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View Full Version : Why we MUST ditch our lazy attitude to finding work through agents and agencies



DimPrawn
12th August 2015, 13:28
Indeed, HMRC confirmed to us that if you’re a contractor who works through a recruitment agency, you are automatically going to be considered under Supervision, Direction or Control (SDC), or the right of these, for the purpose of the new legislation prohibiting tax relief on travel and subsistence expenses.

In other words, where a contractor supplies their personal services through an umbrella or limited company, there will be a “presumption” that there is SDC, or the right of SDC, if the contractor is engaged through an employment agency and as such, your travel and subsistence expenses will not be eligible for tax relief

This automatic opt-in to SDC all stems from a single and rather innocuous-sounding sentence on page 14 of the SDC consultation by HM Revenue & Customs, which states:

“This test will be applied in a similar away to that currently used for agency workers in Section 44 (2) of ITEPA.”

Well, Section 44 (2) of ITEPA states that where a worker is engaged by or through an agency, there will be a presumption that there is Supervision, Direction, or Control (or the right of these) over the worker.

Consequently, if the SDC proposal on travel and subsistence goes through, without alteration, then, regardless of whether there is Supervision, Direction or Control in reality, such Supervision, Direction or Control will be presupposed once contractors secure their contract through a recruitment agency.

So all contractors that work through agencies will automatically be in the position where they can no longer claim travel and subsistence expenses, once the current proposal passes into law from April 2016.

If this actually happens, then I will be going direct to clients, or going permie.

BrilloPad
12th August 2015, 13:34
If this actually happens, then I will be going direct to clients, or going permie.

In some cases it is not laziness. In the early 90s IBs insisted that direct contractors went via an agency. A lot of big organizations now insist on this - even if you found the role direct.

If you get a client you can go direct with - happy days.

Before you go permie, ask which way you will be paid more. And remember, as a permie you get all sorts of office politics, performance reviews and other nonsense you might not like.

Having said all that, I would love to get rid of all agents. Leeches.

The Spartan
12th August 2015, 13:34
Surely you have enough money and don't need to work anymore DP?

DimPrawn
12th August 2015, 13:35
Surely you have enough money and don't need to work anymore DP?

Pre divorce, yes.

Intel
12th August 2015, 13:38
It's just another step to all temporary workers and contractors / consultants being aligned with permanent staff from a tax perspective. The sector's not big enough to prevent change in that regard through political voting. Will just have to suck it up and enjoy the ride whilst it's lasted....

It's why I've spent the last few years churning out the days to pay off the mortgage and get the pension sorted. Once the alignment finally happens i'll just stick two fingers up at the gov, claim JSA, sit in my garden drinking white lightning when it's sunny and pretend I have tourettes when they send me for compulsory interviews.....

PurpleGorilla
12th August 2015, 13:38
Rate rise?

BlasterBates
12th August 2015, 13:43
Presumably this will also mean automatically inside IR35, hard to see this not being the case.

The Spartan
12th August 2015, 13:46
Presumably this will also mean automatically inside IR35, hard to see this not being the case.

It seems that's the way that it is going, perm in every sense of the word except with no benefits to it.

Intel
12th August 2015, 13:47
Presumably this will also mean automatically inside IR35, hard to see this not being the case.

Plainer than a Bulgarian pin up......

aoxomoxoa
12th August 2015, 13:49
It seems that's the way that it is going, perm in every sense of the word except with no benefits to it.

Not exactly. Surely even HMRC won't be able to dictate how you do your hair?

TheLordDave
12th August 2015, 14:10
Bloody Tories. After supporting them for years in 2 months they have killed any chance of me supporting them again. As much as every answer to this seems to be rate rise, that isn't going to happen. I can't imagine any client being willing to cover this, and the divided tax and whatever other bollocks they want to throw at us.

PurpleGorilla
12th August 2015, 14:21
Just floating an idea out, but operating as an associate, could this be the solution. Expenses from consultancy office covered, and if operating on a call off basis arguably outside for IR35?

TheLordDave
12th August 2015, 14:24
Considering I contract at a government department that is full of contracts due to not being able to recruit permies for the salary they are willing to pay, I would like to see what the plan is for staffing when 70% of the contractors leave if they lose there expense claims. Oh that's right, there will be a skills shortage so up goes the bob quota again.

DimPrawn
12th August 2015, 14:39
Considering I contract at a government department that is full of contracts due to not being able to recruit permies for the salary they are willing to pay, I would like to see what the plan is for staffing when 70% of the contractors leave if they lose there expense claims. Oh that's right, there will be a skills shortage so up goes the bob quota again.

Yep, this is some very wealthy Indian outsourcers courting the Tories with promises of big party donations, in return for destroying IT contracting in the UK.

motoukenin
12th August 2015, 14:55
Not quite into the contractor thing yet:ladybags:

DaveB
12th August 2015, 14:55
I wonder what the Pimps would make of this, especially as Reed have just had their appeal refused for £158m in tax on T&S for their temps.

Combine that with contractors making an effort to start going direct and it could well have an effect on their business.

We could start seeing them working on a fixed fee baisis as they do with permie recruits, rather than a %tge of day rate, with the contracts for work being direct between client and contractor.

Milkyway
12th August 2015, 14:56
Yep, this is some very wealthy Indian outsourcers courting the Tories with promises of big party donations, in return for destroying IT contracting in the UK.

Correct, but then I would fault and moan at our own George and Tories, not the Indians!!!!!!

George/tories take money (brown envelop as its called), and we blame the Indians??

You seem to have some very specific issue with Indians :), looking at most of your threads!!!

Listen, instead of focussing your issues at immigrants and Indians, etc. we need to spend the energy to fight our case with our own govt. (via IPSe, and other forums et al.)
If we just simply keep blaming indians, foreigners, etc for all these changes and every other problem, our govt will slip through all legislations in the meanwhile, like the ones we are affected by, while they direct all their blame on foreigners too! :)

For the govt., it is clear - Divide and rule wins, I suppose!

LondonManc
12th August 2015, 15:03
I wonder if George is aware what his banker chums will make of losing vast chunks of contingent workers from The City and CW?

NibblyPig
12th August 2015, 15:05
Well that ****s us over royally doesn't it.

As much as I'd like to work direct, clients don't exactly advertise themselves as looking for contractors.

Even the place I'm working now which has a huge active recruitment program did not advertise on its own careers.massivecorporation.com any contractor positions prior to me applying.

Maybe recruiter model will change to a finders fee. Pretty sure you're not under SDC if the recruiter places you and collects a flat £xxx fee instead of billing etc. via them.

Or even if they simply introduce you and the contractor bills the client and the recruiter bills the client too for some fee.

Basically cut out the recruiter handling timesheets etc.

Milkyway
12th August 2015, 15:11
Well that ****s us over royally doesn't it.

As much as I'd like to work direct, clients don't exactly advertise themselves as looking for contractors.

Even the place I'm working now which has a huge active recruitment program did not advertise on its own careers.massivecorporation.com any contractor positions prior to me applying.

Maybe recruiter model will change to a finders fee. Pretty sure you're not under SDC if the recruiter places you and collects a flat £xxx fee instead of billing etc. via them.

Or even if they simply introduce you and the contractor bills the client and the recruiter bills the client too for some fee.

Basically cut out the recruiter handling timesheets etc.

Wonderful. Perhaps, that is exactly what a recruitment agency would their change their contractor supply model to.

This is legitimate business model, and I would hope the govt / HMG / HMRC would not block this one too.
This sounds like there is some light at the end of the tunnel, during this painful time of uncertainty as to what will happen if agencies will move away from supplying contractors!! (given this new article 44 etc.) change.

meridian
12th August 2015, 15:12
HMRC might consider us to be under SD&C if we work via agencies, but it will be case law that ultimately decides if this is the case (ie working practices), so unless they write very tight legislation then it will likely go the same way as the existing IR35 laws, a big roar at the start and then failing in court.

darmstadt
12th August 2015, 15:29
Hands up who voted Tory :laugh

GlenW
12th August 2015, 15:30
Hands up who voted Tory :laugh

:wave:

:emb

Tasslehoff
12th August 2015, 15:54
Pretty worried by this to be honest.

