IR35 campaigner organisation, the way in which the case might be managed, might not be in the best interests of the contractor. I am talking from experience BTW.

[malvolio]

"Whether people support this campaign, the IPSE or both"

I would say that many would wish to direct their own fight through their own legal representatives. Having an external organisation control any case might not necessarily be in the best interests of a contractor. Those organisations might want to follow a particular path for their own ends, which might not correspond to the contractor's ends. I've had occasion to ignore "legal" advice and follow my own path, disproving that legal advice, to my own advantage.

A test case to resolve this will take several years and at least £2m. Have you the funds to support that level of risk?

[JohntheBike]

I did ask my accountant and they were of the opinion:

1. Would it be "wholly and exclusively"?
2. Affect only personal taxation?
3. They did concede that it will affect how the business operates hence I would argue in 2 it obviously affects business taxation too.

Ultimately they said it would be my call if I feel it is a justifiable business expense and my argument is that, like Yorkie62, in reality there is no point in the business existing if the vast majority of contracts are suddenly blanket assessed as inside IR35, regardless of the reality of the situation.

Whether people support this campaign, the IPSE or both, they are going to need support for the inevitable fights to come in the months/years ahead.

"Whether people support this campaign, the IPSE or both"

I would say that many would wish to direct their own fight through their own legal representatives. Having an external organisation control any case might not necessarily be in the best interests of a contractor. Those organisations might want to follow a particular path for their own ends, which might not correspond to the contractor's ends. I've had occasion to ignore "legal" advice and follow my own path, disproving that legal advice, to my own advantage.

[ShandyDrinker]

How can you say that? The proposed changes may directly affect the business, and potentially its ability to operate, and therefore one might argue that the contributions are justified as being wholly and exclusively for the purpose of the business, i.e. its very existance. Or you can just ask your accountant.

I did ask my accountant and they were of the opinion:

1. Would it be "wholly and exclusively"?
2. Affect only personal taxation?
3. They did concede that it will affect how the business operates hence I would argue in 2 it obviously affects business taxation too.

Ultimately they said it would be my call if I feel it is a justifiable business expense and my argument is that, like Yorkie62, in reality there is no point in the business existing if the vast majority of contracts are suddenly blanket assessed as inside IR35, regardless of the reality of the situation.

Whether people support this campaign, the IPSE or both, they are going to need support for the inevitable fights to come in the months/years ahead.

[northernladuk]

How can you say that? The proposed changes may directly affect the business, and potentially its ability to operate, and therefore one might argue that the contributions are justified as being wholly and exclusively for the purpose of the business, i.e. its very existance. Or you can just ask your accountant.

Hmm yeah. I was thinking of the personal taxation side so had a bit of brain fart there.

[Yorkie62]

It's not wolly and exclusively for the purpose of business so shouldn't go through the company should it?

How can you say that? The proposed changes may directly affect the business, and potentially its ability to operate, and therefore one might argue that the contributions are justified as being wholly and exclusively for the purpose of the business, i.e. its very existance. Or you can just ask your accountant.

[BlueSharp]

Err. yes probably. Was wondering if anyone else had stuck their hand in their pocket.

Yes I have contributed and it was out of my own pocket not the companies, however it did cross my mind to do it from the company when I was charged VAT on top of the donation/subscription.