Freelance Limited Company (FLC) offering from IPSE

[youngguy]

I don't see how the FLC helps us in any way at all? My view is simple...If the Gov wants to tax me like an employee then give me the benefits. If I have to carry the risk (just because my contract has never been ended doesn't mean it won't) then there should be some incentives .

Back to IPSE however, I know the paper is out for consultation but I'm yet to see anyone who supports their views and I can't understand how they reached the views they have. I hope this is a true consultation and they listen to feedback. If not then I will be getting my insurance elsewhere. Bring back the PC I say!

[sapexpert]

Is mostly about the low-end market

Is about the low-end of the market as shown on the BBC 4 podcast (like M&S outsourcing to DHL that in turn uses agency workers that in turn use umbrellas ou Ltds although M&S retains SDC).
BBC Radio 4 - The New Workplace, Who Do I Really Work For?

My 2p.

There is far too much to read there to provide a short reply I'll try tomorrow night...

I have however gone back and reread the IR35 discussion document again.

The first thing that leaps out at me is that if they move the compliance checks and responsibility for payment back to the end client an FLC or limited company instantly becomes untenable for the end client. The end client will need assurance that all tax has been paid and the only way to do that would be to ensure that all payments are done via a trusted 3rd party...

But as the document makes clear HMRC wants clear and simple, practical solutions they can implement.... So we need to highlight the unworkable bits and endeavour to find a solution that might just work...

[eek]

I don't see how the FLC helps us in any way at all? My view is simple...If the Gov wants to tax me like an employee then give me the benefits. If I have to carry the risk (just because my contract has never been ended doesn't mean it won't) then there should be some incentives .

Back to IPSE however, I know the paper is out for consultation but I'm yet to see anyone who supports their views and I can't understand how they reached the views they have. I hope this is a true consultation and they listen to feedback. If not then I will be getting my insurance elsewhere. Bring back the PC I say!

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

[jamesbrown]

The first thing that leaps out at me is that if they move the compliance checks and responsibility for payment back to the end client an FLC or limited company instantly becomes untenable for the end client. The end client will need assurance that all tax has been paid

It depends how the liability is enforced. For example, subject to a reporting requirement being met, it could (quite reasonably) become the responsibility of HMRC to chase any deemed payments that a client indicates are due. I think HMRC would accept that, because we're talking about a low latency (not years after a tax year is closed) and non-payment would represent evasion rather than avoidance. I think the implementation will aim to support Ltd companies being an option, in principle, only one that is less appealing in practice.

But as the document makes clear HMRC wants clear and simple, practical solutions they can implement

Perhaps, but I wouldn't overstate it. Both documents acknowledge the inherent complexity and all of the recent proposals focus on SDC, which isn't much of a simplification.

[eek]

I wonder if the "protected yield" figure will be revised downwards to account for the changes to dividend taxation and, if so, what will remain of it once that is done. One would have thought this would have been sufficient for HMG to lay their avaricious paws on much of this "protected yield".

Also, good comments JB and WiB, certainly a lot of food for thought.

The dividend tax is probably just an old fashioned tax increase. I think it could decrease the potential tax take to £230m or so.

This is based on the Supposedly 100,000 freelancers who should be subject to ir35 (would love to see evidence behind that figure) which would increase current tax take by £430m or £4300 a year.

[jamesbrown]

The dividend tax is probably just an old fashioned tax increase. I think it could decrease the potential tax take to £230m or so.

This is based on the Supposedly 100,000 freelancers who should be subject to ir35 (would love to see evidence behind that figure) which would increase current tax take by £430m or £4300 a year.

We should certainly make that point in the response, because a lot of this is premised on the size of the deterrent effect (it may be a farcical amount, but half of a farcical amount makes a difference). However, one also needs to look at the situation in, say, 2020 when various other rates and allowances will have changed (and probably the dividend tax rate too )

[eek]

It depends how the liability is enforced. For example, subject to a reporting requirement being met, it could (quite reasonably) become the responsibility of HMRC to chase any deemed payments that a client indicates are due. I think HMRC would accept that, because we're talking about a low latency (not years after a tax year is closed) and non-payment would represent evasion rather than avoidance. I think the implementation will aim to support Ltd companies being an option, in principle, only one that is less appealing in practice.

Yep I think we would both agree that using a limited company will be as easy as opting in to agency regulations.

Perhaps, but I wouldn't overstate it. Both documents acknowledge the inherent complexity and all of the recent proposals focus on SDC, which isn't much of a simplification.

It is simple if you apply the logic through agency = SDC = IR35

[teapot418]

would love to see evidence behind that figure

Footnote on page 4

There is no statutory definition of a PSC and they are not precisely identifiable in the available data. The government has estimated the number of PSCs using a proxy. It is therefore subject to a degree of uncertainty.

i.e. we made it up

[Zero Liability]

We should certainly make that point in the response, because a lot of this is premised on the size of the deterrent effect (it may be a farcical amount, but half of a farcical amount makes a difference). However, one also needs to look at the situation in, say, 2020 when various other rates and allowances will have changed (and probably the dividend tax rate too )

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?

[eek]

Footnote on page 4

There is no statutory definition of a PSC and they are not precisely identifiable in the available data. The government has estimated the number of PSCs using a proxy. It is therefore subject to a degree of uncertainty.

i.e. we made it up

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.