I think this would be the straw that breaks the camels back for a lot of contractors. I commute locally because of a young family but this will really screw the "stay away" crowd.

Do we think this is something we can litigate against like IR35 or are we screwed?

VectraMan
12th August 2015, 16:29
Pretty worried by this to be honest.

I think this would be the straw that breaks the camels back for a lot of contractors. I commute locally because of a young family but this will really screw the "stay away" crowd.

Do we think this is something we can litigate against like IR35 or are we screwed?

:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

LondonManc
12th August 2015, 16:32
:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

Increase in flat-sharing, simple as that.

NibblyPig
12th August 2015, 17:03
It's gonna hurt all those places in the arse end of nowhere, that's for sure, of which there seem to be many.

Good luck hiring a contractor in Aeahgheghhehghe, Wales, 20 miles off the M4 over the hills and far away.

Or Swindon, where nobody wants to live (or if we're honest, visit)

aoxomoxoa
12th August 2015, 17:20
It's gonna hurt all those places in the arse end of nowhere, that's for sure, of which there seem to be many.

Good luck hiring a contractor in Aeahgheghhehghe, Wales, 20 miles off the M4 over the hills and far away.

Or Swindon, where nobody wants to live (or if we're honest, visit)

They can always get Psychocandy :D

TestMangler
12th August 2015, 17:25
:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

Think you're missing at least half of the picture here.

centurian
12th August 2015, 18:33
HMRC might consider us to be under SD&C if we work via agencies, but it will be case law that ultimately decides if this is the case (ie working practices), so unless they write very tight legislation then it will likely go the same way as the existing IR35 laws, a big roar at the start and then failing in court.

That's just it - they are changing the law, or at least that's what a grim interpretation of the proposals believes will happen. So previous case law is irrelevant.

DimPrawn
12th August 2015, 18:53
That's just it - they are changing the law, or at least that's what a grim interpretation of the proposals believes will happen. So previous case law is irrelevant.

Yep, and it's guilty until your £1000/hr barrister proves otherwise in court.

SueEllen
12th August 2015, 18:57
Maybe recruiter model will change to a finders fee. Pretty sure you're not under SDC if the recruiter places you and collects a flat £xxx fee instead of billing etc. via them.

Or even if they simply introduce you and the contractor bills the client and the recruiter bills the client too for some fee.

Basically cut out the recruiter handling timesheets etc.

A couple of agencies do this already. Though one of them mostly has foreign operations which probably explains why they have this model.

NotAllThere
12th August 2015, 19:04
:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying tax at a higher rate than a permie on the same salary, whose employer can offset their expenses against taxes.Fixed that for you.

DaveB
12th August 2015, 19:10
:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

ShandyDrinker
12th August 2015, 19:28
I wonder what the Pimps would make of this, especially as Reed have just had their appeal refused for £158m in tax on T&S for their temps.

Combine that with contractors making an effort to start going direct and it could well have an effect on their business.

We could start seeing them working on a fixed fee baisis as they do with permie recruits, rather than a %tge of day rate, with the contracts for work being direct between client and contractor.

A very sensible suggestion as a way around the issue. Unfortunately I don't think it's that trivial though. Like them or hate them, recruitment agencies are not only sourcing the roles but providing an important payment smoothing service to the contractor market in that many will allow weekly invoicing by contractors and not get paid for 30,60 or 90 days by the client. As a result think of recruitment agencies as an invoice factoring service too. Having gone direct a few times I know how painful it can be chasing clients for money in addition to doing the actual contract.


Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

Spot on. Unfortunately the stay away crowd will be completely shafted if these changes are implemented. As someone who has worked a number of contracts in that way, the only way I would even consider a role entailing travel/accommodation in the future would be if the client pays.

vwdan
12th August 2015, 19:52
Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

Exactly, and as someone whose work will nearly always involve lots of travel it's an absolute killer.

SimonMac
12th August 2015, 20:06
For those who say we just go direct in future, what incentives are their for the client to help up? The main reason they use agencies is to make their life easier in the first place.

SimonMac
12th August 2015, 20:15
If I also read this right, its not just expenses we are being hit with, we are going to be automatically deemed within IR35? If this is the case what is the point of running our own LtdCo anymore, the brollys must be happy(ish)

ginge
12th August 2015, 20:24
I did go direct, got my first contract via an ex-colleague, but I'm still with an agent as the big corp handles all contractors through the agent.

As has been said already, big corps use agents to handle this because it's easier, and I'd guess they'd have to have a lot of contractors all the time to make it worth their while doing it in-house so we could contract direct...

SpontaneousOrder
12th August 2015, 20:39
Not quite into the contractor thing yet:ladybags:

Why would I pay the 'appropriate' taxes on 5 hours of travel per day, and a hotel stay in London when I'm not travelling? When I could just go permie locally instead?

SpontaneousOrder
12th August 2015, 20:50
:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

if your daily commute is, lets say, 4 hours. And that commute costs you heading towards 10k a year after tax, then when you factor in the lack of permie perks, the marginal increase in take home after those expenses (remember we'll be in 40% territory), AND the fact that you're commuting 4 hours a day...

Then it's arguably a far better deal to commute only 1.5 hours per day and chill as a permie.

VectraMan
12th August 2015, 20:52
Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

:rollin:

You contractors can't half BS when it comes to justifying tax avoidance.

If they disallow travel and substinence expenses all it means is you have to do what everybody else does: pay for it out of your own pocket. There's no point in YourCo reimbursing you the expenses (because it would be a BIK anyway). You're exactly in the same position as the millions of permies, which is the point. YourCo pays you, either via salary or tax avoiding dividends, and you pay your expenses.

SpontaneousOrder
12th August 2015, 20:56
:rollin:
You're exactly in the same position as the millions of permies, which is the point.

Have you bumped your head recently? How many millions of permies do you know that spend their own post-tax income on 5 nights of hotel stays every week?

Zero Liability
12th August 2015, 21:11
If I also read this right, its not just expenses we are being hit with, we are going to be automatically deemed within IR35? If this is the case what is the point of running our own LtdCo anymore, the brollys must be happy(ish)

It could go that way, but it's a separate issue, as SDC is not sufficient at present. The IR35 reform may change that, but it's still in discussion and will then undergo a consultation, so I can see why people are predicting 2017 for any changes resulting from that (which I think makes sense as well as rushing it through may be met with more severe resistance by end clients, who are ill prepared for it.) So they'll have to skip that hurdle, and even then, they're not proposing changes at the legislative level but at the enforcement level, so it may yet fail in the courts. Plus, not all clients are going to be happy with this. It's a matter of them organising to voice their complaints.

If it does all pass, I can't see contractors going via an agency (i.e. the vast majority) being much different than FTC employees. All the risks and the lack of employment rights remain, but none of the benefits of permiedom accrue.

TheLordDave
12th August 2015, 21:14
In that case I expect 25 paid days a year holiday from client co. Sick leave, training and a 14% pension contribution like the permie next to me gets. Oh and also employment regulations regarding contract termination and paternity leave and bonus and everything else us disguised permies don't get!

MicrosoftBob
12th August 2015, 22:57
For those who say we just go direct in future, what incentives are their for the client to help up? The main reason they use agencies is to make their life easier in the first place.

