Reply to: Employment status overview

[DonkeyRhubarb]

In theory the equation is simple, even if the answer is not.

Is the economic benefit of a flexible workforce with expert skills and making their own pension and other arrangements, more than the tax that is allegedly "lost" through that workforce choosing to be self employed (or at least pay less tax than an employee)?

Arguably, there is very little loss.

Let's suppose you changed the tax code to extract £1Bn more in tax from contractors.

That's taking £1Bn out of the economy which could be spent on goods & services. Goods & services attract VAT. Goods & services create employment which attracts income tax and nics.

Net effect - the amount the Government would be better off, overall, would be a tiny fraction of £1Bn.

It's just smoke and mirrors, and mickey mouse accounting.

[webberg]

In theory the equation is simple, even if the answer is not.

Is the economic benefit of a flexible workforce with expert skills and making their own pension and other arrangements, more than the tax that is allegedly "lost" through that workforce choosing to be self employed (or at least pay less tax than an employee)?

Given that the Government control the statistics, (and the OBR is laughably not independent), proving the above will be like looking for the space the needle took up in the haystack but which can move every time a new set of numbers is produced.

Perhaps a project for Christmas week (yes, my life is that exciting).

[eek]

Grant Shapps


Oh.

Did you include his business's practices in that oh or should I add a second oh.

Personally, I still don't believe the Government has it in for contracting. I know they want to do something to destroy various means of tax abuse (trouble is we are to a greater / lesser extent collateral damage within that desire)..

[TheFaQQer]

Has anyone in the current Government ever run a business?? Or had a proper job for that matter??

Grant Shapps


Oh.

[WordIsBond]

Has anyone in the current Government ever run a business?? Or had a proper job for that matter??

Philip Hammond would be one.

From his wiki page:

Hammond joined the medical equipment manufacturers Speywood Laboratories Ltd in 1977, becoming a director of Speywood Medical Limited in 1981.[4] In 1982, an automatic electrocardiograph electrode manufacturing plant figured among his notable achievements. He left in 1983 and, from 1984, served as a director in Castlemead Ltd.

From 1993 to 1995, he was a partner in CMA Consultants and, from 1994, a director in Castlemead Homes.[5] He had many business interests including house building and property, manufacturing, healthcare, and oil and gas. He undertook various consulting assignments in Latin America for the World Bank in Washington, D.C., and was a consultant to the Government of Malawi from 1995 until his election to Parliament.

I have no idea if there are any others. Osborne has not had a real job since he graduated, maybe he delivered papers for the newsagent or something when he was a schoolboy. Maybe not.

[LisaContractorUmbrella]

Two responses:
1. Fact-based evidence can achieve modifications of planned policy if it can be showed that an alternative that accomplishes the same general direction is better or less detrimental.
2. Fact-based evidence can cause a reconsideration if it can be shown that the intended direction of policy is detrimental to larger goals.

What we're up against here is that the Tories have become New Labour, "fairness" appears to be the Larger Goal (if we had any misguided idea that a balanced budget was the larger goal, it died on Wednesday), the way we are taxed is perceived to be unfair, and the greatest equality in this country is no longer equality of opportunity but equality of result. If you have more than your neighbour, no matter how it happened, it isn't fair, and You Should Pay More.

Has anyone in the current Government ever run a business?? Or had a proper job for that matter??

[WordIsBond]

Fact-based evidence makes very little difference unless it is consistent with the intended direction of policy.

Two responses:
1. Fact-based evidence can achieve modifications of planned policy if it can be showed that an alternative that accomplishes the same general direction is better or less detrimental.
2. Fact-based evidence can cause a reconsideration if it can be shown that the intended direction of policy is detrimental to larger goals.

What we're up against here is that the Tories have become New Labour, "fairness" appears to be the Larger Goal (if we had any misguided idea that a balanced budget was the larger goal, it died on Wednesday), the way we are taxed is perceived to be unfair, and the greatest equality in this country is no longer equality of opportunity but equality of result. If you have more than your neighbour, no matter how it happened, it isn't fair, and You Should Pay More.

[TheFaQQer]

There was a survey running on the T&S but I don't know where that got to. I was happy to help but the organiser there had valid reasons for not wanting my involvement, which I respect.

That sort of survey is however exactly what is needed.

I'm not familiar with what IPSE does but would/could/should they be banging the drum and use their resources to pull together a submission?

IPSE had over 2600 responses (I think closer to 3000 but I don't have the exact figures to hand, whereas I know 2600 was a number of responses at one stage) to their survey, which were then used in the submission that they made.

They had over 100 specific examples of how the proposed T&S changes would have hit people. They had case studies of people who were willing to speak to the press about the impact, which resulted in one lucky member talking on Radio 5 Live about the impact to an audience of about 3.5 million people.

Fact-based submission highlighting the detrimental effect on the economy the proposals would have had - now the next challenge is doing the same with IR35...

[webberg]

I've contributed to the CIOT submission and that is ongoing. Ideally I'd be more involved but there is a balance between paid work and "investment" in this sort of issue and I can't see that happening in the short term.

Whilst I note and applaud the efforts from the Umbrella community and the professional bodies, (not sure who some of them are) my experience here is that a coherent and definitive, fact based paper with a letter head from a Big 4 (or a magic circle law firm if that's a better fit) does make a difference.

