What is everyone going to do assuming HMR&C and Osborne get their way?

[WordIsBond]

Well, that "confirmation" is interesting.

One month (big business may succeed in pushing it out to 3 months) before you have to do the ESI. If you fail it, you go on payroll.

I don't see that going through. I could be wrong, but certainly engagers do not want contractors on payroll, and will fight it. They might be willing to pay an additional tax, if it isn't too high, but they don't want contractors on payroll. And I think they have enough power to stop that.

I think they've sort of taken on board that it is an injustice for the worker to pay employer NI. Employer NI is the elephant in the room, the big difference in taxation between contractors and employees, and by any just measure the engager should pay it if the engagement is deemed to be employment.

I wonder if this ends up with something I floated a while back, with a new class of NI.
1. After 1-3 months, engager must check the ESI.
2. If the ESI fails, the contractor is assumed to be under IR35.
3. If the contractor is under IR35, the engager must pay the new class of NI, "engagers NI", say 8%.
4. The contractor has to operate IR35, but IR35 no longer includes employers NI, it's been covered by the engager's NI.

For the engagers, that's not a horrible compromise. They get hit with an additional 8% tax but don't have to put contractors on payroll, with all the employment rights and other hassles involved.

For the contractors, it's yet another hit, it means you can't operate as a normal business with cash management planning, etc. If your fees one year put you in higher rate tax and the next year you're on the bench, you are going to get hammered by higher rate tax anyway, and that's not right that it should be that way. It's still unfair tax treatment, and it will drive some out of contracting. But at least contractors wouldn't be hit with employers NI as well.

Engagers might want to cut prices to recoup their 8%, but it won't work. If almost everyone is under IR35, even if exempt from employers NI, enough will get out of contracting to trigger supply/demand dynamics. Costs will go up, not down. They won't go up enough to make up for the hit on contractors, but they'll go up. Engagers won't be happy.

That's what the economic-illiterates making the decisions can't seem to grasp. They hit contractors with the dividend tax and they are looking to hammer us even more. The hit on dividend tax brings in most of the money they think they are missing while still letting us run our businesses as a business. It doesn't skew the market. But these other proposals are all devastating to the market. They will drive a lot of people out of it or force them to change behaviour. The result is that supply and demand means UK plc is going to have to pay a LOT of money for contractors, and it will hurt the economy.

Idiots.

[pjt]

We don't know yet, do we?

We don't but the harding stance on IR35 etc certainly suggests they're not looking to give us any relief.

[MarkT]

We don't know yet, do we?

And to be honest - that is no skin off of the CBI and others noses. We are too small to worry about on our own.

If IR35 makes them liable for any taxes, they'll be all over it like a rash.

[WordIsBond]

How successful has anyone been in stopping the T&S changes after that consultation.

We don't know yet, do we?

[pjt]

I'd be okay with that - on the basis that nothing happens until April 17 and that the CBI, IPSE & APSCo all fight it alongside us, tooth and nail.

How successful has anyone been in stopping the T&S changes after that consultation. I have a feeling whatever's in that document will come to pass with very few changes.

[MarkT]

Someone has just put out the idea that the 'leaked' document APSCo refer to could in fact be the consultation document - this would make perfect sense

I'd be okay with that - on the basis that nothing happens until April 17 and that the CBI, IPSE & APSCo all fight it alongside us, tooth and nail.

[LisaContractorUmbrella]

Someone has just put out the idea that the 'leaked' document APSCo refer to could in fact be the consultation document - this would make perfect sense

[Zero Liability]

You're kidding? I am sure we will go from knowing nothing, to getting a rough idea of the direction, but I'm confident that will just lead to a load more questions rather than any real clarity.

Never said anything about clarity.

[pjt]

It's only 5 days until we get actual confirmation.

Am I the only one who feels like a turkey just before Christmas??

[Danglekt]

You're kidding? I am sure we will go from knowing nothing, to getting a rough idea of the direction, but I'm confident that will just lead to a load more questions rather than any real clarity.