IR35 - Back to first principles....

[jamesbrown]

Well, you could institute a dividend tax to discourage tax-motivated incorporation, thus narrowing significantly the gap between employment and self-employment taxation. Then, for one-man bands, you could remove the employment allowance (since it is intended to encourage employment, not be a nice bonus for one-man bands. And then, you could simply STOP since you've done enough.

But if you really, really need to do more, narrow the gap further between employment and non-employment taxes. That is simple and eliminates the need to establish somewhat arbitrary distinctions between what is and isn't employment for tax purposes.

You should work for the Treasury Wait a second...

I wouldn't argue against tax simplification as the end goal (for everyone concerned).

[LisaContractorUmbrella]

It depends how you formulate it. I think it applies to "skilled" work, but obviously not to generic support workers for whom SDC will almost certainly apply (I don't mean that to come across in a condescending way, but I think it's a pointer in the context of SDC).

Yes exactly

[WordIsBond]

You should work for the Treasury

https://www.gov.uk/government/organi...ut/procurement

Their procurement pipeline is way out of date.

[Danglekt]

interesting point regarding liability.

Lets imagine a claims comes in retrospectively, the client then pursues the contractor and in doing so drums up £100k in legal nonsense (ok £100k is an exageration but you get my point).

Many a warchest (hate that phrase) will be bled dry by legal fees rather than the tax clawback. How do we protect against that mess?

[DaveB]

interesting point regarding liability.

Lets imagine a claims comes in retrospectively, the client then pursues the contractor and in doing so drums up £100k in legal nonsense (ok £100k is an exageration but you get my point).

Many a warchest (hate that phrase) will be bled dry by legal fees rather than the tax clawback. How do we protect against that mess?

Would your PI cover it or are we looking at a whole new insurance product ala IR35 cover?

[jamesbrown]

Would your PI cover it or are we looking at a whole new insurance product ala IR35 cover?

No, PI wouldn't cover it. In the current regime, IPSE and others offer legal expenses cover ("professional expenses insurance"). In addition to that, you can get tax liability insurance (covering tax, interest and penalties). However, if there's a material change in risk, there will be a material change in cost (probably not a material change in risk w/ client as gatekeeper, because the bar will be high).

[WordIsBond]

Would your PI cover it or are we looking at a whole new insurance product ala IR35 cover?

It would have to be a new product. It would be tied to the contract, and the client would be the beneficiary for any liability they have, so that if the contractor Ltd co goes out of business the client is still covered.

And either clients would purchase it directly or they would force contractors to purchase it on their behalf. That would be a negotiation point, like rate and other things -- who pays for the client's IR35 insurance?

[fidot]

not if under SDC

But if a contractor is under the client's SDC, there's not much scope for pursuing the contractor legally.

It's why, pre IR35, that agency contracts tried to show that contractors were under the client's SDC, so that there was no come back on the agency.

[mudskipper]

I ran a google search and filtered on results before 2002 - it does appear (as some have claimed) as if it has always been SD or C, and not always with the not! - but I couldn't find a result which was actually a date stamped document, so ICBW.

Tried this - everything seems to come back dated 1/2/2001. Not convinced the results are accurate...

[breaktwister]

Loophole to all of this

IR35 was poorly written, difficult to police and easy to circumvent. Everything I have read so far on the new issues can be circumvented by contractors buddying up and forming a ltd with 2 directors proving business services to 2 or more clients. Thus, such a company falls outside the definition of "an employment intermediary" and SDC, IR35 etc doesn't apply.