Reply to: IR35 Agency rate breakdown

[jamesbrown]

We don't care about the draft legislation. what is actually happening is companies are saying they won't deal with PSCs. End of. The draft and ultimately real legislation simply doesn't matter, the companies have taken a different route.

End result is the same, but the remedies in the legislation are utterly useless.

That's why I disagree with your analysis

It isn't an analysis, it's a statement of fact about what a deemed payment involves, which is literally at the core of the legislation. It is simply a misunderstanding (either of my point or the fact) that deemed payments were somehow envisaged as paid to the contractor directly. Nonsense. In themselves, they don't change the supply chain or the contractual relationships. How companies react is a totally different thing and was equally obvious from the beginning (i.e., not making assessments and hence not using deemed payments), so you're completely missing my point.

[malvolio]

You disagree with what?

I am not talking about intentions or what might be possible, I am talking about draft legislation.

There is nothing unclear about this.

A deemed payment is a thing and it's perfectly clear that a deemed payment doesn't change anything else about the contractual relationship. When a worker continues to be fronted by a company, then the deemed payment is made to the company. It's up to the Client and the Fee Payer to decide whether they allow or disallow other types of engagement, such as employment, in which case there is no deeming and hence no deemed payment.

We don't care about the draft legislation. what is actually happening is companies are saying they won't deal with PSCs. End of. The draft and ultimately real legislation simply doesn't matter, the companies have taken a different route.

End result is the same, but the remedies in the legislation are utterly useless.

That's why I disagree with your analysis

[ladymuck]

Erm. That would be me. Very sorry.

You killed Kenny! You....

[northernladuk]

Who pushed this IR35 legislation through?

Erm. That would be me. Very sorry.

[JPC]

And that's the issue, paying all the same taxes and NI but no perks. But it's a bit late in the day. There is a protest next week (I think 12th Feb although not sure).

Why is it late in the day out of interest? Who pushed this IR35 legislation through?

[LondonManc]

I disagree. The whole point is that the YourCo is a vehicle with no purpose other than avoiding tax (or, more accurately, NICs). There is no reason to pay YourCo so it can immediately pass it on to you, and there is no reason not to pay it into your personal account.

Except of course the agency still think YourCo and You are indivisible and all they know is how to pay companies, not people. Perhaps in their confused little minds they think paying you personally puts you on their payroll.

Complete nonsense - but then so it the whole fecking exercise.

The YourCo vehicle is in response to the original IR35 legislation years ago; it's more the use of disguised pems by companies where the avoidance of NICs is rife.

I'd argue that it's easier to go on to an agency's payroll for the duration of the contract; cut out the umbrella and get paid further up the line without another set of commission being taken.

[jamesbrown]

I disagree. The whole point is that the YourCo is a vehicle with no purpose other than avoiding tax (or, more accurately, NICs). There is no reason to pay YourCo so it can immediately pass it on to you, and there is no reason not to pay it into your personal account.

Except of course the agency still think YourCo and You are indivisible and all they know is how to pay companies, not people. Perhaps in their confused little minds they think paying you personally puts you on their payroll.

Complete nonsense - but then so it the whole fecking exercise.

You disagree with what?

I am not talking about intentions or what might be possible, I am talking about draft legislation.

There is nothing unclear about this.

A deemed payment is a thing and it's perfectly clear that a deemed payment doesn't change anything else about the contractual relationship. When a worker continues to be fronted by a company, then the deemed payment is made to the company. It's up to the Client and the Fee Payer to decide whether they allow or disallow other types of engagement, such as employment, in which case there is no deeming and hence no deemed payment.

[NeedTheSunshine]

Protest Day

Just found a link on another thread

It's an hour of your time. If you're in London take an early lunch break

Westminster Protest and Lobby Day - Stop The Off-Payroll Tax

[NeedTheSunshine]

Ok thanks to you and the others here responding so quickly, greatly appreciate your time and knowledge.

In the meantime i am going to step up the campaign here IR35 is 100% wrong im happy to go this route as long as im paid holiday and sick pay like every other person paying the same tax an NI rate.

And that's the issue, paying all the same taxes and NI but no perks. But it's a bit late in the day. There is a protest next week (I think 12th Feb although not sure).

[malvolio]

I don't really get the confusion around this.

It's precisely what the legislation expects to happen.

Sure, we could've predicted that most clients and fee payers wouldn't want to bother with the faff, but this situation is literally the core of what the legislation intended.

I disagree. The whole point is that the YourCo is a vehicle with no purpose other than avoiding tax (or, more accurately, NICs). There is no reason to pay YourCo so it can immediately pass it on to you, and there is no reason not to pay it into your personal account.

Except of course the agency still think YourCo and You are indivisible and all they know is how to pay companies, not people. Perhaps in their confused little minds they think paying you personally puts you on their payroll.

Complete nonsense - but then so it the whole fecking exercise.

[JPC]

Nope, not really, unless you have other work that is outside.

But this is literally how the legislation is supposed to work w/r to deemed payments.

Anyway, in the vast majority of cases, an umbrella is going to make more sense. No deemed payments, just actual payments to an (umbrella) employee.

Ok thanks to you and the others here responding so quickly, greatly appreciate your time and knowledge.

In the meantime i am going to step up the campaign here IR35 is 100% wrong im happy to go this route as long as im paid holiday and sick pay like every other person paying the same tax an NI rate.

[jamesbrown]

So is there any point in me having a LTD company?

Do i just take it up the tuliptah and go umbrella as HMRC has dictated to us minions? (who would paradoxically not exist if it wasn't for us working and creating an economy in the first place)

Nope, not really, unless you have other work that is outside.

But this is literally how the legislation is supposed to work w/r to deemed payments.

Anyway, in the vast majority of cases, an umbrella is going to make more sense. No deemed payments, just actual payments to an (umbrella) employee.

[JPC]

OK this is the response i recived


The rate is at £400 per day, however as this is inside IR35. When working through your Ltd company, this will be on a deemed bases. Meaning employers and employees NI and tax will need to be paid at source

The break down below shows employers NI being deducted, due to everyone’s tax code being different, we are unable to work out the accurate rate after this has been deducted

So is there any point in me having a LTD company?

Do i just take it up the tuliptah and go umbrella as HMRC has dictated to us minions? (who would paradoxically not exist if it wasn't for us working and creating an economy in the first place)

[IRMe]

Are you absolutely sure it will be paid to LTD. This is the second time we've heard this this week but never before and ti's against what we thought would happen.

It's been taxed and is net so no reason to be paid to you personally so why the LTDs suddenly being allowed?

For what it's worth NLUK HMRC's view operating through a PSC as an option and provide info on how salary and dividends would be paid:

DRAFT off-payroll working legislation: Chapter 10, ITEPA 2003 (from 6 April 2020): basic principles: how the worker accounts for and reports monies drawn from their intermediary
This is a draft and may be subject to change

Where the worker draws remuneration or dividends from their PSC, this approach can be used to report information for tax and NICs purposes. The worker’s intermediary (e.g. the PSC) will need relief against its payroll liability if Chapter 10 ITEPA 2003 / Part 2 SSCIR 2000 have been applied.

https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm10030]Draft ESM 10030[/url]

I guess using your PSC as the intermediary is an option, if your client allows, although many seem to be going brolly only.

[jamesbrown]

ti's against what we thought would happen

I don't really get the confusion around this.

It's precisely what the legislation expects to happen.

Sure, we could've predicted that most clients and fee payers wouldn't want to bother with the faff, but this situation is literally the core of what the legislation intended.