Discussion document on IR35 published

[gables]

Other people mentioned...

We have more in common with high skilled self employed than temps

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.

We are high skilled self employed people. We also provide part of the flexible workforce that the government said is required. And we generate more income for them than if we were employed.

I really don't get what is so difficult for the government to understand.

[cojak]

It is and always has been more than just that. It is far easier and much, much cheaper for them to police a single BigCo than 2000 LittleCos. Not to mention getting what would otherwise have been CT in the form of tax/NI, collected up to 20 months earlier.

Will the contractor business model end up as a collective (one MediumCo as opposed to 5/10/20 LittleCos), so that HMRC get what they want and and we get what we want, or does our very flexibility (3 month contracts, bench time etc) mean that HMRC will NEVER be happy with how we operate (in theory - in practice the word is that HRMC are screaming for contractors on stuttering projects...)?

[tractor]

....

Will the contractor business model end up as a collective (one MediumCo as opposed to 5/10/20 LittleCos), so that HMRC get what they want and and we get what we want, or does our very flexibility (3 month contracts, bench time etc) mean that HMRC will NEVER be happy with how we operate (in theory - in practice the word is that HRMC are screaming for contractors on stuttering projects...)?

It is never a surprise that they, like us want their cake and to eat it. I am toying with the idea of determining what is needed to set up outside their purview of what a 'PSC' is in terms of shareholding/corporate structure etc. and maybe setting up that way but then finding another 20 contractors with the right mix of skills and experience that you can also trust is akin to finding an honest politician!

In fact, I just took a year off and will be looking to get back to it shortly. During that time, I have kept my searches going on the usual job sites and during that year, the content of the emails have just got worse and worse with all encompassing job roles, fishing, etc. It should be interesting trying to find a new contract with a one year gap. Maybe I should apply to HMRC.

[Gumbo Robot]

He's happy for us to earn a lot of money and be compensated for all that risk.

He just wants the engager to pay for that, rather than having any tax recognition of those risks. He wants his (your) money.

He wants to have low income people have more income, but he doesn't want to pay for it himself. Simple. He'll make companies pay for it. Magic!

Same with us. He's fine with independent workers being compensated well for the risk, he just wants the big companies to be the ones to pay for it.

And a lot of UK PLC will pay. They won't want the risk of unclear legislation being used against them. But they'll still need contractors, good ones. So what happens? They'll require their contractors to operate under IR35, and if that means they have to pay more, they'll pay more.

Or.... They will require their contractors to get a contract review and carry something like TLC35 on a per contract basis that complete indemnifies them. And that will cost maybe £5-10 a day on a six month contract, and many contractors won't even pass it on in their fees. But if they pay an extra £100 a week to have IR35 indemnification, that's nothing to much of UK PLC.

So, some will just say we always operate all our contractors under IR35, they'll pay more, and Georgie gets more money to waste. Others more savvy will require the contractor to indemnify them, and maybe pay a little more to cover the insurance. QDOS will make a lot of money offering insurance on a per contract basis. Others may be quite willing to work with contractors to stay IR35 friendly.

And others will just say, "Let's hire perms."

Of course, it is possible, since the government obviously cares more about UK PLC than small businesses, that the whole idea of making the engager liable will die, once the big corporate lawyers tell their clients to start screaming about it.

I don't see end clients paying more; there will just be more of us turning down roles because it's not worth it.

End result?

There will be a "skills shortage" & they'll just increase the number of on-shored "consultants" on ICTs etc. to deal with the shortfall.

Tech Mahindra, Infosys et al must be rubbing their hands together...

[tractor]

..

I don't see end clients paying more; there will just be more of us turning down roles because it's not worth it.

End result?

There will be a "skills shortage" & they'll just increase the number of on-shored "consultants" on ICTs etc. to deal with the shortfall.

Tech Mahindra, Infosys et al must be rubbing their hands together reaping the rewards of all those brown envelopes...

FTFY

[tomtomagain]

Here's the news we've all been waiting for

From the FT - Freelance employees face new scrutiny on tax

My bold.

The IR35 rules were introduced in 2000 .... paid broadly the same amount of tax and national insurance contributions as other employees.

But HMRC accepted that non-compliance is widespread.
It estimates that nine out of ten of those who should comply, do not.

So HMRC think that 90% of contractors should be caught by the current IR35 but are not because of problems with enforcement.

The proposed shake-up would require anyone using a worker through a personal service company to consider whether IR35 applied and, if so, deduct the correct amount of income tax and national insurance from their pay.

So they are going to "Fix" the problem by making it someone else's problem. Putting the onus onto the agents and clients to decide whether the contract is IR35 compliant or not.

[DimPrawn]

Let's see, is a client going to do that, or will they call an Indian bodyshop "consultancy" for some UK Govt approved and sponsored "highly skilled migrants" instead? No risk, low cost option. Why have HMR&C all over you when you can shop abroad and let the Indian tax authorities worry about it.

Vote LibLabCon, end UK Contracting today!

[SimonMac]

Discussed here

http://forums.contractoruk.com/accou...published.html

Mods, can we close this down so we don't end up with a budget like scenario where there are 15 threads discussing the same thing

[SimonMac]

Contractors don't take on any risk, other than not finding work, and that's no different than temps. But unlike temps you get paid a lot more than the equivalent permie, and you get to avoid tax to boot.

Between VAT, CT and PAYE, I pay a lot of tax, probably more than if I was a permie in a similar role

[tomtomagain]

awwwe don't close my thread. It's the first one I've created in 10 years.