Large law firm just sent out IR35 email

[northernladuk]

Making corporations assess status is a massive job, typical of HMRC to force companies to take on all this additional cost and risk and not care one bit. Firms will struggle to do it and are more likely to just refuse contractors all together like some of the banks have done. I was surprised to hear the large law firm is individually contacting each contractor and dealing with each one a case by case basis. They have been phasing out contractors for years though, so probably no where near as many as there once was.

And in other news the sun will come up tomorrow.

[simes]

Crazy thing is, if I go back to perm at a law firm i will go from sending £50k in taxes including VAT to HMRC and corp tax and personal tax, to less than £20k including national insurance. Remind me again how this war on contractors is going to generate more tax revenue for greedy HMRC?

Yup, something I have too been saying for the last few months...

Tax income will stay the same or decrease as everyone goes Perm, and all that the HMRC will have succeeded in doing is destroy a perfectly viable short term method of project delivery.

And yet, they will still declare it an unmitigated success.

[LondonManc]

You would have to be living under a rock to not know about IR35. I knew about IR35 before I even started contracting and my accountant gave me a 10 point list of indicators that puts contractors outside. Also they changed my contract before I started to make sure it would adhere to outside IR35.

I don't think inside IR35 is the end of the world, the tax is comparable to going LLC, it is not much different. My one colleague who has been contracting for years wants to setup his own umbrella company to get around this non-sense. I wonder how difficult that is?

The main issue is, not being able to claim expenses, from what I can see. Which considering the politicians are known for claiming ridiculous expenses, is a bit of a slap in the face towards the plebs. Alright for some I guess.

Erm, no. The main issue is that you'll have no benefits of running a limited co - you'll become the employee of an umbrella and be taxed at permie rates. If your other half is a shareholder, this is where the biggest fecker is - you go from both getting a salary (e.g. 12.5k for you, 10k for them) and a maxed out dividend take totalling about 80k at lowest rate tax to 100k taxed at fully perm rates.

If you currently work in London but have to stay over in London, you're then going to have to be a rate snob because your expenses now come out of that permie-equivalent take home. A DOUBLE WHAMMY!!!

[PeterSim]

Making corporations assess status is a massive job, typical of HMRC to force companies to take on all this additional cost and risk and not care one bit. Firms will struggle to do it and are more likely to just refuse contractors all together like some of the banks have done. I was surprised to hear the large law firm is individually contacting each contractor and dealing with each one a case by case basis. They have been phasing out contractors for years though, so probably no where near as many as there once was.

[cojak]

A lot. Clients too. Given that the legislation will only start to take final form on 11 March, there will be three weeks for many companies to either take a final policy decision against contractors or to complete SDSs. Outside of the CUK bubble, it’s easy to underestimate the degree of headless chicken that is about to befall the contracting scene, particularly in mid-sized companies that weren’t forced to care before now. I would expect a surge in astonished n00bs around then.

https://www.contractoruk.com/forums/...ml#post2722013

[jamesbrown]

From reading this thread I just wonder how many contractors out there are still in the dark with no knowledge whatsoever of what's happening.

A lot. Clients too. Given that the legislation will only start to take final form on 11 March, there will be three weeks for many companies to either take a final policy decision against contractors or to complete SDSs. Outside of the CUK bubble, it’s easy to underestimate the degree of headless chicken that is about to befall the contracting scene, particularly in mid-sized companies that weren’t forced to care before now. I would expect a surge in astonished n00bs around then.

[PeterSim]

You would have to be living under a rock to not know about IR35. I knew about IR35 before I even started contracting and my accountant gave me a 10 point list of indicators that puts contractors outside. Also they changed my contract before I started to make sure it would adhere to outside IR35.

I don't think inside IR35 is the end of the world, the tax is comparable to going LLC, it is not much different. My one colleague who has been contracting for years wants to setup his own umbrella company to get around this non-sense. I wonder how difficult that is?

The main issue is, not being able to claim expenses, from what I can see. Which considering the politicians are known for claiming ridiculous expenses, is a bit of a slap in the face towards the plebs. Alright for some I guess.

[PCTNN]

From reading this thread I just wonder how many contractors out there are still in the dark with no knowledge whatsoever of what's happening.

[PeterSim]

It is not Freshfields, but an equally large Law firm that i would rather not identify.

I can get another job perm but that is not the point is it?

What do you mean by "having something to sell through it"?

Also i don't think it is a waste of time, if i don't have a website then it will be more a challenge to sell through upwork and similar sites for additional income. Also I have another contract work that might require my service on an adhoc basis and don't want to be tied down to a perm job where I can't take days off to work elsewhere when I need to.

I am going to pursue outside IR35 status and HMRC can stick it

My accountant already changed my contract and outline steps that I need to adhere to be outside IR35. One of them is to basically act more like a business. Also my contract is for one single project and then when i get renewed that will be for another single project. i don't do any BAU or Ops work. I am just doing this one project, so that should be outside.

One interesting point from the email is that they said, if i am deemed inside, I can then appeal and if I lose the appeal, then they will deduct income tax and national insurance from my salary before I receive it but i will not be considered an employee or receive any benefits. So i assume they will be using their own umbrella company to do that? If it is the same rate, would that prevent me from claiming expenses?

[Manic]

If it is Freshfields, I'm not surprised. Tough not to be treated like a permie there as they don't get it. They also have AMS and Teksystems crawling all over the supply chain.

[NotAllThere]

Moved.

[northernladuk]

Ir35 type posts go in the IR35 reform sub section in accounting by the way. Some good info in there.

[northernladuk]

You won't be losing half your salary. It will go up 3 or 4 fold.

Setting up websites to look like a real business is a waste of time unless you really have something to sell through it. Your average contractor doesn't.

Just doing project work doesn't really help your IR35 status on its own either. Permies do project work as well you know.

Wouldn't be Freshfields would it?

Why will you have to go perm at a law firm? If you are any good you should be able to go perm most places surely?

[PeterSim]

Just received an email stating the law firm is going to assess my IR35 status and outlined the steps to appeal if I disagree.

Just finished my first year contracting. Definitely late to the party and now faced with going back perm and losing half my salary. I am doing project based work and hope to stay outside. I am setting up a website and trying to act more like a real business, I am also trying to take on more work at the same time. Through sites like Upwork and similar.

Crazy thing is, if I go back to perm at a law firm i will go from sending £50k in taxes including VAT to HMRC and corp tax and personal tax, to less than £20k including national insurance. Remind me again how this war on contractors is going to generate more tax revenue for greedy HMRC?