None, if the contract market dries up they'll just scream skills shortage and import more slaves

Gordon Ice
12th August 2015, 23:16
I'm guessing that some/all of the following will come to pass:

1. Contracts will be amended with new clauses to transfer the risk of being found inside SDC/IR35 all the way down the contractual chain to the Contractor Ltd who will be expected to take out a new type of indemnity insurance covering the Client and/or the Agency.
2. Given that the pivotal part of SDC (and most probably IR35) is the involvement of an intermediary (Agent) the contractual chain will evolve with the Contractor Ltd going direct and paying the Agency a placement fee and/or monthly commission.
3. Agencies will evolve into Professional Services businesses (i.e. no longer operating as an "intermediary") and sub-contract to Contractor Ltd's.
4. The use of Contractor Marketplaces may actually reach critical mass replacing (or greatly reducing) the need for Agencies, hence avoiding the pivotal part of SDC/IR35.
5. Confirmation of working practises and being outside SDC/IR35 will be confirmed in writing (as standard) by the Client/Agency/Contractor Ltd before any contractual agreements are made. No "outside SDC/IR35" = no contract or higher rates.
6. Higher rates in general.
7. Contractors will start trading as a different legal entity (assuming that being classed as a PSC is material to SDC/IR35)

It's not over yet folks.. a whole industry grew out of dealing with IR35 and I suspect this will be exactly the same; too many interested parties, and too much money to be made/lost. Whatever HMRC finally decide upon will be impossible to police (just as for IR35) and as long as Clients can effectively transfer/mitigate the risk it'll be business largely as usual.

Here's hoping.

Contreras
12th August 2015, 23:44
Yes, Because...

If your Ltd reimburses you your T&S costs that will be counted as remuneration and not expenses, so you will then pay tax on that as if it was salary. Your company will not be able to claim tax relief on it. If the company pays T&S on your behalf then it will be regarded as BIK and taxed accordingly, and the company will not get tax relief on it.

We would not just lose the 20% relief, we would end up paying tax on the cost of expenses as well.

Eh that doesn't sound quite right. Care to expand upon it with some numbers?

AtW
13th August 2015, 00:55
Bloody Tories. After supporting them for years in 2 months they have killed any chance of me supporting them again.

+100

Will vote for Komrade Korbyn, at least he will make sure that inherited wealth Tory Scum will squeal like a pig.

AtW
13th August 2015, 01:00
Hands up who voted Tory :laugh

:tantrum:

AtW
13th August 2015, 01:05
If I also read this right, its not just expenses we are being hit with, we are going to be automatically deemed within IR35? If this is the case what is the point of running our own LtdCo anymore, the brollys must be happy(ish)

Running LtdCo will still have an advantage of being able to purchase your own favourite brand of Vaseline rather than being given some bog-standard issue by the brolly.

HTH

P.S. Yes, it will be treated as BIK!

darmstadt
13th August 2015, 06:34
The prime minister extended his thanks “to the entrepreneurs, to the techies, to the roof tillers, to the retailers, to the plumbers, to the builders”, for engineering the “biggest economic turnaround in Europe”.


A commitment to reviewing the “disadvantages faced by the self-employed” – now 15% of the labour force – including accessing maternity pay and building up pensions. An “urgent review” will be commissioned into the disadvantages the self-employed face.


The Tories are the party of “grafters and the roofers and the retailers and the plumbers”...the Prime Minister will say that he “gets” and “respects” the small businesses that are the “backbone of our economy”.


“We can either get straight back to work on May 8 delivering that plan or Britain can be plunged into political instability and economic chaos.”

They're doing what they said they would, aren't they?

NotAllThere
13th August 2015, 06:38
:rollin:

You contractors can't half BS when it comes to justifying tax avoidance.

If they disallow travel and substinence expenses all it means is you have to do what everybody else does: pay for it out of your own pocket...You are somewhat comparing apples with oranges. For many contractors, the correct comparison would be with consultants who are employees of the likes of PwC. Consultants don't pay for their T&S expenses to clients out of their own pockets.

However, the disallowing of T&S expenses to and from the place of work will not mean the end of contracting. When I first went contracting the usual stance of your local tax office was that T&S were not tax deducatable- that where you were working was your primary job - and yet the number of contractors kept increasing. The rates of pay more than made up for the expense of travelling and day to day upkeep.

The Spartan
13th August 2015, 07:07
You are somewhat comparing apples with oranges. For many contractors, the correct comparison would be with consultants who are employees of the likes of PwC. Consultants don't pay for their T&S expenses to clients out of their own pockets.

However, the disallowing of T&S expenses to and from the place of work will not mean the end of contracting. When I first went contracting the usual stance of your local tax office was that T&S were not tax deducatable- that where you were working was your primary job - and yet the number of contractors kept increasing. The rates of pay more than made up for the expense of travelling and day to day upkeep.

For me most contracts involve travelling and staying over mon-fri as unfortunately Wales is not flush with contract positions so I've spent most of my time working down and around near London, to be fair mind those living around London also pay a huge amount in travel but on the whole I spend more as I'm away from home. Being unable to claim T&S would put a stop to me doing this and only a surge in the number of contracts in Wales or Bristol would allow me to keep on contracting.

Agree wholeheartedly with you point about comparing apples to oranges I'm sure there would be uproar if this was also rolled out to consultants of the big firms like PwC, KPMG, Deloitte etc

Gumbo Robot
13th August 2015, 07:38
:rollin:

If you can earn double a permie's gross as a contractor how can it not still be worth being a contractor even paying the same rate of tax as everyone else?

You're only really getting back 20% of expenses as things stand now, so is having to pay that 20% of a B&B bill really going to "screw the 'stay away' crowd"?

I don't know what sort of a world you inhabit - you often trot out the same line about us having to be grateful for earning twice as much as the average permie.

If you're on a long term rolling contract in an IB then fair enough but for most of my contracting career I've been doing 6 months here, 6 months there on a range of different rates with some occasional sizeable gaps between these stints.

Your figures just do not add up for me & while I'm happy with my current situation, the planned end to tax relief on expenses will definitely see me changing the way I operate. I just won't do any Mon - Fri gigs any more. Simple.

MrMarkyMark
13th August 2015, 07:39
You're exactly in the same position as the millions of permies, which is the point.
Really? I don't think so, did someone put something in your tea?


For many contractors, the correct comparison would be with consultants who are employees of the likes of PwC. Consultants don't pay for their T&S expenses to clients out of their own pockets.

This.

eek
13th August 2015, 07:48
For me most contracts involve travelling and staying over mon-fri as unfortunately Wales is not flush with contract positions so I've spent most of my time working down and around near London, to be fair mind those living around London also pay a huge amount in travel but on the whole I spend more as I'm away from home. Being unable to claim T&S would put a stop to me doing this and only a surge in the number of contracts in Wales or Bristol would allow me to keep on contracting.

Agree wholeheartedly with you point about comparing apples to oranges I'm sure there would be uproar if this was also rolled out to consultants of the big firms like PwC, KPMG, Deloitte etc

For this period of contracting (2012 onwards) all my contracts bar one have been as associate to large blue chip consultancies. On the expenses rule there is no way that it can be implemented as is because it would create the situation below that would fail a judicial review.


For many contractors, the correct comparison would be with consultants who are employees of the likes of PwC. Consultants don't pay for their T&S expenses to clients out of their own pockets.

SueEllen
13th August 2015, 08:16
:rollin:

You contractors can't half BS when it comes to justifying tax avoidance.

If they disallow travel and substinence expenses all it means is you have to do what everybody else does: pay for it out of your own pocket. There's no point in YourCo reimbursing you the expenses (because it would be a BIK anyway). You're exactly in the same position as the millions of permies, which is the point. YourCo pays you, either via salary or tax avoiding dividends, and you pay your expenses.
Don't know what you are drinking but what you and HMRC don't understand is that not all contractors take contracts within commuting distance of where they live.

This can be due to where they live now not having any industry for their skills.

BrilloPad
13th August 2015, 08:18
Don't know what you are drinking but what you and HMRC don't understand is that not all contractors take contracts within commuting distance of where they live.

This can be due to where they live now not having any industry for their skills.

IMO you are missing the point.

