A New Business Entity Test

[DaveB]

Could you simplify it completely by using a percentage of costs from turnover as a determinant? E.g. if your business costs are more than 10% of turnover 'IR35' [placeholder for replacement] won't apply?

I wouldnt be happy with that personally. My costs are around 7.5% of turnover, but I have multiple clients, including direct B2B and my turnover is such that I'm likely to be kicked off the FRS this year. The bulk of the expenses come from working for one client so the %tge of turnover is relativley low.

Anyone working remotely, having a local client(s) etc could potentially lose out as well as T&S are generally our biggest on going costs.

[jamesbrown]

Could you simplify it completely by using a percentage of costs from turnover as a determinant? E.g. if your business costs are more than 10% of turnover 'IR35' [placeholder for replacement] won't apply?

You can do what you want with deeming criteria, but they'll always end up favouring certain sectors or business models in a more or less arbitrary way. For example, picture a small business that operates from their own premises (limited T&S) and has meaningful expenses on equipment, but nothing like 10% of turnover, especially for a business with a relatively high turnover.

[LisaContractorUmbrella]

I wouldnt be happy with that personally. My costs are around 7.5% of turnover, but I have multiple clients, including direct B2B and my turnover is such that I'm likely to be kicked off the FRS this year. The bulk of the expenses come from working for one client so the %tge of turnover is relativley low.

Anyone working remotely, having a local client(s) etc could potentially lose out as well as T&S are generally our biggest on going costs.

Fair enough, just a thought

[Danglekt]

Could you simplify it completely by using a percentage of costs from turnover as a determinant? E.g. if your business costs are more than 10% of turnover 'IR35' [placeholder for replacement] won't apply?

That just favours people with low turnover.

[LisaContractorUmbrella]

That just favours people with low turnover.

Please see above

[TheFaQQer]

Could you simplify it completely by using a percentage of costs from turnover as a determinant? E.g. if your business costs are more than 10% of turnover 'IR35' [placeholder for replacement] won't apply?

Encourages people to what a load into a pension plan instead.

[WordIsBond]

Encourages people to what a load into a pension plan instead.

I thought government was all about encouraging pension savings.

It would certainly incentivise someone near the threshold to A) cheat or B) suddenly need a new laptop or printer or some other legitimate but unneeded expense.

[WordIsBond]

However, perhaps more importantly from HMRC's perspective, is whether it has the advantage of increasing tax take sufficiently.

If it helps them filter out the cases where they are almost sure to lose, then it will probably increase tax take because they can target investigations at the high risk people.

Really, this is all about putting mascara on pig eyebrows. IR35 should just die.

[LondonManc]

Two sides to it. We prove we're not disguised permies is one of them, as per the checklist of permie rights that we don't get.
The other is clientcos avoiding NICs - this is the side that should be implemented in some other way. Contractors should be proved to be engaged for clearly defined pieces of worked that are non-repeatable, i.e. cleaners must become FTEs.

[northernladuk]

Two sides to it. We prove we're not disguised permies is one of them, as per the checklist of permie rights that we don't get.
The other is clientcos avoiding NICs - this is the side that should be implemented in some other way. Contractors should be proved to be engaged for clearly defined pieces of worked that are non-repeatable, i.e. cleaners must become FTEs.

Thing is a number of us ARE disguised permies and I would like to see something separating them out from the rest of us. Just having a business and paying divis' does not mean everyone by default is a contractor in the proper sense.