Are we really thinking of off payroll rules for Private Sector?

[LandRover]

Then as I said before once you get past that point you are left with the question are those people innocent consumers who should be protected from their mistakes or were these decisions business decisions for which there is no excuse - and in that case I disagree with MMM as I do believe people should be held responsible for their decisions no matter how misguided their were....

Many of us are not technical accounting experts, we went to so-called professional Chartered Accountants. For example I went to my local High Street Chartered Accountant to setup a LTD company, and after having the IR35 fear driven into me by the accountant, was offered an alternative by the very same accountant to join a scheme that mitigated IR35.

So does that make me a naive idiot or a tax avoiding scum-bag?

Very easy for those not affected to be righteous.

[eek]

Many of us are not technical accounting experts, we went to so-called professional Chartered Accountants. For example I went to my local High Street Chartered Accountant to setup a LTD company, and after having the IR35 fear driven into me by the accountant, was offered an alternative by the very same accountant to join a scheme that mitigated IR35.

So does that make me a naive idiot or a tax avoiding scum-bag?

Very easy for those not affected to be righteous.

Rule 1 in all professional advice - how much of a kickback are you getting from selling me that?

For the past 15 years there has really been 2 options - tax avoidance schemes or IPSE / IR35 insurance. Given that I run a mile from anything with the word trust / loan in the title (rule 2 is I want my money in my account asap) you can tell which approach I took - and I really can't understand why anyone would accept anything with the word trust / loan in the title / documentation as a payment mechanism - but you can tell I'm risk adverse.

now if it was a local accountant who had sold me the scheme I would be attacking his professional insurance for everything its worth - especially as I doubt he was qualified as a tax specialist. and if he was the latter I definitely would be going after his professional insurance. Mind you the local travellers and a baseball bat would be an equally appropriate approach..

[eek]

Somebody is going to have to do it in court. THAT will be heard loud and clear. It has to be someone in the PS whose client declared them inside IR35. By declaring that, they are declaring that you work like an employee, and so should be taxed like an employee. When your employer says that and doesn't give you employment benefits, it's court time.

The unions will - I believe the court cases are already being prepared....

[LondonManc]

The unions will - I believe the court cases are already being prepared....

Which is why Hammond should hold off on Private Sector - he hasn't even seen the fallout of Public Sector go-live yet.

[northernladyuk]

Remind me of the structure in Ireland; isn't it just a dividend witholding tax at normal income tax rates (to which CT doesn't apply)? What about NICs? Unless there's a look-through structure whereby company income (minus limited expenses) is fully (or almost fully) taxed under PAYE on the controlling persons, there will always be the perception of a "tax gap". Having income deferred and taxed at lower marginal rates in future is generally a bigger issue than the marginal rates themselves, at least for higher paid contractors. In other words, the only "simple" solution that achieves the objective of equivalent tax treatment across different forms of income is also pretty drastic. Perhaps an equivalent treatment of different forms of income, as it arises, is an acceptable compromise, but it's far from equal treatment. Obviously, there's a reasonable justification for this too, because we can only do this with a warchest and, from our perspective, it's punitive to heavily tax a good year when a bad year is around the corner, but this isn't an easy argument to win.

Dividend Withholding Tax is 20% but does not define the totality of an individual's tax due on dividends. It is taxed as income: employees' PRSI (NIC equivalent), income tax at marginal rate and USC, therefore if your income is above €33,800, all income including divis, is taxed at a marginal rate of 52% - with the Ltd having already paid CT. Leaving aside the rates, this structure is a very simple way of sorting out IR35, should HMG wish to do so.

A contractor can of course hold funds over in the Ltd, but is then paying CT this year, and being taxed on divis as income down the road. There is also an Entrpreneurs Tax Relief Scheme which reduces CGT from 33% to 20% with T's and C's.

[northernladyuk]

Doesn't work as JB states you need to change a lot of other things to get to that point.

All you need to do is tax dividends as earned income.

[PurpleGorilla]

The tax collection system is a slow response system, much like your domestic heating controls. Hammond's existing changes with Div Taxes have yet to have full effect, and he is currently turning the dial up with PS off book. If he reaches for the control again and hits the private sector with off book, the latent carnage that awaits will be huge.

[LondonManc]

Could be that people will need to be declaring sizeable dividend at the end of March based on the upcoming budget.

[RonBW]

Somebody is going to have to do it in court. THAT will be heard loud and clear. It has to be someone in the PS whose client declared them inside IR35. By declaring that, they are declaring that you work like an employee, and so should be taxed like an employee. When your employer says that and doesn't give you employment benefits, it's court time.

You won't get employment rights. You might get worker rights, though. There is a big difference.

I'll offer my prediction of how this will pan out.

1) Review of workers rights is announced.
2) Review determines that the rights that workers get are fair, but there is no longer a requirement in this day and age to pay for holiday pay as a worker
3) Unions argue this is unfair; businesses argue this is what we need in a post Brexit global economy (insert buzzwords a-plenty) to be competitive
4) Businesses win the argument - business good, union bad
5) A large percentage of contractors are now seen as workers - you get a few rights that businesses don't care much about now because they've got rid of the expensive one.
6) HMRC declare this a "win" because PAYE receipts go up (HMRC do not look at additional costs elsewhere in the system, merely money received via PAYE)

Timescale: Before 2025

[barrydidit]

The tax collection system is a slow response system, much like your domestic heating controls. Hammond's existing changes with Div Taxes have yet to have full effect, and he is currently turning the dial up with PS off book. If he reaches for the control again and hits the private sector with off book, the latent carnage that awaits will be huge.

The divi tax was Gideon's work, not Hammond.

Could be that people will need to be declaring sizeable dividend at the end of March based on the upcoming budget.

Fortunately, I did that last year to pay off the mortgage before the 7.5% business came along. I suppose i'll have to consider it again if the rates are going up significantly, but that'll bugger things up with the payments on account I made in January. Doesn't make life easy if you can't be certain what the tax rate is going to be in 2 months time...