Freelance Limited Company (FLC) offering from IPSE

[teapot418]

That's the 265,000 Psc figure not the 100,000 who should be subject to Ir35 which is probably more inaccurate than the PSC figure.

I think we could really do with some figures from the contractor accountancy firms as to how many contractor PSCs actually exist.

Yes - it's a finger in the air percent of an estimated figure.

It's probably worked backwards - we need to raise £x - how many PSCs do we need to catch to make that happen?

[jamesbrown]

It's quite a huge decrease, and that is predicated on figures that are already very flimsy. I'm a little perplexed as to why there is such an utter lack of rigour in estimating these figures, when they are proposing changes that could have huge direct effects on the freelancer market and its engagers. Even assuming that the £230m is true, that's at most £2.3bn over 10 years, without factoring in any wider economic detriment or behavioural changes it might induce. That is a minuscule amount compared to the total tax take. Surely they could nab the remainder by simply calibrating dividend tax rates (not that I'd want that) accordingly, rather than going through all this mess?

Yeah, you'd think, but there are so many Wild-Ass-Guesses flying around in government budgets and planning documents (not even forecasts) that it becomes second nature for them to stick a finger in the air. It's a regular feature in select committee hearings. It's illuminating to look through the "uncertainty" rankings in the OBR assessments of budget measures.... "High", "Very high", "You're kidding, right?"

[SpontaneousOrder]

yes but my point with drawing an arbitrary line is that someone on (say) 14.5k would pay more tax than someone on 15.5k - which is unfair - it's generally agreed/accepted/is never going to change that tax should be progressive to protect the very-low earners (an extra £100 to someone with £1000 is worth a lot more than an extra £100 to someone with £100,000)

That sounds reasonable, but you have to understand that that's a pragmatic argument. The only thing that makes that not 'arbitrary' is pragmatism.

It is absolutely unfair that person B should pay a higher percentage of tax than person A, just because he earns more. BUT... if you want to raise some particular amount of tax without impoverishing the low earners, then pragmatism mandates it.

I'm not saying the £15 per hour limit (or whatever it was) is a good idea. I've not thought about it too much. BUT... given that the lower earners are leeched less by the taxman in the first place, then it makes sense grant more favourable tax planning facilities to higher earners.

The fact that a higher earner may pay less tax than a lower earner (under particular circumstances) is no different from the general state where a higher earner pays a higher percentage.

The injustice in one is a mirror image of the other. In this case (i.e the difference between £14 and £15 an hour) the pragmatism that supposedly justifies the current state of affairs doesn't exist - it's just that it's been engrained in your mind as being 'normal' whereas a higher earner paying a lower percentage is the opposite of that 'normal'. Which says nothing about fairness..

[eek]

That sounds reasonable, but you have to understand that that's a pragmatic argument. The only thing that makes that not 'arbitrary' is pragmatism.

It is absolutely unfair that person B should pay a higher percentage of tax than person A, just because he earns more. BUT... if you want to raise some particular amount of tax without impoverishing the low earners, then pragmatism mandates it.

I'm not saying the £15 per hour limit (or whatever it was) is a good idea. I've not thought about it too much. BUT... given that the lower earners are leeched less by the taxman in the first place, then it makes sense grant more favourable tax planning facilities to higher earners.

The fact that a higher earner may pay less tax than a lower earner (under particular circumstances) is no different from the general state where a higher earner pays a higher percentage.

The injustice in one is a mirror image of the other. In this case (i.e the difference between £14 and £15 an hour) the pragmatism that supposedly justifies the current state of affairs doesn't exist - it's just that it's been engrained in your mind as being 'normal' whereas a higher earner paying a lower percentage is the opposite of that 'normal'. Which says nothing about fairness..

I think there are 2 things people are missing here

1) I haven't said I like the idea (I don't I just think it works and there is no other suggestion on the table from anyone)
2) the lower paid are often hit hard by umbrella costs at he moment and they aren't cheap. Given £14 an hour paid via paye or £15 paid via umbrella would you like to guess which pays better once you factor in umbrella costs and employers NI?

Finally as I tell my children at times, life is unfair deal with it. Mrs Eek often works all week making chocolates while I earn the same on Monday morning. If you argument against something is perceived injustice either fight against that injustice, give us another solution or work to ensure you are on the other side of it.

[Gordon Ice]

FLC navel gazes on taxation from the HMRC perspective and completely misses the point that contractors choose to operate through a Limited Company for more reasons than tax.. once again this demonstrates a complete lack of understanding of the contractor market.

[youngguy]

Supposedly most of the cc were against it. That doesn't seem to have stopped the proposal seeing daylight though.

I'm not surprised. There is so much wrong with this. Why on earth would we sign up to FLC when there is still the risk of falling under IR35 as the doc states? Why should we get punished if clients want repeat business? That is surely what any 'real' business would want to strive for?

IPSE also don't seem to acknowledge that companies and agencies pretty much dictate things, we all know an agency can't discriminate if someone has not got security clearance but we all know they do. We all know opting in/out is our choice but in reality there are strong pressures.

I don't know why the Gov doesn't mandate a minimum percentage for salary and increase the dividend tax if they want to raise funds. I'm not saying I would like it but I could understand it.

[Zero Liability]

That's the 265,000 Psc figure not the 100,000 who should be subject to Ir35 which is probably more inaccurate than the PSC figure.

I think we could really do with some figures from the contractor accountancy firms as to how many contractor PSCs actually exist.

In which direction is the inaccuracy biased, if you were to hazard a guess (for the PSC figure)? Too high or low?

[SueEllen]

Supposedly most of the cc were against it. That doesn't seem to have stopped the proposal seeing daylight though.

The questionnaire on FLC is unfair.

The only way to answer it is to say you disagree with everything otherwise the proposer will say x% of members agree with having a FLC structure.

I had similar questionnaires given to me by the local council on parking and some residents on different streets revolted due to how the questions were written, so the residents were able to get the parking times they knew would be effective for their individual roads.

[expat]

Forgetting "us" for a moment, a turnover requirement would exclude, say, a freelance photographer starting out, charging low rates to get their name known, and needing the limited liability that a LtdCo offers. Even for us there's periods of benchtime, holidays, periods of part time etc. I can't see how it could work.

Long bench time is bad enough: imagine adding to the the stress of knowing that if you don't achieve a certain turnover you will not only have lower income, you will have more tax to pay.

[eek]

Long bench time is bad enough: imagine adding to the the stress of knowing that if you don't achieve a certain turnover you will not only have lower income, you will have more tax to pay.

Exactly who apart from mudskipper and the iPse have suggested a turnover based approach.

My approach is payment related to avoid that problem. 3 hours work at £50 an hour is out of scope. 2 hours at £8 an hour in scope because those workers shouldn't be being paid that way