Having sat in some of the "consultations" meetings, I've seen HMRC dismiss good evidence as conflicted, partisan, unbalanced, too niche, biased and altogether presenting a hopelessly diverse picture that they then feel compelled to rationalise or force into a common shape. In that instance the industry I was representing got well and truly hammered and essentially was out of business within 12 months. (Perhaps a reflection on my contribution?)

I fear the same here.

However, I recognise that serious efforts are being made and that is perhaps all that can be asked for.

[jamesbrown]

I don't think we need an overarching effort. Any consistency that stems from a common interest in maintaining a strong contracting market speaks for itself. A convergence of opinion is better than an overarching effort that HMRC can dismiss as a single response, which is precisely what they do when referring to "160" responses, for example. Furthermore, while there's agreement on maintaining a strong contracting market, there are significant differences in opinion and significant vested interests in shaping that market.

I think IPSE, AUCAE, APSCo, REC, CIOT, ICAEW, and many smaller organisations (e.g. Abbey Tax) have done an excellent job of responding to the T&S and IR35 consultations with plenty of factual information. There's no dearth of factual information being presented.

[LisaContractorUmbrella]

In my opinion, the ONLY hope of deflecting, even slightly, the juggernaut is to produce a FACT based analysis that demonstrates just how damaging forcing contractors to become employees for tax purposes (and not for the employment protection rights).

These threads are full of people saying that they will no longer be able to travel long distances without suitable recompense and various other impacts.

That is why this https://www.gov.uk/government/news/g...-self-employed is very important.

However contractors need to be ORGANISED.

There was a survey running on the T&S but I don't know where that got to. I was happy to help but the organiser there had valid reasons for not wanting my involvement, which I respect.

That sort of survey is however exactly what is needed.

I'm not familiar with what IPSE does but would/could/should they be banging the drum and use their resources to pull together a submission?

If there is no central source within the contractor community willing to take this on, my opinion is that a CROWD FUNDING effort be made with the aim of engaging a full time analyst.

My opinion is that said analyst should carry some kudos in the form of a Big 4 accounting firm who will not only have some experience here but also probably connections with Government and quite possibly staff on secondment in the various departments.

However for so long as contractors continue to operate in small groups (relatively) the above is pipe dream.

AUCAE submitted a 5000 word plus written response to the T&S consultation which was delivered to Downing Street and HMRC along with written submissions and survey responses from over 700 contractors - happy to do the same thing for any IR35 consultation

[webberg]

In my opinion, the ONLY hope of deflecting, even slightly, the juggernaut is to produce a FACT based analysis that demonstrates just how damaging forcing contractors to become employees for tax purposes (and not for the employment protection rights).

These threads are full of people saying that they will no longer be able to travel long distances without suitable recompense and various other impacts.

That is why this https://www.gov.uk/government/news/g...-self-employed is very important.

However contractors need to be ORGANISED.

There was a survey running on the T&S but I don't know where that got to. I was happy to help but the organiser there had valid reasons for not wanting my involvement, which I respect.

That sort of survey is however exactly what is needed.

I'm not familiar with what IPSE does but would/could/should they be banging the drum and use their resources to pull together a submission?

If there is no central source within the contractor community willing to take this on, my opinion is that a CROWD FUNDING effort be made with the aim of engaging a full time analyst.

My opinion is that said analyst should carry some kudos in the form of a Big 4 accounting firm who will not only have some experience here but also probably connections with Government and quite possibly staff on secondment in the various departments.

However for so long as contractors continue to operate in small groups (relatively) the above is pipe dream.

[DotasScandal]

However I'd agree that the "consultation" and "discussion" is nothing of the sort.

You mean just like this "consultation" ?

Gauke's idea of a "discussion" can be summed up by the proverbial "boot trampling a mouth" image. Just look at the guy, FFS! Textbook sociopath.

[jamesbrown]

The ESI is a very generic and therefore blunt instrument but it's quite worrying that it's seen as a base for what should be a sophisticated test.

However I'd agree that the "consultation" and "discussion" is nothing of the sort. The die is already cast and the agenda is clear - as many contractors as possible should be paying tax as close to employee rates as possible.

The legal status of the ESI tool could be interesting. It's a given that if the tax rules are made more complex as they attempt to define the indefinable then the avoiding of the written parameters becomes easier. Fitting in with or outside of strict rules is relatively easy.

To make the tool have any impact it has to be subject to law. That means, not just the algorithm used, but the reasons for that algorithm and that will lead to a lot of arguments about how the largely Judge led definitions and dicta will be applied.

Agreed. In other words, recommendations 17-21 in Gauke's response are inseparable (no. 21 being the "statutory employment test").

[jamesbrown]

I disagree.

Fact-based evidence makes a big difference, and those that responded to the consultations, contacted their MP, and got involved in the campaign all deserve credit for the impact that their contribution made.

"Get your facts first, and then you can distort them as much as you please" - Mark Twain.

Then we disagree. Fact-based evidence makes very little difference unless it is consistent with the intended direction of policy. Otherwise, for example, the central "facts" surrounding the expected tax revenues from a tightening of policy (£400m) would've been revised in response to the quite obvious accusation that they don't account for the forthcoming dividend tax increases. Facts are disputable, manipulable, and contextual. Intentions and actions are clear.

Ultimately, quite soon, we'll see who's correct. If my cynicism is misplaced, I will happily retract and renew my faith in the political process