As is the theme of many of the threads here, the world of contracting is going to be different from April 2016. That process will accelerate when the IR35 "reforms" arrive (consensus is April 2017?).
The present business models are unlikely to survive. Or if they continue to be used, will result in higher tax bills for contractors and presumably higher contracting bills for clients.
The effect on tax revenues is an increase for HMG although perhaps not as much as predicted.
New business models will arise. I hear tales of the IPSE suggested FLC. From what I can see, that looks like a variant of the Family Limited Company/Partnership that a lot of wealthy families use to hold and trade business interests. (Forgive me if that is incorrect as I've not really focussed there as yet).
I fear that some sharks are already circling. I can see claims that a client paying an offshore entity which pays your offshore company will avoid the rules. No. I can see claims that payment in kind/shares/credit will avoid tax. No. I can see claims that Elvis has been spotted in Sainsbury's means no tax is due. No.
The more I think about this, the more I become convinced that some form of time based test will be used to determine whether, for tax purposes only, your income should be treated as business receipts or salary. I just feel that the S,D or C tests are just to flaky to be operated consistently.
I've already been asked to look at a partnership scheme where some profits are stored in a corporate member. I shared some of that and it got comprehensively shot to pieces based on practical operation.
There are perhaps other models waiting to launch. I'm sure a lot of tax advisers have their favourites.
Contractors may leave the UK but that probably means no longer working for UK resident companies. I suspect many contractors who have family and settled connections in the UK will not wish to leave. For them the simple answer (he's says reaching for tin hat) is to increase rates.
The present business models are unlikely to survive. Or if they continue to be used, will result in higher tax bills for contractors and presumably higher contracting bills for clients.
The effect on tax revenues is an increase for HMG although perhaps not as much as predicted.
New business models will arise. I hear tales of the IPSE suggested FLC. From what I can see, that looks like a variant of the Family Limited Company/Partnership that a lot of wealthy families use to hold and trade business interests. (Forgive me if that is incorrect as I've not really focussed there as yet).
I fear that some sharks are already circling. I can see claims that a client paying an offshore entity which pays your offshore company will avoid the rules. No. I can see claims that payment in kind/shares/credit will avoid tax. No. I can see claims that Elvis has been spotted in Sainsbury's means no tax is due. No.
The more I think about this, the more I become convinced that some form of time based test will be used to determine whether, for tax purposes only, your income should be treated as business receipts or salary. I just feel that the S,D or C tests are just to flaky to be operated consistently.
I've already been asked to look at a partnership scheme where some profits are stored in a corporate member. I shared some of that and it got comprehensively shot to pieces based on practical operation.
There are perhaps other models waiting to launch. I'm sure a lot of tax advisers have their favourites.
Contractors may leave the UK but that probably means no longer working for UK resident companies. I suspect many contractors who have family and settled connections in the UK will not wish to leave. For them the simple answer (he's says reaching for tin hat) is to increase rates.
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