How many contractors does it need to be a business rather than a PSC?

[breaktwister]

I'll just stop posting for awhile and not dilute a useful and highly topical thread

This forum would be much more useful if you took your own advice.

[breaktwister]

It's a ridiculous idea, trying to work around IR35. IR35 has been around for 17 years. If your idea was remotely workable, everyone would have done it - so why don't you talk to a company that works in the way you describe and see what their problems to date have been?

It hasn't been needed until now as it has been easy for a PSC to make an "outside" determination. I don't know of any company that has tried this model - you seem to know everything so why you don't point me in the direction?

[breaktwister]

Share ownership based on daily rate is never going to work out.

Fair enough. I knew that there would be huge challenges on the dividend side but thought that there might have been a way to contract around some of it.

[eek]

Here is my idea: Something similar to an umbrella company where contractors team together to form a consultancy/services firm. No individual is allowed to own more than 5% of the firm. The firm handles invoicing etc and everyone is paid a basic minimal salary. Each contractors daily rate determines his percentage of ownership so that dividends can be paid proportionally. IR35 cannot be applied to these individuals regardless of "end-client SDC" as they do not meet the criteria of s51 ITEPA 2003. The firm can rightly bill out to the end-client or agency and expect to receive the full amount without the "deemed employee" deductions. Operating under this structure can be sold to end-clients as an "IR35 free" solution where they are not required to determine SDC.

The name of that idea is a Managed Service Company - it was Brookson's (firm of accountants) original business model and was banned in the early 2000s.

Can I be honest here you are going over old ideas that have already either been done and then banned or already discussed to death. Stop posting schemes as they come into your head and read a bit....

[RonBW]

It hasn't been needed until now as it has been easy for a PSC to make an "outside" determination.

If your idea was workable, then every PSC would be working this way so that there is no risk of an IR35 investigation. It has been "easy" to make the declaration, yes, but there has ALWAYS been a risk that the declaration would be challenged - so if there was a loophole in the way you suggest then many, many contractors would work that way because it would immediately remove the risk of there being any challenge to the IR35 status declared by the contractor.

The fact that there aren't huge groups of people working this way should give you some kind of indicator about whether your idea has any merit or not - if it was workable then most contractors would operate this way and remove the risk of an investigation. Why wouldn't you work that way if it was viable?

I don't know of any company that has tried this model

And there's a good reason for that. You just don't seem to want to hear it.

[breaktwister]

The name of that idea is a Managed Service Company - it was Brookson's (firm of accountants) original business model and was banned in the early 2000s.

Can I be honest here you are going over old ideas that have already either been done and then banned or already discussed to death. Stop posting schemes as they come into your head and read a bit....

Fair enough, I've obviously annoyed quite a few of the long-time posters by asking so many questions and putting my ideas up for discussion. Its easier to ask questions in a forum where someone can quickly put you right rather than try to become an expert in everything via your own research overnight. I have been spending every hour I can reading up on this - it is a lot of research.

[northernladuk]

Fair enough, I've obviously annoyed quite a few of the long-time posters by asking so many questions and putting my ideas up for discussion. Its easier to ask questions in a forum where someone can quickly put you right rather than try to become an expert in everything via your own research overnight. I have been spending every hour I can reading up on this - it is a lot of research.

Which is fair enough but you aren't asking questions. You are getting snippets of information and then regurgitating them as fact and making up failed scenarios based on that little bit of information you've found. It's then taking us ages to explain why your posts are so incorrect taking over the forum/thread with pointless posts. Ask a point, get an answer, go away and digest but make sure what you ask is relevant and useful.

[RonBW]

The name of that idea is a Managed Service Company - it was Brookson's (firm of accountants) original business model and was banned in the early 2000s.

Late 2000s - legislation announced December 2006, introduced 2007.

[administrator]

Late 2000s - legislation announced December 2006, introduced 2007.

Heck, that really was 10 years ago!
Managed Service Companies - MSC Legislation, Rules and Guides

[RonBW]

Heck, that really was 10 years ago!
Managed Service Companies - MSC Legislation, Rules and Guides

Time flies and all that