Public sector IR35 consultation launched

[jamesbrown]

If this is a suggestion/inference/ guess that ipse's proposals to Gov are FLC again then we really are all doomed!

IPSE should have learnt how little support their idea had the first time .

Folks, we need some balance here. Regardless of what prejudices you may have about IPSE, based on perceived successes or failures in the past or opinions about certain individuals that may or may not represent them, there's very little mileage in forming a circular firing squad here. We need to face outwards and support whatever lobbying efforts may help to mitigate the damage. I'm not incredibly optimistic, but there's a reasonable chance that policy makers (not HMRC) fail to understand the implications of what is being proposed, because they don't understand the problem, either structurally (what it means to be a contractor, distinct from a temp) or fiscally (i.e. reliance on HMRC estimates that are woefully and demonstrably nonsensical, such as 90% non-compliance). You also need to bear in mind that IPSE is a member organization, and a significant majority of members were supportive of ideas like the FLC (I was not, for reasons I've identified many times before), and this is symptomatic of a wider problem. I'd guess that a majority of contractors know almost feck all about tax or legislation. CUK isn't representative (in a good way), and we have a fair number of muppets around here. This is why so many have landed themselves in trouble, historically. Perhaps a little less fighting in a sack?

[youngguy]

Oh yes, when surveyed a mere 30% or so of the membership were opposed to it...
.

Fair, I can't argue with that

[youngguy]

What makes a reduction to one year fairer than two?

I don't think it is fairer....but I do think Gov see us as a privileged group/ easy target and they are not going to let this go. At this point I think it is about the best possible deal, not the deal we all want/ feel is fair.

So the Q is where is the happy medium that doesn't cripple real Ltd businesses but appeases the view that Gov have about us having unfair tax advantages.

As others have said the div tax has clawed some tax back.

Another way may be to tighten the expenses rule. This brings in more tax , encourages depts to think about their temporary resource and provides a negotiation point at 12 months. A contractor can take the hit or up rates. A dept can accept or reject based on performance.

Another way would be a tiered Ltd tax model based on income.... That helps tackle the Starbucks issues and sets truly small businesses apart from the larger ones. It means more tax but protects important things such as pension contributions.

[northernladuk]

So the Q is where is the happy medium that doesn't cripple real Ltd businesses but appeases the view that Gov have about us having unfair tax advantages.

IPSE could chuck the BAU/Servidedesk types under a bus and see if HMRC will leave the rest of us alone for a bit?

[Hobosapien]

IPSE could chuck the BAU/Servidedesk types under a bus and see if HMRC will leave the rest of us alone for a bit?

Or sell HMRC insurance for every failed investigation they attempt.

[missinggreenfields]

I don't think it is fairer....but I do think Gov see us as a privileged group/ easy target and they are not going to let this go. At this point I think it is about the best possible deal, not the deal we all want/ feel is fair.

So the Q is where is the happy medium that doesn't cripple real Ltd businesses but appeases the view that Gov have about us having unfair tax advantages.

As others have said the div tax has clawed some tax back.

Another way may be to tighten the expenses rule. This brings in more tax , encourages depts to think about their temporary resource and provides a negotiation point at 12 months. A contractor can take the hit or up rates. A dept can accept or reject based on performance.

Another way would be a tiered Ltd tax model based on income.... That helps tackle the Starbucks issues and sets truly small businesses apart from the larger ones. It means more tax but protects important things such as pension contributions.

So, you think that there should be a separate taxation and expenses regime for "us" and "real Ltd businesses". How do you differentiate between the two camps? Is it based on number of employees (thereby hitting pubs, corner shops, small businesses), number of employees and SIC code (in which case you need to have a list of approved industries and occupations, which someone has to maintain and is easy for HMRC to tweak to their advantage)? Is it based on whether the company is predominantly in the supply of labour (but then you hit lots of other "real" businesses as well)?

Tightening the expenses rule is one way to add complexity to an already complex taxation system, but any government could do that. But it comes back to how do you identify whether the "real business" rules apply, and when do the "not real" rules apply - and if there was a simple way to do that then HMRC would have done something years ago.

A turnover tax is one thing that could happen, but it doesn't make a great deal of sense. As Duncan Bannatyne kept saying on Dragon's Den, turnover is nothing, profit is everything. Look at the turnover of (for example) a large umbrella company, and see what the profit margin is - if you change to a turnover tax then that could well be the end of low-margin businesses. Just because a "PSC" that is in IT makes whacking great margins and might be able to suck up a turnover tax, that doesn't mean that other freelance roles can do the same.

But at the end of the day, if you think that there should be separate taxation and expenses rules applied, is that not the same kind of thing as a Limited Company for Freelancers (let's call it an LCF)?

[missinggreenfields]

IPSE could chuck the BAU/Servidedesk types under a bus and see if HMRC will leave the rest of us alone for a bit?

First they came for the BAU contractors, but I said nothing etc.

I suspect that HMRC would love that to happen - because they get a whole load of people caught (no idea what percentage of contractors meet your rules), and they also see that nobody is going to fight their proposals so they can do what they want.

And saying to the membership "we don't want these guys, but to make up for that we're going to double your fees" is probably not going to indear the IPSE to the membership much.

[MrMarkyMark]

IPSE could chuck the BAU/Servidedesk types under a bus and see if HMRC will leave the rest of us alone for a bit?

True, but they would love the divide and conquer victory to be so easily had

[northernladuk]

And saying to the membership "we don't want these guys, but to make up for that we're going to double your fees" is probably not going to indear the IPSE to the membership much.

Bearing in mind we voted for brexit and Trump you never know. Would be interesting to see though wouldn't it?You could ask if they really should be supporting 1st line service desk and pure BAU 'contractors' at all to be fair. Representing anyone that pays membership isn't the best model.

Just being a bit glib really but maybe a topic for discussion.

[MrMarkyMark]

Bearing in mind we voted for brexit and Trump you never know. Would be interesting to see though wouldn't it?You could ask if they really should be supporting 1st line service desk and pure BAU 'contractors' at all to be fair. Representing anyone that pays membership isn't the best model.

Just being a bit glib really but maybe a topic for discussion.

Not really, its all worth discussion.
They are going for low hanging fruit already by going for the PS, if it works they will attempt to move on to the private sector.