End of the road

[WordIsBond]

In fact, the simplicity of the comparison of the two lawyers was so basic, and so unenlightened it really troubled me.

Two lawyers, in the same gig processing similar cases, both paid 70K. Lawyer A is PAYE, and Lawyer B is PSC. It took a polarised view on just the tax aspects. In fact it was so polarised it forgot to look at some really important aspects, such as the legitimate cost of a PAYE worker. Such that I think it's fair to take double their gross salary as the cost to the business.

This has been discussed in some detail: http://forums.contractoruk.com/futur...tudy-ir35.html

If there are other details that you think we've missed, please comment so we can include them in the response. Certainly, the problems with this lawyer comparison should be part of the response we give.

Not going to rehash what others have said on here, but I found the case studies woefully inadequate, and if they are basing the consultation process on these two case studies, then I seriously question the value of the output from said consultation.

The output based on those case studies will be very valuable to HMRC in the short run because it will bring in more tax, but very detrimental in the long run because it will destroy the flexible workforce.

It doesn't recognise the real world, it doesn't recognise long term ramifications, it doesn't recognise differences between the cases they are comparing, it doesn't recognise the impact on contractors, who will be worse off than employees, all it looks at is how much money HMRC takes from a nominal amount of compensation, not even recognising that the nominal amount, in reality, is drastically different for the two cases. It doesn't even recognise the impact of legally-mandated auto-enrolment nor the fact that dividend taxation is changing next April. It is either incompetence on a staggering level or intentional misrepresentation. (I hope I'm not being too diplomatic.)

[suityou01]

No-one can argue with the idea of simplifying IR35 - it's the detail that's causing concern. What do you think of the proposal that the current tests are replaced with a single test - whether the engager has a right of supervision, direction or control over the worker (reflecting the T&S consultation)? All current case law becomes obsolete. Combine that with the fact that any contractor engaged through an agency will automatically assumed to be under supervision, direction or control and it all looks rather bleak.
How HMRC is revoking tax relief on contractor expenses :: Contractor UK

I guess we need a clear definition of what "through an agency" means. Does this mean the initial introduction?

Could the agency do the initial introduction, and the PSC then invoice directly, and the agent then invoice the PSC for his/her cut?

[suityou01]

This has been discussed in some detail: http://forums.contractoruk.com/futur...tudy-ir35.html

If there are other details that you think we've missed, please comment so we can include them in the response. Certainly, the problems with this lawyer comparison should be part of the response we give.

The output based on those case studies will be very valuable to HMRC in the short run because it will bring in more tax, but very detrimental in the long run because it will destroy the flexible workforce.

It doesn't recognise the real world, it doesn't recognise long term ramifications, it doesn't recognise differences between the cases they are comparing, it doesn't recognise the impact on contractors, who will be worse off than employees, all it looks at is how much money HMRC takes from a nominal amount of compensation, not even recognising that the nominal amount, in reality, is drastically different for the two cases. It doesn't even recognise the impact of legally-mandated auto-enrolment nor the fact that dividend taxation is changing next April. It is either incompetence on a staggering level or intentional misrepresentation. (I hope I'm not being too diplomatic.)

I would think applying Hanlons razor here is a wise choice, if even only for your sanity.

The previous IR35 looked at the practicalities of the working relationship to establish if SD&C applied. To just assume it because an agency is involved seems verging on if not entirely illegal.

I think they may have egg on their face over this.

[teapot418]

I guess we need a clear definition of what "through an agency" means. Does this mean the initial introduction?

Could the agency do the initial introduction, and the PSC then invoice directly, and the agent then invoice the PSC for his/her cut?

In many cases, the client wants to deal with an agency, not with contractors directly. I think it's not unreasonable to assume that clients will be risk adverse.

But I'm sure you're right - there will be ways round at least some of this - but creating a different set of hoops to jump through rather defeats the object of what they're trying to achieve, doesn't it?

[WordIsBond]

I would think applying Hanlons razor here is a wise choice, if even only for your sanity.

