Discussion document on IR35 published

[tractor]

....

They tried to with the BETs. Though what they defined as a business came out of the 1960s and ignored technological innovations such as the internet.

I've had clients' who don't have "proper" offices in the UK. Everyone works from home unless they have to work on a client site, all workers meet up when required in coffee shops/hotels/bars for face-to-face interaction, and they book meeting rooms as needed for clients, interviews etc.

BET was a tool to catch some of us out. It worked after a fashion because lots of people 'failed' and either declared themselves inside or went umbrella/PAYE. We lobbied against them and it probably would have been better in hindsight to have let them be.

They will never define a 'business' in terms of what they will accept.

Because as soon as they do, we know what hurdles we have to jump and they cannot easily change it then bang goes any deterrent they ever had.

[WordIsBond]

They will never define a 'business' in terms of what they will accept.

Because as soon as they do, we know what hurdles we have to jump and they cannot easily change it then bang goes any deterrent they ever had.

Pretty much it. They want the fear and the confusion.

They claim a high percentage aren't complying with IR35. Perhaps a high percentage are complying by making sure they stay outside of it. But for HMRC, "complying" means making sure you pay everything they want you to pay.

[northernladuk]

Pretty much it. They want the fear and the confusion.

They claim a high percentage aren't complying with IR35. Perhaps a high percentage are complying by making sure they stay outside of it. But for HMRC, "complying" means making sure you pay everything they want you to pay.

Another problem is most contractors don't know what a business is either.

[Waldorf]

Discussion document on IR35 published

In addition I am VAT registered, so HMRC get:

~14% of my gross in VAT
20% of retained profits
7.5% and 32.5% of whatever I whip out in addition to the the small salary I take.

So looking at the maths on VAT, plus CT, plus income tax and I generate SIGNIFICANTLY more income for HMRC than I ever did as a permie.

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.

[jamesbrown]

The amount you pay as CT and on dividends is a small proportion of the amount that you would pay as an employee

I agree with your central premise, but not for the reasons you provide. A contractor would typically generate much more profit subject to CT than the equivalent permie salary subject to income tax and NI. However, this is a completely flawed comparison, because permies also generate profit for their employers, so the difference (if any) in CT is really about productivity. Couching any argument in terms of overall tax revenue is likely to be a very hard sell and probably wrong, except for those contractors that are beyond retirement age and, therefore, unemployable or those that would move overseas or currently generate a large amount of revenue from overseas. Anyway, this shouldn't be the focus of any representations.

[TheFaQQer]

Now if this legislation meant that the bank had to back date holiday payments for their 100 or so contractors, a healthy percentage of which had been there for over 15 years happily filling in annual leave requests and providing doctors notes etc. if this meant they got walloped for backdated NI payments, and the contractors that so wantonly flouted the rules got brought to book I for one would laugh my not so skinny ass off.

But it doesn't - and the consultation makes it clear that it is not attempting to modify employment law.

The worst case is that clients adopt the safety first approach and assume that everyone is inside IR35. And why wouldn't they do that?

[psychocandy]

From the doc.....

One option which could meet the objectives for reform, and specifically tackle the challenges in enforcing compliance set out earlier in this document, would be for engagers to take on more of a role in ensuring that the right amount of employment taxes are paid.

So, clients, via the agent, gets a signed document stating that the contractor PSC (yes, I know, it's not a legal term) is operating inside IR35 (i.e paying it in full, not getting a contract review and declaring themselves 'out'). Not willing ? Another contractor please Mr Agent. End of story, end of contracting in its current form for all but the few who currently operate concurrent clients or other more business like arrangements.

Stick any onus on the end client for compliance and every contract will become either inside IR35 or FTC. (Or outourced to a bob agent/consultancy).

I fear you could be right. Clients don't care - they're going to want a contractor whos hassle free i.e. willing to sign the document saying they're paying the tax.

Client wont give a monkeys about the ifs or whats... Neither will the agent.

I fear with the expenses thing too we're all going to moving towards being FTC people. Entire income being paid as a permie salary with no expenses, no dividends etc. just all PAYE.

Rates are not going to raise enough to compensate either. No way.

[psychocandy]

The T&S consultation document also refers to the 'engager' being severally liable but it's not clear whether the engager would be the agency or the client or possibly both

I think thats the killer. If you get the client or agent involved then whether you're right or not they will decide things because they don't want the hassle.

Gone will be the days of client/agency not caring.

[jamesbrown]

The worst case is that clients adopt the safety first approach and assume that everyone is inside IR35. And why wouldn't they do that?

Out of curiosity, how would you respond if they did?

[LisaContractorUmbrella]

I think thats the killer. If you get the client or agent involved then whether you're right or not they will decide things because they don't want the hassle.

Gone will be the days of client/agency not caring.

So does the panel think that the end client (if held liable under debt transfer) would just say, without consideration of circumstances, that everyone was under SDC just to mitigate risk??