To HMRC we are all tax avoiders. Soon the only thing we will be left with is dividends over salary. And that gap is narrowing.

The issue is that tax avoidance is legal. HMRC do not recognize that.

MicrosoftBob
13th August 2015, 08:19
Don't know what you are drinking but what you and HMRC don't understand is that not all contractors take contracts within commuting distance of where they live.

This can be due to where they live now not having any industry for their skills.

That and when a contract ends, one usually takes a pick of the contracts available from your skills wherever they are, rather than sit there claiming benefits waiting for the dream contract to magically appear walking distance from your home

Bacchus
13th August 2015, 08:21
For me most contracts involve travelling and staying over mon-fri as unfortunately Wales is not flush with contract positions so I've spent most of my time working down and around near London, to be fair mind those living around London also pay a huge amount in travel but on the whole I spend more as I'm away from home. Being unable to claim T&S would put a stop to me doing this and only a surge in the number of contracts in Wales or Bristol would allow me to keep on contracting.


Or moving to where the work is?

This has always been the bedrock of the two year rule, surely?

I'm going to take a slightly controversial view here, if eighty percent of the work is in London then why should the taxpayer subsidise us choosing to live in a cheaper area to have a bigger house?

I will be hit by the changes as much as anyone, I have been contracting for nearly twenty years and it has never been so unappealling, but the country is still in a financial pickle (thanks Tony, thanks Gordon) and the people who have to pay to get it out are the ones capable of turning a buck, so we are being targetted. No point in targetting the poor...

The Spartan
13th August 2015, 08:23
IMO you are missing the point.

To HMRC we are all tax avoiders. Soon the only thing we will be left with is dividends over salary. And that gap is narrowing.

The issue is that tax avoidance is legal. HMRC do not recognize that.

That's right we're easy pickings compared to big businesses and self-employed tradespeople

BrilloPad
13th August 2015, 08:24
Or moving to where the work is?

This has always been the bedrock of the two year rule, surely?

I'm going to take a slightly controversial view here, if eighty percent of the work is in London then why should the taxpayer subsidise us choosing to live in a cheaper area to have a bigger house?

I will be hit by the changes as much as anyone, I have been contracting for nearly twenty years and it has never been so unappealling, but the country is still in a financial pickle (thanks Tony, thanks Gordon) and the people who have to pay to get it out are the ones capable of turning a buck, so we are being targetted. No point in targetting the poor...

Then why stay in the UK? Move abroad.

This country is a sh1te hole anyway.

BrilloPad
13th August 2015, 08:25
That's right we're easy pickings compared to big businesses and self-employed tradespeople

True true. And to add to that there are quite a lot of us.

When I first started there were about 20,000 contractors in the UK.

SueEllen
13th August 2015, 08:25
That's right we're easy pickings compared to big businesses and self-employed tradespeople

They go after self-employed tradespeople differently.

The Spartan
13th August 2015, 08:28
I'm going to take a slightly controversial view here, if eighty percent of the work is in London then why should the taxpayer subsidise us choosing to live in a cheaper area to have a bigger house?

Because we have specialist skills that they're not able to find elsewhere would be one reason I would say, another would be the fact I pay a lot more in tax now than I would pay if I were in permanent employment.

Gumbo Robot
13th August 2015, 08:33
Or moving to where the work is?



I can think of 3 friends of mine who live in London and are yet commuting to get to a contract. One's travelling to Newbury everyday, another Folkestone on a Mon - Fri and the other one Basingstoke.

And they haven't taken these roles over anything they've been offered in London either.

It's not quite as simple as moving to where the work is.

The Spartan
13th August 2015, 08:33
They go after self-employed tradespeople differently.

Really? I hadn't noticed honestly (no sarcasm intended)

Quite a few of my neighbours are tradespeople and my brothers too and they're always doing jobs where they get cash, so they have a substantial amount of undeclared income. They even work most weekends as they have that much work on, perhaps thinking about I should retrain so I can get a slice of the action no tax, no NI sounds great.

Bacchus
13th August 2015, 08:33
Then why stay in the UK? Move abroad.

This country is a sh1te hole anyway.

Or this.

Nobody puts a gun to our heads and tells us to live/work anywhere or to take a contract miles from home; it's a free choice.

HMRC and Govt. make the rules. If we can exist happily within them, then we do, otherwise do something else. Contractors, by their nature, are generally enterprising people, yes?

(I do think it will result in severe labour shortages and "Bobbification" though:cry1: )

The Spartan
13th August 2015, 08:36
Then why stay in the UK? Move abroad.

This country is a sh1te hole anyway.

It is but it's home and the wife is close to her family, I lived and worked in Switzerland for 15 months before without my family being there it was a lonely period in my life :frown

MrMarkyMark
13th August 2015, 08:37
another would be the fact I pay a lot more in tax now than I would pay if I were in permanent employment.

Exactly this.
Does HMRC think that they will get more tax revenue if we all become perm?

Bacchus
13th August 2015, 08:40
Because we have specialist skills that they're not able to find elsewhere would be one reason I would say, another would be the fact I pay a lot more in tax now than I would pay if I were in permanent employment.

I don't think that having specialist skills is a good enough reason. A nurse has skills that I couldn't possibly hope to emulate.

Even with the exes thing I don't think you'd pay as much tax as the permanent if you take employer's and employee's NI into consideration. Now if the proposed change to assume that anyone who works via an agency is under control and supervision and therefore within IR35 happens then that will change, but this will drive contractors away, business will suffer and rates will have to accomodate that by increasing rates to pay for the flexibility of having contractors in the workplace. Supply and demand that is.

DimPrawn
13th August 2015, 08:41
Or this.

Nobody puts a gun to our heads and tells us to live/work anywhere or to take a contract miles from home; it's a free choice.

HMRC and Govt. make the rules. If we can exist happily within them, then we do, otherwise do something else. Contractors, by their nature, are generally enterprising people, yes?

(I do think it will result in severe labour shortages and "Bobbification" though:cry1: )

I know three families (building trade related) who have or are in the process of emigrating to Australia. Like for like, the houses and lifestyle is leagues ahead of here, and they have nice big coastal homes to move into.

5 bedroom property for sale in 5 Learmond Court, MOONTA BAY 5558, Australia (http://www.rightmove.co.uk/overseas-property/property-47299186.html)

They have effectively sold up their tiny £400K house here, and have money left in their pockets for boats, cars, savings, with better paid work.

eek
13th August 2015, 08:42
I don't think that having specialist skills is a good enough reason. A nurse has skills that I couldn't possibly hope to emulate.

Even with the exes thing I don't think you'd pay as much tax as the permanent if you take employer's and employee's NI into consideration. Now if the proposed change to assume that anyone who works via an agency is under control and supervision and therefore within IR35 happens then that will change, but this will drive contractors away, business will suffer and rates will have to accomodate that by increasing rates to pay for the flexibility of having contractors in the workplace. Supply and demand that is.

No it wouldn't. Supply will drop and offshore companies will have a field day...

The Spartan
13th August 2015, 08:42
Or this.

Nobody puts a gun to our heads and tells us to live/work anywhere or to take a contract miles from home; it's a free choice.

HMRC and Govt. make the rules. If we can exist happily within them, then we do, otherwise do something else. Contractors, by their nature, are generally enterprising people, yes?

(I do think it will result in severe labour shortages and "Bobbification" though:cry1: )

That's right no one puts a gun to our head, but here is the point there are consultancies that do more or less what we do they charge more and their consultants can claim T&S how is what we do any different? We provide the same service (probably better) for less and unlike these consultancies pay the correct amount of corporation tax a year.

So I should just toss away a decade of skills because I live in an area not renowned for technology, I'm all for rules but it's not a level playing field.

Bacchus
13th August 2015, 08:44
I can think of 3 friends of mine who live in London and are yet commuting to get to a contract. One's travelling to Newbury everyday, another Folkestone on a Mon - Fri and the other one Basingstoke.