Unnecessary. I don't care whether it is malice or stupidity, so I don't have to try to decide. I just grant myself the luxury of pointing out the two alternatives to my MP. It's his job to diagnose whether the people who allegedly work for him (well, for the government) are stupid or malicious, and what he and his colleagues should do about that diagnosis.

[suityou01]

This has been discussed in some detail: http://forums.contractoruk.com/futur...tudy-ir35.html

If there are other details that you think we've missed, please comment so we can include them in the response. Certainly, the problems with this lawyer comparison should be part of the response we give.

The output based on those case studies will be very valuable to HMRC in the short run because it will bring in more tax, but very detrimental in the long run because it will destroy the flexible workforce.

It doesn't recognise the real world, it doesn't recognise long term ramifications, it doesn't recognise differences between the cases they are comparing, it doesn't recognise the impact on contractors, who will be worse off than employees, all it looks at is how much money HMRC takes from a nominal amount of compensation, not even recognising that the nominal amount, in reality, is drastically different for the two cases. It doesn't even recognise the impact of legally-mandated auto-enrolment nor the fact that dividend taxation is changing next April. It is either incompetence on a staggering level or intentional misrepresentation. (I hope I'm not being too diplomatic.)

Well I think it's pretty well covered, but I assume the PAYE lawyer is provided with a computer. I have to run my own equipment which involves upgrades and maintenance costs, and of course software licensing. Not to mention additional hours fixing them when they go wrong.

If it's in the thread apologies but I didn't see it.

[suityou01]

In many cases, the client wants to deal with an agency, not with contractors directly. I think it's not unreasonable to assume that clients will be risk adverse.

But I'm sure you're right - there will be ways round at least some of this - but creating a different set of hoops to jump through rather defeats the object of what they're trying to achieve, doesn't it?

Again why I think this will rather leave them flat footed. The consultation document doesn't take into account divvy tax. How embarrassing. When they make their move, the agencies and lawyers will cut through it all and find another way around it all, making is an expensive waste of time.

I want to know who these stakeholders are they mention, as they should have approved the document and are equally embarrassed.

The incompetence is there for all to see. They had the option to boil the frog slowly, but tried to go straight for the boiling water option. I see HMRC being greatly outnumbered, and coming out of this quite badly unless they get the house in order pdq.

[suityou01]

Unnecessary. I don't care whether it is malice or stupidity, so I don't have to try to decide. I just grant myself the luxury of pointing out the two alternatives to my MP. It's his job to diagnose whether the people who allegedly work for him (well, for the government) are stupid or malicious, and what he and his colleagues should do about that diagnosis.

Haven't you heard? It's trial by media these days. Plenty of papers want to have a pop at the Tories.

[WordIsBond]

Haven't you heard? It's trial by media these days. Plenty of papers want to have a pop at the Tories.

Yeah, well I'm not a paper, but I do, too, after that budget.

Three things:
1) Definite tax changes announced (divi tax, employment allowance).
2) Aggressively tighten rules on T&S.
3) Aggressively tighten rules on IR35.

Any one of those three, in isolation, I could understand, even support. All three? Or even two of them? What happened, did a contractor steal a girl that Georgie and Davie wanted back at uni, and they are just now getting their revenge?

Thanks for the point on Ben's computer, I'll add that in.

[suityou01]

Yeah, well I'm not a paper, but I do, too, after that budget.

Three things:
1) Definite tax changes announced (divi tax, employment allowance).
2) Aggressively tighten rules on T&S.
3) Aggressively tighten rules on IR35.

Any one of those three, in isolation, I could understand, even support. All three? Or even two of them? What happened, did a contractor steal a girl that Georgie and Davie wanted back at uni, and they are just now getting their revenge?

Thanks for the point on Ben's computer, I'll add that in.

Precisely. Trying to boil the frog too quickly. We just need a few people in high places to cotton on what this means for businesses bottom line and this will fold.

Businesses have to engage consultancies instead of contractors. Their bottom line is hit hard. Consultancies do well. PI firms go bust. Mass layoffs of permies. Greater unemployment. Bad news for call me Dave.

Just think it through. This cannot and will not go through as is, or the tulip will hit the fan.