Freelance Limited Company (FLC) offering from IPSE

[MrMarkyMark]

We get rewarded for delivering value to the client.

Agree totally.

Thats why I said amongst other reasons, my risk example was something personal to me and in a particular context.

The problem is umbrella companies, pimps and other Klingons blurring the lines between consultants, contractors and agency scrotes.

Yup. My thoughts exactly.

[WordIsBond]

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...?

Yes, they are hitting their target (and more) with the new dividend tax, but oddly enough, Georgie's budget still isn't balanced. And their baseline is we should be paying the same tax as employees, so obviously target practice will continue.

Yes, the new dividend tax should have made them pause and say, "Let's see how this works with disguised employment, we don't really have to keep on this IR35 thing until we see how things go." But there are feathers to be plucked, and we're the turkeys of the day as far as HMG is concerned.

Until IPSE or anyone else figures out how to change that mindset, we're toast, and any proposals that don't touch it and include any concessions at all are only likely to be used against us rather than accepted in full.

[WordIsBond]

You are of course free to apply for a job with said big consultancy.

HMG is of course free to explain why he should have to do that to get the same tax treatment as they get on expenses.

[LisaContractorUmbrella]

Since 'contractor' is an undefined term that IPSE doesn't use much, that's not ever so helpful really.
The problem is umbrella companies, pimps and other Klingons blurring the lines between consultants, contractors and agency scrotes.

It's 'principle' btw.

Thank you for the spelling correction.

Other than that you seem to have missed the point I was trying to make. There needs to be a distinction made between a contractor and an employee and if a 'contractor' was defined we may not have the problems that we have now

[Lightwave]

HMG is of course free to explain why he should have to do that to get the same tax treatment as they get on expenses.

Equally we are free to explain why umbrella worker 'A' employed via an agency to work alongside agency worker 'B' deserves more beneficial treatment.

Also, I suspect the consultant from the large consulting co generates more tax in total from his assignment, because his daily charge out rate creates turnover and corp tax for his firm. And he's generating a stout NI bill.

Contracting is quite diverse.
How many of us are employed as an alternative to a consultant form a consulting co, and how many are an alternative to a permie?
Personally, my client would have to replace me with a permie, or another freelancer, or they could outsource the whole project, it's that kind of role. To bang on about the old days again, I was in a project based industry, so a big reason for not taking on permies was that they would not be needed when the project wound down.

[Lightwave]

Thank you for the spelling correction.

Other than that you seem to have missed the point I was trying to make. There needs to be a distinction made between a contractor and an employee and if a 'contractor' was defined we may not have the problems that we have now

It's not a binary choice though.
We have:
Consultant (multi client)
Contractor (single client at a time)
Umbrella co workers
agency staff (multi end-client)
agency staff (single end-client)
Temporary contract direct PAYE
Permies

Plus other convolutions.
with time of engagement distinctions.

While I think the proposals on the table are deeply flawed, so is the status quo.....

[LondonManc]

Equally we are free to explain why umbrella worker 'A' employed via an agency to work alongside agency worker 'B' deserves more beneficial treatment.

Also, I suspect the consultant from the large consulting co generates more tax in total from his assignment, because his daily charge out rate creates turnover and corp tax for his firm. And he's generating a stout NI bill.

Contracting is quite diverse.
How many of us are employed as an alternative to a consultant form a consulting co, and how many are an alternative to a permie?Personally, my client would have to replace me with a permie, or another freelancer, or they could outsource the whole project, it's that kind of role. To bang on about the old days again, I was in a project based industry, so a big reason for not taking on permies was that they would not be needed when the project wound down.

How would you know the difference?

If you're in an IT development department, you could be either.

[eek]

It's not a binary choice though.
We have:
Consultant (multi client)
Contractor (single client at a time)
Umbrella co workers
agency staff (multi end-client)
agency staff (single end-client)
Temporary contract direct PAYE
Permies

Plus other convolutions.
with time of engagement distinctions.

While I think the proposals on the table are deeply flawed, so is the status quo.....

So come up with a solution that solves HMRCs problems....

I know that this going to become a broken record but just saying x is a bad idea doesn't solve anything when x is currently the only option on the table.

And currently a rule based on a percentage of national living wage is the only plausible suggestion on the table. I don't want to promote it if someone comes up with something workable and better but I'm not seeing anything workable or better just continual posts saying its a bad idea (yep, it is, the other option is just worse)...

[Lightwave]

So come up with a solution that solves HMRCs problems....

I know that this going to become a broken record but just saying x is a bad idea doesn't solve anything when x is currently the only option on the table.

And currently a rule based on a percentage of national living wage is the only plausible suggestion on the table. I don't want to promote it if someone comes up with something workable and better but I'm not seeing anything workable or better just continual posts saying its a bad idea (yep, it is, the other option is just worse)...

Dare I suggest that the key thing could be being a 'professional' as in broadly equivalent to Chartered status?
Just a thought, not something I'm committed to.

Either that, or as I've seen elsewhere, the concept of an 'overarching employment', i.e. I'm employed by myco and myco sends me wherever the contracts are, and employs me continuously for as long as that's my 'business model'. I've always seen that as significant, paying myself the same salary whether I'm in contract or 'between'.

Maybe what's needed is forcing people to pay themselves serious salaries for their 'bum on seat' role?
An end to the £10k plus 10x that in divs for a '£50k permie' role?
I don't know.
I am relieved not to be dependent on my contracting career going very far forwards from here!

[WordIsBond]

So come up with a solution that solves HMRCs problems....

Combine NI, employer's NI, and income tax into a single tax. Make corporation tax the same rate. Eliminate dividend taxation entirely.

Life becomes easier for everyone.

Except for the politicians, who lose the ability to tinker with rewarding behaviour they like and punishing things they don't like but can't criminalise. And they'd lose also a big part of the ability to obscure how much tax they are taking. And they'd lose the ability to lure companies here with low corporate tax and then hammer them and their employees on employment tax, and brag about how they've brought in new jobs.

So it won't happen.