And they haven't taken these roles over anything they've been offered in London either.

It's not quite as simple as moving to where the work is.

Not a simple equation, no, I agree, but I have stayed within the M4 corridor for the last twenty years for this very reason (Newbury and Basingstoke both do-able, had a good gig in Basingstoke...)

I have had stay away gigs too, which would have to be priced accordingly, but on the whole this location has given me good access to work.

Thinking of moving away from contracting now (as it is becoming increasingly not worth the extra effort and expense of runnign the business), so can physically move away from the area - bigger house, no mortgage, ker-ching

The Spartan
13th August 2015, 08:49
I don't think that having specialist skills is a good enough reason. A nurse has skills that I couldn't possibly hope to emulate.

Even with the exes thing I don't think you'd pay as much tax as the permanent if you take employer's and employee's NI into consideration. Now if the proposed change to assume that anyone who works via an agency is under control and supervision and therefore within IR35 happens then that will change, but this will drive contractors away, business will suffer and rates will have to accomodate that by increasing rates to pay for the flexibility of having contractors in the workplace. Supply and demand that is.

Actually no I do pay more, the corporation tax I pay is treble what I paid in tax, NI and what was paid Employers NI when I was a permanent employee. You may not think specialist skills are a good enough reason but I do and trust me when I say there's not many if any who are being trained that can do my role. You say nurses but you should be looking at it more from the standpoint of surgeon it would be a more appropriate reference.

Bacchus
13th August 2015, 08:53
consultancies that do more or less what we do they charge more and their consultants can claim T&S how is what we do any different?

I don't think it is different, I worked on a gig in the city as a contractor sitting alongside a good bunch who were from a consultancy. We turned up every day and did similar work but the client thought of us differently, especially when it came to telling them when we were not going to be there. This is one of the reasons that I didn't renew (one of them), although I left on good terms and have been talking about some consultancy work!



So I should just toss away a decade of skills because I live in an area not renowned for technology, I'm all for rules but it's not a level playing field.

No. Move, adjust your working methods, or form a consultancy.

I don't like it, I don't like paying tax at all really, but I accept it as a legal and moral duty and the more you earn the more you pay. Contracting has been good to me, I have paid a **** of a lot of tax over the years but it has bought me a house or two, put my kid through school and paid for my divorce (c:

Let's face it, this legislation is aimed at contractors working through an agency, and many of them really behave exactly the same as Permanent staff. There will be collateral damage for a few, but Govt is about taking as much as they can from as many as they can. Up to us to try and keep it fair

d000hg
13th August 2015, 08:54
If this actually happens, then I will be going direct to clients, or going permie.

Where's this quote from DP?

SimonMac
13th August 2015, 08:54
I don't think that having specialist skills is a good enough reason. A nurse has skills that I couldn't possibly hope to emulate.

Even with the exes thing I don't think you'd pay as much tax as the permanent if you take employer's and employee's NI into consideration. Now if the proposed change to assume that anyone who works via an agency is under control and supervision and therefore within IR35 happens then that will change, but this will drive contractors away, business will suffer and rates will have to accomodate that by increasing rates to pay for the flexibility of having contractors in the workplace. Supply and demand that is.

Do you think IT workers are they only people incorporated to be tax efficient? On these forums alone we have had social workers and doctors asking for advice.

If we can move to a system where contractors are the specialist consultants who can pay themselves in the way that they do rather than 2/3rd line support people or (sorry to say this to the code monkey friends I have) developers who are needed to fill a resource gap maybe this would be better.

VectraMan
13th August 2015, 08:58
Don't know what you are drinking but what you and HMRC don't understand is that not all contractors take contracts within commuting distance of where they live.

This can be due to where they live now not having any industry for their skills.

Not all permies take jobs within commuting distance of where they live. So why don't they get expenses too?

Make it the same for everybody.

DimPrawn
13th August 2015, 09:00
Where's this quote from DP?

Front page of CUK. You DO read CUK don't you?

How HMRC is revoking tax relief on contractor expenses :: Contractor UK (http://www.contractoruk.com/news/0012178how_hmrc_revoking_your_rights_expenses.html )

:facepalm:

BrilloPad
13th August 2015, 09:00
Not all permies take jobs within commuting distance of where they live. So why don't they get expenses too?

Make it the same for everybody.

Permies get a lot of things that contractors don't. Holiday pay. Sick pay. I am sure there are loads more.

d000hg
13th August 2015, 09:01
Ta. I only come visit the forums :)

eek
13th August 2015, 09:01
Do you think IT workers are they only people incorporated to be tax efficient? On these forums alone we have had social workers and doctors asking for advice.

If we can move to a system where contractors are the specialist consultants who can pay themselves in the way that they do rather than 2/3rd line support people or (sorry to say this to the code monkey friends I have) developers who are needed to fill a resource gap maybe this would be better.

Yep. I'm coming to the conclusion that the only solution is something like anyone employed via an agency and paid less than national living wage (times x say 2) should be treated as subject to SD&C anything above is not SD&C.

It's hideous (and I really don't like it) but HMRC want something simple that works, the unions who screamed during the discussion phase don't want their members forced into using limited companies and end clients will want an easy to follow rule which means they don't need to take risks.

The Spartan
13th August 2015, 09:01
Not all permies take jobs within commuting distance of where they live. So why don't they get expenses too?

Make it the same for everybody.

Because they didn't negotiate them when taking the job

Bacchus
13th August 2015, 09:02
No it wouldn't. Supply will drop and offshore companies will have a field day...

... that's what I meant by "(I do think it will result in severe labour shortages and "Bobbification" though )",

I think it will be a bit of both - supply and demand is page one of any economics course - but if it doesn't then we'll have to adapt. The world turns.

The Spartan
13th August 2015, 09:03
Permies get a lot of things that contractors don't. Holiday pay. Sick pay. I am sure there are loads more.

bonuses, career progression, training etc

DimPrawn
13th August 2015, 09:05
Not all permies take jobs within commuting distance of where they live. So why don't they get expenses too?

Make it the same for everybody.

We are not the same as permies. FFS, where's my employment contract? Where's my pension, health cover, sick pay? Where's my holiday pay and entitlement? Where's my rights to a tribuneral, where's my legal pay for being made redundant?

Why aren't you paying employers NI? Why don't you charge VAT on your salary?


We aren't ******* permie staff! Simples!

BrilloPad
13th August 2015, 09:05
bonuses, career progression, training etc

And an invite to the Christmas party! Where contractors are invited they usually have to stump up.

Cycle to work scheme.

Life insurance.

Health care.

Bacchus
13th August 2015, 09:05
Actually no I do pay more, the corporation tax I pay is treble what I paid in tax, NI and what was paid Employers NI when I was a permanent employee. You may not think specialist skills are a good enough reason but I do and trust me when I say there's not many if any who are being trained that can do my role. You say nurses but you should be looking at it more from the standpoint of surgeon it would be a more appropriate reference.

I wasn't trying to belittle your skill-set, I was merely pointing out an enormous group of people who do a job that I simply couldn't

I have a friend who is a top, top trauma surgeon. She lives in London because that is where the big hospitals are... (mind you, she can afford to!)

Bacchus
13th August 2015, 09:08
We are not the same as permies. FFS, where's my employment contract? Where's my pension, health cover, sick pay? Where's my holiday pay and entitlement? Where's my rights to a tribuneral, where's my legal pay for being made redundant?

Why aren't you paying employers NI? Why don't you charge VAT on your salary?


We aren't ******* permie staff! Simples!

Surely these reside with yourco?

BrilloPad
13th August 2015, 09:08
We aren't ******* permie staff! Simples!

According to HMRC you are tax avoiding scum. Of course it was fine while it was just the BN66 mob. Not so nice now is it?

Basically parliament listens to HMRC. Parliament can make any law they want.

