Discussion document on IR35 published

[mudskipper]

The survey is up at http://goo.gl/forms/O2O4WhscV4 .

Please share to any contractors you know...

Couple of comments - you haven't said what you're going to do with the data.

Abroad thing possibly irrelevant - travel expenses will still be allowable.

I think a question about how many different client journeys you've had in the past (say) two years might also be useful.

[eek]

Couple of comments - you haven't said what you're going to do with the data.

Abroad thing possibly irrelevant - travel expenses will still be allowable.

I think a question about how many different client journeys you've had in the past (say) two years might also be useful.

Fixed with your question added (I asked for comments on questions last week by the way)....

[OrangeSquash]

Bump - just completed, only takes a few minutes

[SueEllen]

Fixed with your question added (I asked for comments on questions last week by the way)....

Can you put something like "travel expenses including hotel/accommodation costs" in bold?

As I presume you are aiming at as wide an audience of contractors as possible you need be aware that most people don't read small print properly. So while people will automatically will put in their mileage and train costs they will not put in their hotel/accommodation costs.

Also it's unfair to pick on others who make suggestions for amendments to your survey, as until someone puts a draft copy of their survey up suggestions to improve/clarify questions can't be made.

[hugebrain]

No, HMRC is not getting more.

VAT - whatever amount you pay over, your agency/client will reclaim the VAT they pay you so HMRC effectively will not see any of this.

The amount you pay as CT and on dividends is a small proportion of the amount that you would pay as an employee, PLUS you would pay National Insurance PLUS your employer would pay NIC.

In addition you would not be able to claim travel etc.

You can see why HMRC see employees as for attractive to people working through their own company.

This is of course completely wrong. Never go full retard.

Just to see how ludicrous your argument is, try to answer the question of why the government make us charge VAT in the first place.

Then think about this. The companies hire us, not out of charity, but so that they can make more profit out of whatever they are selling. So not only do HMRC get the 20% or whatever directly from us, they also get another 20% of the added value we bring to the company (clue is in the name).

Finally, the most unlikely thing of all, permies being more attractive than us? What were you thinking?

[Waldorf]

This is of course completely wrong. Never go full retard.

Just to see how ludicrous your argument is, try to answer the question of why the government make us charge VAT in the first place.

Then think about this. The companies hire us, not out of charity, but so that they can make more profit out of whatever they are selling. So not only do HMRC get the 20% or whatever directly from us, they also get another 20% of the added value we bring to the company (clue is in the name).

Finally, the most unlikely thing of all, permies being more attractive than us? What were you thinking?

Oh dear, you just don't understand how VAT works do you?

VAT is only effectively paid by the end user in the chain.

Any VAT you charge to your client will reduce their own VAT bill and reduce the amount of VAT is paid over to HMRC.

The style of the tax is in the name, VALUE ADDED, ie a VAT is only paid on the value added part of the service/goods you provide. Whatever VAT you charge comes straight off the VAT your client pays, simples.

If your client engaged a permanent employee rather than a contractor, their VAT bill would be higher as they would not be reclaiming the VAT you would have charged them.

Permies are more attractive to HMRC, in terms of cash flow, admin etc. clearly there may be some argument regarding the tax raised, but overall permie staff probably would contribute more as there is less leakage of revenue such as contractors expenses, not paying taxes etc.

[DaveB]

This is of course completely wrong. Never go full retard.

Just to see how ludicrous your argument is, try to answer the question of why the government make us charge VAT in the first place.

Then think about this. The companies hire us, not out of charity, but so that they can make more profit out of whatever they are selling. So not only do HMRC get the 20% or whatever directly from us, they also get another 20% of the added value we bring to the company (clue is in the name).

Finally, the most unlikely thing of all, permies being more attractive than us? What were you thinking?

I'm sorry but this is so wrong it's ridiculous. You clearly don't understand how the VAT system works.

VAT is a tax on consumuption, paid for by the final consumers of good or services, not the suppliers. Any VAT paid by suppliers in the course of producing goods or services is reclaimed by that supplier from HMRC.

We charge VAT on our invoices to the client and pay it to HMRC. The client then reclaims that VAT from HMRC as part of their VAT return. It's a Zero Sum.

VAT only generates actual revenue at the point at which the final consumer of goods or services does not reclaim it. So when Joe Public buys the product that the client sells and that the contractor helped to develop, then he pays VAT on the purchase price. The client then pays that VAT to HMRC.

Most contractors operate the Flat Rate Scheme for VAT as they have minimal VAT'able expenses. This means we pay less VAT to HMRC than we charge our clients. This results in a net loss to HMRC in VAT recovered. This would not happen if it was an employee doing the job instead of a contractor.

[northernladuk]

I'm sorry but this is so wrong it's ridiculous. You clearly don't understand how the VAT system works.

Sometimes I wonder if we are our own worst enemy when trying to defend the way we work. It's hardly a surprise HMRC are after us when it's blatantly obvious too them that most of us don't have a clue. Maybe VAT isn't the best example but when people think giving notice has something to do with MoO for example how can we put a defense up?

[eek]

I'm sorry but this is so wrong it's ridiculous. You clearly don't understand how the VAT system works.

Most contractors operate the Flat Rate Scheme for VAT as they have minimal VAT'able expenses. This means we pay less VAT to HMRC than we charge our clients. This results in a net loss to HMRC in VAT recovered. This would not happen if it was an employee doing the job instead of a contractor.

+1. I have a simple viewpoint on this (which is crude but effective). Anyone who claims that VAT is an additional tax we pay rather than just an annoying task with paperwork attached that we have no choice but to do really has lost the argument before they begin...

[DaveB]

Sometimes I wonder if we are our own worst enemy when trying to defend the way we work. It's hardly a surprise HMRC are after us when it's blatantly obvious too them that most of us don't have a clue. Maybe VAT isn't the best example but when people think giving notice has something to do with MoO for example how can we put a defense up?

I wouldnt say it was most, but it's a significant enough minority that it's not hard to spot. Makes you wonder if HMRC read these threads as some form of light relief since we already know they read some of the Retro Tax related stuff.

--> HMRC.