Freelance Limited Company (FLC) offering from IPSE

[LisaContractorUmbrella]

I read it that it would make you immune from investigation, as long as you complied with the operating criteria. If, for whatever reason - choice or circumstance, you failed to meet the operating criteria, then you would again be at risk.

But that's just adding layers and making things unnecessarily complicated (again) e.g. a business plan review I can see that as an opportunity for companies to make money - offering business plan reviews where they now offer IR35 reviews but other than that I can't see that the inclusion serves any real purpose.

[jamesbrown]

I don't know where you think I'm suggesting a turnover based approach.

Understood, but we're both using this phrase as a shorthand, and it amounts to screening based on rates, if not totals.

[eek]

But that's just adding layers and making things unnecessarily complicated (again) e.g. a business plan review I can see that as an opportunity for companies to make money - offering business plan reviews where they now offer IR35 reviews but other than that I can't see that the inclusion serves any real purpose.

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..

[jamesbrown]

But that's just adding layers and making things unnecessarily complicated (again) e.g. a business plan review I can see that as an opportunity for companies to make money - offering business plan reviews where they now offer IR35 reviews but other than that I can't see that the inclusion serves any real purpose.

I've tried to avoid discussing the specifics, but I suppose this is effectively in the public domain now. There are elements of this plan that are worse than half-baked, they are unbaked, and would further complicate an already complicated administration, without any upsides. Let's face it, the vast majority of contractors have quite a simple "business plan": get contract, make money, with an occasional dose of re-skill. There's a reason that the BETs failed miserably. However, I don't think there's merit in discussing any of the details surrounding the implementation of the FLC when the basic premise is flawed. It's a poor solution to the wrong problem. I do hope that we'll be able to bring some pressure to bear on this and avoid it being adopted as an official position.

[eek]

Yes, this is my basic concern too (i.e. I'm trying to think beyond what makes sense for us as, generally well-paid, contractors). On the one hand, you do want to screen out the large number of low-paid workers that are being guided into using Ltd companies for a mixture of tax purposes (benefits on both sides, but mainly the employer) and employment law purposes (benefits the employer). A turnover approach (and I use this as a shorthand) is quite a crude way of doing this, but I'm willing to listen.

I think we're just looking for a prerequisite or screening mechanism, rather than an over-arching solution (i.e. SDC will still be needed). However, we're trying to address the symptom (too many companies) rather than the cause (unscrupulous employers). It would be better to address the cause somehow. For example, is there some way of imposing a meaningful penalty regime on employers that require or otherwise guide low-paid workers into incorporation for tax/employment law purposes (i.e. penalties that require them to be seen to be doing the opposite, if anything)? In the new joined-up environment, one would think that it would be fairly straightforward to identify candidates for investigation.

Your options would be:-

payment below x an hour/day/week have to be done either directly or directly from the agency / via an agency's designated payroll company.

or

a x strikes and you are out rule. After which agencies would only be able to employ people via their own payroll..

I know its screening on rates (remember I've never said I liked the idea). But that is simple, easy to implement, clear cut and directly tackles the issue both the unions and HMRC really dislike...

[pr1]

If a worker is on Living Wage + 20%, or less, then an umbrella company or a single person Ltd Co should not be an option. Legislation such as this would not need to be constantly reviewed as it is aligned with Living Wage, it would be simple to police through RTI and agency reporting

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

if Government had the gumption to ban zero hours contracts, vulnerable low paid workers would be back in safe, protected, permanent employment.

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

[jamesbrown]

Remember its a mess because HMRC are only attacking symptoms not the causes..

Yes, I completely agree. However, I think we should respond to these discussions and consultations honestly. In other words, if we can think of ways to address the causes rather than the symptoms, we should do that, while being mindful of the practicalities.

[WordIsBond]

If a worker is on Living Wage + 20%, or less, then an umbrella company or a single person Ltd Co should not be an option.

OK, but you can't make it that simple, or you block the start-up free lance photographer mentioned above, the inventor, etc. They HAVE to be Ltd for liability reasons.

If I take a year off contracting, pay myself nothing, live off of savings, and develop a product, should I still be allowed to have a Ltd Co? If I take 2 contracts of 2 weeks each during the year and pay myself a little bit from them, does that change the picture?

It's the problem of unintended consequences hitting people who weren't in view when the proposal was made. The government specialises in that, of course. But in this case, i think they wanted to hit contractors.

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. I'd find some hope that this is the "bad news budget" and that they'll start to bring out good news later, but for us, their consultations and discussions are all about hitting us again. I doubt it will be the complete worst case scenarios, but 2016-17 is going to be much worse than 15-16, and chances are high that 17-18 is going to be a lot worse than 16-17 for many of us, too. And we don't carry enough votes, and we aren't the kind of victims the press likes to bloviate about.

Our best hope is probably to convince enough Tory MPs that they are behaving worse than Labour, and thus put pressure on them to at least slow down and think about the 5 year effects of what they are doing on the economy. Georgie isn't going to be PM if they kill the economy and he can't get elected.

[jamesbrown]

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

I don't agree with that specific suggestion, but I do think the bar is currently too low for incorporation. That's one aspect of the FLC discussion that I did agree with. I think it would be helpful to require a minimum initial investment, through share capital, even if it isn't paid down immediately.

[pr1]

I don't agree with that specific suggestion, but I do think the bar is currently too low for incorporation. That's one aspect of the FLC discussion that I did agree with. I think it would be helpful to require a minimum initial investment, through share capital, even if it isn't paid down immediately.

i don't agree with it either, but it's fairer than it being about how much you earn