As there are only a couple of hundred thousand of us, no-one will listen.

Don't worry though. Things could be worse. You could be divorced. Or live in Swindon.

DimPrawn
13th August 2015, 09:14
Surely these reside with yourco?

Exactly, there's always this "I'm a permie, you are a permie, you should pay more tax". We are not permies, there's no like for like whatsoever. I work for my own company, you don't. I manage a company, you don't.

Drives me insane.

The Spartan
13th August 2015, 09:15
I wasn't trying to belittle your skill-set, I was merely pointing out an enormous group of people who do a job that I simply couldn't

I have a friend who is a top, top trauma surgeon. She lives in London because that is where the big hospitals are... (mind you, she can afford to!)

No problem, the point I was trying to make is that there aren't a lot people who can do the work I do, so I was looking at it for a numbers standpoint. I did contemplate moving previously but the wife wants to close to her family and my daughter is settled where she is (plus she is a Welsh speaker) so it's not really an option.

VectraMan
13th August 2015, 09:22
We are not the same as permies. FFS, where's my employment contract? Where's my pension, health cover, sick pay? Where's my holiday pay and entitlement? Where's my rights to a tribuneral, where's my legal pay for being made redundant?

Why aren't you paying employers NI? Why don't you charge VAT on your salary?

We aren't ******* permie staff! Simples!

And for all of that you get to charge twice as much. Why should you be entitled to tax avoidance as well?

Do you think a permie on £50K would see a £100K job as not worth it because they couldn't claim tax relief on travel to work? Because that's basically what you're saying. Plenty of contractors have been quite happy working through an umbrella basically giving in to IR35; if they really did clamp down and get rid of expenses and make it impossible for anyone to operate outside IR35 it would still be well worth contracting over the equivalent permie job.

MrMarkyMark
13th August 2015, 09:36
And for all of that you get to charge twice as much. Why should you be entitled to tax avoidance as well?

Do you think a permie on £50K would see a £100K job as not worth it because they couldn't claim tax relief on travel to work? Because that's basically what you're saying. Plenty of contractors have been quite happy working through an umbrella basically giving in to IR35; if they really did clamp down and get rid of expenses and make it impossible for anyone to operate outside IR35 it would still be well worth contracting over the equivalent permie job.

Hopefully, almost 3* as much :smokin.

Why?



pension, health cover, sick pay? Where's my holiday pay and entitlement?


bonuses, career progression, training etc

And risk, maybe?

How much do you think you cost your Co?
No one is "entitled" to tax avoidance, true, however I'm sure you would be participating, if you were able.

DimPrawn
13th August 2015, 09:48
How much do you think you cost your Co?

I believe taking into the cost of hiring permies, all the benefits they get, the legal protection as employees, tax overhead to the company, it is pretty much 2 x gross salary.

So permies cost as much as a contractor, and have 1/2 the skills, work ethic and experience. Oh and they are off sick pretty much most of the year.

MrMarkyMark
13th August 2015, 09:53
it is pretty much 2 x gross salary.

Your understanding aligns with mine.
In fact my stepdad used to employ a few people and was the 1st person to tell me about the double gross figure.

darmstadt
13th August 2015, 09:54
If such a plan was put into place then presumably contractors would pay the same price in the subsidised staff canteen, for those working in London then a London weighting allowance would be granted and interest free loans for buying a season ticket? These are items that permies get and contractors don't....

MicrosoftBob
13th August 2015, 09:55
If such a plan was put into place then presumably contractors would pay the same price in the subsidised staff canteen, for those working in London then a London weighting allowance would be granted and interest free loans for buying a season ticket? These are items that permies get and contractors don't....

Don't forget the latest thing unlimited parental leave

Weltchy
13th August 2015, 10:08
Hrm,

Sounds like it's time to setup as a 4+ man contractor consultancy and figure out how to pay ourselves a relative amount based on the billing rate.

MrMarkyMark
13th August 2015, 10:13
Hrm,

Sounds like it's time to setup as a 4+ man contractor consultancy and figure out how to pay ourselves a relative amount based on the billing rate.

Been thinking of exactly this and maybe a managed service type model :smile.

Weltchy
13th August 2015, 10:19
Been thinking of exactly this and maybe a managed service type model :smile.

I think it's possible, but would require a fair amount of forethought. You would have to take into consideration things like what happens when one of the contractors is out of contract and not billing. How do you apportion expenses, etc.

Still, I think if the T&S and IR35 changes come to pass, this will have to be investigated thoroughly. I wonder if someone like SJD, Nixon Williams or any specialist contractor accountancy could operate something like this on our behalf.

DimPrawn
13th August 2015, 10:21
I think it's possible, but would require a fair amount of forethought. You would have to take into consideration things like what happens when one of the contractors is out of contract and not billing. How do you apportion expenses, etc.

Still, I think if the T&S and IR35 changes come to pass, this will have to be investigated thoroughly. I wonder if someone like SJD, Nixon Williams or any specialist contractor accountancy could operate something like this on our behalf.

No doubt HMR&C would call it a "scam" and "deliberate tax avoidance" and take you all to court.

It almost like anything that isn't a big Tory donor consultancy must be crushed....

PurpleGorilla
13th August 2015, 10:21
Been thinking of exactly this and maybe a managed service type model :smile.

Does anyone have a decent link for setting up a consultancy/associates business?

d000hg
13th August 2015, 10:21
So permies cost as much as a contractor, and have 1/2 the skills, work ethic and experience. Oh and they are off sick pretty much most of the year.Maybe you shouldn't work in such dire companies, because that's certainly not my experience.

TheLordDave
13th August 2015, 10:22
Been thinking of exactly this and maybe a managed service type model :smile.

I have also been thinking this. It would be a pain in the ass the manage though, unless an accountancy firm 'managed' it for you.

Other options?
Off shore company - is that possible?
Hire someone on minimum wage so your an employer?
Incorporate plan b into contractor company.

Would any of those make a difference and take you out of the Psc rules?

PurpleGorilla
13th August 2015, 10:27
I have to say, this extra tax and IR35 tulip is a complete wind up. Contracting for me offers the last available opportunity to secure a decent future for my family. But the Tories have pulled up the final ladder. No matter what you do there is no escape from debt slavery permieville servicing stupidly priced housing.

Platypus
13th August 2015, 10:27
Indeed, HMRC confirmed to us that if you’re a contractor who works through a recruitment agency

What exactly is a recruitment agency? Is this well enough defined?

Imagine that I have a direct contract with ClientCo but that they send me to their clients and charge me out at X per day, are they a recruitment agency? e.g. Accenture.

Furthermore, what if the "agency" or consultancy is offshore?

MrMarkyMark
13th August 2015, 10:28
It would be a pain in the ass the manage though, unless an accountancy firm 'managed' it for you.
Already having a couple of early conversations, initially the important bit is to have someone, on a PSL, to help you get in, factor invoices etc. for a fee / commission.
The other important thing is to factor the agreement so you can detach yourself at a later (contracted) time, hopefully, by then, you will have earnt the right to get on the PSL off your own back.

Gumbo Robot
13th August 2015, 10:29
I don't know if this has already been asked by anyone and forgive me if I seem unduly paranoid but is there any chance there could be any retrospective aspect to any IR35 reworking?

i.e. In my current contract I'm reasonably confident of being outside IR35 & I will no longer be in this role if and when the new changes are implemented.

So, could they go back over the last 6 years and judge my previous contracts according to the new rules?

I'm guessing not. That could only happen in a totalitarian regime...

Weltchy
13th August 2015, 10:30
No doubt HMR&C would call it a "scam" and "deliberate tax avoidance" and take you all to court.

It almost like anything that isn't a big Tory donor consultancy must be crushed....

Thing is, how exactly would you differentiate between this and an IT consultancy firm that outsources it's admin and accountancy functionality? In fact, would this not be an IT Consultancy firm that outsources it's admin and accountancy functionality.

