Freelance Limited Company (FLC) offering from IPSE

[eek]

it should be nothing to do with turnover/wage/income - having a rule that says "you earn more than him, so you can pay less tax per £ earned" is f**king ridiculous

if you're going to go down that path (i.e. to discourage tax-advantageous incorporation) a fairer way would be to have an annual fixed fee for incorporation - where it costs (eg) £5000 per year to be a limited company or add a static £100/month tax on top of umbrella fees



or, unemployment (i.e. on JSA and more housing benefit) - the glass isn't always half full, someone paying less-than-PAYE tax is still more tax than claiming benefits

No its not. The rule would say that anyone paid less than £x through an agency is clearly and obviously subject to SD or C... and should therefore be treated (for HMRC for tax reasons, in a union / my world for all reasons) as an employee by the company who are paying the bill.

HMRC are trying to solve a problem of low paid fake self-employment with the only tool they have left in their toolbox - a very heavy sledgehammer. We can all see what damage they could do with that tool, we need to find a way to minimise it just a little bit...

[pr1]

No its not. The rule would say that anyone paid less than £x through an agency is clearly and obviously subject to SD or C... and should therefore be treated (for HMRC for tax reasons, in a union / my world for all reasons) as an employee by the company who are paying the bill.

HMRC are trying to solve a problem of low paid fake self-employment with the only tool they have left in their toolbox - a very heavy sledgehammer. We can all see what damage they could do with that tool, we need to find a way to minimise it just a little bit...

so someone paid £x+1 is clearly and obviously not subject to SD or C? you can't base it on earnings - it's ludicrous. Just because MrX can't demand as much for his service(s) as MrY should have no impact on the rules

[jamesbrown]

HMRC are trying to solve a problem of low paid fake self-employment with the only tool they have left in their toolbox - a very heavy sledgehammer. We can all see what damage they could do with that tool, we need to find a way to minimise it just a little bit...

One other thought on this: I don't think we should be complacent about the problem and solution being focused elsewhere. We (professional contractors) are squarely in view as more than simply collateral. Would removing low-paid workers from incorporation address the argument for clients as gatekeepers on SDC? Afterall, this is the central problem. We either need to find a workable iteration whereby clients are encouraged/required to undertake a professional review rather than defaulting to SDC or we push back with a sufficiently convincing argument that it's unworkable and hope for the best (I have my doubts either way, but it surely must be one of these two things).

[eek]

so someone paid £x+1 is clearly and obviously not subject to SD or C? you can't base it on earnings - it's ludicrous. Just because MrX can't demand as much for his service(s) as MrY should have no impact on the rules

We are not talking about us. Lisa is talking about people who earn £12 an hour or less, my figure being higher is talking about those earning £15 an hour or less... Very few skilled contractors of any trade earn that little (please, please show me an exception)...

Now the HMRC expense consultation currently has a flaw in it which is as I've continually said:-

1) As an employee of blue chip consultancy I can claim travel expenses to end client at the other end of the country.
2) As an associate of that consultancy I cannot.

That isn't going to pass any judicial review and as many MPs understand how consultancies work HMRC know that they cannot remove expenses from their workers. Hence its a problem...

By restricting the SD&C test for expenses to some low payment figure we solve a few of the issues:-

1) HMRC have something that is easily verifiable.
2) Agencies have a set of rules they can easily follow.
3) Companies cannot pretend their everyday staff are self employed when they are clearly not.

And yes I'm merely looking at expenses here and how to ensure the changes give HMRC most of what they want without really impacting me.

How we fix IR35 is something I still haven't got a clue about.....

[eek]

One other thought on this: I don't think we should be complacent about the problem and solution being focused elsewhere. We (professional contractors) are squarely in view as more than simply collateral. Would removing low-paid workers from incorporation address the argument for clients as gatekeepers on SDC? Afterall, this is the central problem. We either need to find a workable iteration whereby clients are encouraged/required to undertake a professional review rather than defaulting to SDC or we push back with a sufficiently convincing argument that it's unworkable and hope for the best (I have my doubts either way, but it surely must be one of these two things).

Isn't it something like the tier 2 argument. We cannot find the skill set on a permanent basis and therefore need to bring someone in... I think that's an issue for a different thread..

As I said above I've not got a solution to all the issues yet simply a starting point that gives HMRC something simple to start with... IR35 is a great one because it may not be SD or C that the company is applying to the contractor, the contractor could be applying SD or C to the company using the original Monday to Friday example....

[teapot418]

I am a single consultant in a company that cannot expand beyond that point. Why do I need a business plan?

I missed that utter fail. but will happily add it to the list..

Perhaps if you read the document, you'll be in a position to slag it off with some authority.

[LisaContractorUmbrella]

so someone paid £x+1 is clearly and obviously not subject to SD or C? you can't base it on earnings - it's ludicrous. Just because MrX can't demand as much for his service(s) as MrY should have no impact on the rules

Thanks to Eek for the clarification of my earlier points

No more ludicrous than basing the criteria for determining whether or not tax relief is due on expenses on a single element of employment law which effectively involves the tax payer (or engager or agency) proving a negative.

This is about achieving HMRC's aim without decimating the contractor market - the current proposals are less sledgehammer and nut and more nuclear device and amoeba

[Lightwave]

I am a single consultant in a company that cannot expand beyond that point. Why do I need a business plan?

I missed that utter fail. but will happily add it to the list..

Surely you have a plan?
It might not be long or formal, but in a similar position, I have a plan that my company will offer my services to a series of clients for the 'n' years or so, then it will either progress into designing its own products or wind up.

FWIW, that differentiates me from someone who just has a company because they need one for this year's agency job.

[eek]

Surely you have a plan?
It might not be long or formal, but in a similar position, I have a plan that my company will offer my services to a series of clients for the 'n' years or so, then it will either progress into designing its own products or wind up.

FWIW, that differentiates me from someone who just has a company because they need one for this year's agency job.

I do have a plan. It features using substitution to build up a business to the point that it employs multiple people. I can't do that if the company I'm using is restricted to a single employee and shareholder...

[gisajob]

And IPSE can make proposals until we discover that the moon is actually made of bleu cheese rather than green cheese, but if those proposals limit the tax take that the government thinks it can get from us, they'll fall on deaf ears, because we've been targeted and it's not likely to get better.

But they are already hitting their target (and more) for lost tax take with the new dividend tax. The consultation document estimates the Treasury is losing £430m per year at the moment and that the new rules target approx 265000 Ltd Co. contractors. I've seen calculations showing that the rough consequences of the new dividend tax will be circa £2k per year. 265000 x 2000 = £530m

Surely that's just HMRC's method to make us all split the liability, regardless of turnover, rate, no. of directors, IR35 position etc. Or is that over simplifying it...?