MrMarkyMark
13th August 2015, 10:41
Thing is, how exactly would you differentiate between this and an IT consultancy firm that outsources it's admin and accountancy functionality? In fact, would this not be an IT Consultancy firm that outsources it's admin and accountancy functionality.

You got it, I cannot see this approach wouldn't "fix" the issue.
I already know of one group that are doing this at an IB.

If you have a group of individuals that are already highly respected and known, you will find people will come to talk to you.
This is why I have started investigating this, in the first instance, a few months ago.

czakky
13th August 2015, 10:44
Contract recruiter here...

We're currently discussing how on earth we will function as an agency if this all goes through, as the way we do business is going to be fundamentally turned on its head.

The main option that we're coming up with, if things are a bad as they seem, it to provide contractors in the same way that permies are hired, eg. we take an intro fee and then you guys work out the commercials, as if travel expenses go for anyone through an agency, there is zero chance of filling roles in some area's - I do alot of recruitment in the North East (yes, there are SOME companies up here that hire contractors); and there is literally zero local talent that is available - we HAVE to re-locate people for most contracts.

Either that, or accept the golden days of recruitment are dead for good, and look at something else...

DaveB
13th August 2015, 10:47
Contract recruiter here...

We're currently discussing how on earth we will function as an agency if this all goes through, as the way we do business is going to be fundamentally turned on its head.

The main option that we're coming up with, if things are a bad as they seem, it to provide contractors in the same way that permies are hired, eg. we take an intro fee and then you guys work out the commercials, as if travel expenses go for anyone through an agency, there is zero chance of filling roles in some area's - I do alot of recruitment in the North East (yes, there are SOME companies up here that hire contractors); and there is literally zero local talent that is available - we HAVE to re-locate people for most contracts.

Either that, or accept the golden days of recruitment are dead for good, and look at something else...

So is the Recruitment industry making representations about this as well?

If not, why not?

As you say, it stands to have a major impact on your business model.

Its An Interesting Thing
13th August 2015, 10:49
I don't know if this has already been asked by anyone and forgive me if I seem unduly paranoid but is there any chance there could be any retrospective aspect to any IR35 reworking?

i.e. In my current contract I'm reasonably confident of being outside IR35 & I will no longer be in this role if and when the new changes are implemented.

So, could they go back over the last 6 years and judge my previous contracts according to the new rules?

I'm guessing not. That could only happen in a totalitarian regime...


No, of course not.

Your degree of being "caught by IR35", for want of a better expression, can only be determined by the law that was extant at that time.

Now, if your current contract (which you say will be over by April but, hey - who knows in this game :smile:) gets extended then I'm gussing that the new legislation (if indeed, there is any) will apply back to the start of that engagement. So yes, in that respect there could be some retrospection but I wouldn't worry about every contract you've undertaken during the last 6 years being examined under a new set of rules.

d000hg
13th August 2015, 10:51
I do alot of recruitment in the North East (yes, there are SOME companies up here that hire contractors); and there is literally zero local talent that is available - we HAVE to re-locate people for most contracts.That doesn't sound very likely. Me and Eek are both in the NE ;)

czakky
13th August 2015, 10:53
So is the Recruitment industry making representations about this as well?

If not, why not?

As you say, it stands to have a major impact on your business model.

To be brutal, about 80% of people in recruitment are retards who give the industry an awful name, and I doubt alot of them are even aware of this, they are too busy trying to hit KPI's and generate leads from candidates. And my god, I wish this was a lie, but it's not.

The larger players in the industry are worried, although most of the larger players generate most of their revenue outside of the UK; the European/USA/APEC region is currently a very good place to do business in comparison to our lovely isle.

Umbrella companies are starting to make noise about this, and the normal route for "on the ground" recruiters to hear about these changes are through these bodies.

In terms of official line, the industry is so fragmented I doubt we'll come up with one - I really wish it could happen, and any information I can help with as a push back to this, I'm happy to offer - just PM me what you want to know.

eek
13th August 2015, 10:55
That doesn't sound very likely. Me and Eek are both in the NE ;)

As were many of the colleagues I've worked with at various clients... In fact the reason why we live where we do is because it has decent communication links (can get round Europe via the local airport and Amsterdam, London by train is 2 and a bit hours)..

czakky
13th August 2015, 10:56
Sorry, I'll clarify - its hard to find anyone local that does not have a gig already!

eek
13th August 2015, 11:15
Sorry, I'll clarify - its hard to find anyone local that does not have a gig already!

Probably because the local market is small we all accept we have to travel. Hence as we aren't that fussy about location (I can happily work down to about Birmingham with little effort) we currently find it easy to find work...

DodgyAgent
13th August 2015, 11:50
I would just like to have my thoughts on this aired.

Basically you are all stuffed :happy

DimPrawn
13th August 2015, 11:53
I would just like to have my thoughts on this aired.



:cretin::tumble::whoosh:

The Spartan
13th August 2015, 11:55
I would just like to have my thoughts on this aired.

Basically you are all stuffed :happy

DA doesn't this also mean that you're stuffed :laugh

DodgyAgent
13th August 2015, 12:03
DA doesn't this also mean that you're stuffed :laugh

I am OK on niche stuff and with certain clients

DimPrawn
13th August 2015, 12:05
I am OK on niche stuff and with certain clients

He means ferrying over Bobs for £10 an hour to end clients.

MicrosoftBob
13th August 2015, 12:05
I am OK on niche stuff and with certain clients

So Thai ladyboys and furries then

expat
13th August 2015, 12:05
That doesn't sound very likely. Me and Eek are both in the NE ;)And I'm in the Scottish Borders. Newcastle is one of my airports, but it doesn't seem to be one of my work locations.

DimPrawn
13th August 2015, 12:12
And I'm in the Scottish Borders. Newcastle is one of my airports, but it doesn't seem to be one of my work locations.

The only boom in the NE is public sector, so you will have to wait for Komrade Korbyn to create 1,000,000 non-jobs there again.

DodgyAgent
13th August 2015, 12:19
So Thai ladyboys and furries then

My Granny makes me £500 a day and the kids another £1500 between them so I am OK Jack

eek
13th August 2015, 12:37
The only boom in the NE is public sector, so you will have to wait for Komrade Korbyn to create 1,000,000 non-jobs there again.

Not quite. Many consultancies use the North East as an onshore development hub...

Labour is slightly cheaper than elsewhere while office rents are also lower..

SpontaneousOrder
13th August 2015, 12:54
As were many of the colleagues I've worked with at various clients... In fact the reason why we live where we do is because it has decent communication links (can get round Europe via the local airport and Amsterdam, London by train is 2 and a bit hours)..

What sucks is that I live in Suffolk, and London by train is 2.5 hours :D

NibblyPig
13th August 2015, 16:47
Not quite. Many consultancies use the North East as an onshore development hub...

Labour is slightly cheaper than elsewhere while office rents are also lower..

Last I checked the only permie jobs are leeds or hull.

Hull makes swindon look like a buzzing social hub

AtW
13th August 2015, 17:36
Last I checked the only permie jobs are leeds or hull.

Hull makes swindon look like a buzzing social hub

Hell Happyness and Hull...

ClothCap
13th August 2015, 21:58
I fully agree with the OP and I am currently building a network via old contacts, fellow consultants and general networking. Already got a few leads for smaller items of work with potential repeat business.

To me that will provide a more varied and relaxed working model with the potential to scale into a more semi-retired arrangement. Obviously not as lucrative but better for the soul.

More IR35-friendly and no dealing with agencies who are now more than ever to be avoided if they are to become portals for HMRC to start snooping on you.

Sysman
14th August 2015, 06:45
Not exactly. Surely even HMRC won't be able to dictate how you do your hair?

Don't give them ideas :mad:

Sysman
14th August 2015, 08:20
if your daily commute is, lets say, 4 hours. And that commute costs you heading towards 10k a year after tax, then when you factor in the lack of permie perks, the marginal increase in take home after those expenses (remember we'll be in 40% territory), AND the fact that you're commuting 4 hours a day...

Then it's arguably a far better deal to commute only 1.5 hours per day and chill as a permie.

That'll be 40% plus employer's and employee's NI.

Let's look at the table at Wiki - NI Contribution Rates (https://en.wikipedia.org/wiki/National_Insurance#Contribution_Rates_-_Employees)

As in other texts floating around, the article concentrates on the low paid:


For 2015-16 there is therefore up to £304.80 payable by someone who has not reached the point where they are liable for Income Tax.

...

There is a further complexity in as much as the calculation for employees has to be made on each pay period - so a weekly paid employee will face a charge in any week where earnings exceed one fifty-second of the annual limit. It is therefore possible for a charge to Employees NI to arise on someone who earns below the limit on an annual basis but who has occasional payments above the weekly limit.

What nobody looks at is the other end of the scale. Consider someone who earns their yearly income tax allowance (nominally £10,600 but it depends on the tax code) in month 1 of the tax year, at which point the contract finishes. A contractor subject to the proposed scheme will pay full whack NI (EE and ER) for that month plus tax, based on a yearly earning of 12 times that month's pay.

If they don't work again in the tax year, that tax will come back, but the NI won't.

expat
14th August 2015, 08:29
That'll be 40% plus employer's and employee's NI.

Let's look at the table at Wiki - NI Contribution Rates (https://en.wikipedia.org/wiki/National_Insurance#Contribution_Rates_-_Employees)

As in other texts floating around, the article concentrates on the low paid:



What nobody looks at is the other end of the scale. Consider someone who earns their yearly income tax allowance (nominally £10,600 but it depends on the tax code) in month 1 of the tax year, at which point the contract finishes. A contractor subject to the proposed scheme will pay full whack NI (EE and ER) for that month plus tax, based on a yearly earning of 12 times that month's pay.

If they don't work again in the tax year, that tax will come back, but the NI won't.The 40% tax threshold matches the employee's NI upper limit, so when 40% tax kicks in, all but 2% of the EEs disappears.

NICs are calculated on a yearly basis for directors, so it doesn't matter when you earn it from that point of view.

Sysman
14th August 2015, 08:44
Or moving to where the work is?

This has always been the bedrock of the two year rule, surely?

I'm going to take a slightly controversial view here, if eighty percent of the work is in London then why should the taxpayer subsidise us choosing to live in a cheaper area to have a bigger house?

The problem is that successive governments have centralised too much in London and a lot of folks simply cannot afford to move there.

DimPrawn
14th August 2015, 08:54
The problem is that successive governments have centralised too much in London and a lot of folks simply cannot afford to move there.

You can buy an ex-council flat for £1,200,000 what you talking about?

Sysman
14th August 2015, 08:55
Not all permies take jobs within commuting distance of where they live. So why don't they get expenses too?

Make it the same for everybody.

When various countries around the world do provide tax relief to normal employees on travel to and from work, and a lunch allowance, this.

Wake up Britain, it's a global economy now.

Sysman
14th August 2015, 08:59
The 40% tax threshold matches the employee's NI upper limit, so when 40% tax kicks in, all but 2% of the EEs disappears.

But the ER component doesn't have an upper limit.


NICs are calculated on a yearly basis for directors, so it doesn't matter when you earn it from that point of view.

But if you are going to be hammered with PAYE on your full earnings, are you still going to be a director?

Sysman
14th August 2015, 09:00
You can buy an ex-council flat for £1,200,000 what you talking about?

Oh silly me.

I'll probably find that down the back of the sofa.

Sysman
14th August 2015, 09:07
I believe taking into the cost of hiring permies, all the benefits they get, the legal protection as employees, tax overhead to the company, it is pretty much 2 x gross salary.

I did all the figures years ago, and 2 x was the figure I came up with, with minor variations by industry.

unixman
14th August 2015, 09:12
Bit more optimism needed here.

If the govt brings in some daft rule, it will be fine so long as we are all affected the same. I was umbrella for years and only went Ltd when rates went down the toilet. I was being undercut by Ltd company contractors who could work for the lower rates because of their their tax advantages. If the govt stops us being Ltd, we will all go umbrella and nobody will be undercutting anybody. Rates, which have already recovered, will be further driven up by that level playing field market.

I'd be happy to go hassle-free umbrella (or whatever), although it would rather can my dream of taking people on, expanding and being an Alan Sugar.

MicrosoftBob
14th August 2015, 09:17
It won't cause rates to go up, multinationals will scream about a skills shortage, and more ICTs will be allowed

The Spartan
14th August 2015, 09:19
Bit more optimism needed here.

If the govt brings in some daft rule, it will be fine so long as we are all affected the same. I was umbrella for years and only went Ltd when rates went down the toilet. I was being undercut by Ltd company contractors who could work for the lower rates because of their their tax advantages. If the govt stops us being Ltd, we will all go umbrella and nobody will be undercutting anybody. Rates, which have already recovered, will be further driven up by that level playing field market.

I'd be happy to go hassle-free umbrella (or whatever), although it would rather can my dream of taking people on, expanding and being an Alan Sugar.

I'm guessing you don't care about expenses?

SueEllen
14th August 2015, 09:22
Hull makes swindon look like a buzzing social hub

:eek:

Another one on the list to tell foreigners to visit to see the "real" England.

LondonManc
14th August 2015, 09:25
I'm guessing you don't care about expenses?

I had my first year as a contractor with an umbrella and could claim expenses.

I think there needs a better split on what can and cannot be claimed, rather than a blanket ban. Claiming travel and accommodation while working away should be it. If you want to pay £30 for a meal rather than £8 that is your wont. I'd be having lunch whether I worked perm or contract, etc. - any costs reasonably paid by a perm who isn't stupid enough to live a 2 hour commute from their job shouldn't be claimable.

Sysman
14th August 2015, 09:25
That doesn't sound very likely. Me and Eek are both in the NE ;)

I'm pretty confident that the NE has more work than the pair of you can cope with alone :D

The Spartan
14th August 2015, 09:30
I had my first year as a contractor with an umbrella and could claim expenses.

I think there needs a better split on what can and cannot be claimed, rather than a blanket ban. Claiming travel and accommodation while working away should be it. If you want to pay £30 for a meal rather than £8 that is your wont. I'd be having lunch whether I worked perm or contract, etc. - any costs reasonably paid by a perm who isn't stupid enough to live a 2 hour commute from their job shouldn't be claimable.

I hear what you're saying but when you're staying away in a hotel it's not as if you have facilities to cook and prepare food, I've never been very lavish when purchasing food while away and have always tried to keep it to a minimum as ultimately it's coming out of the company's pot of money.

NibblyPig
14th August 2015, 09:35
Meanwhile Peer claims £300 a day in expenses to walk 200 yards to work at House of Lords - Telegraph (http://www.telegraph.co.uk/news/politics/conservative/11769736/Peer-claims-300-a-day-in-expenses-to-walk-200-yards-to-work-at-House-of-Lords.html)

:mad::mad::mad:

ShandyDrinker
14th August 2015, 09:44
It won't cause rates to go up, multinationals will scream about a skills shortage, and more ICTs will be allowed

We're already seeing this. Look at some of the recent articles on this website and contractorcalculator. I'm sure someone will post evidence to the contrary but it's interesting how skills shortages are rarely reported for "closed shops" such as lawyers, accountants and so on where the hourly rates can be eye watering.

d000hg
14th August 2015, 10:15
I'm pretty confident that the NE has more work than the pair of you can cope with alone :DYeah but I very rarely get emails about local work - it's mostly in Cambridge which is about the hardest place in England to commute to from the NE (I think?)

unixman
14th August 2015, 10:21
I'm guessing you don't care about expenses?

On the contrary I am staying away mon-fri and currently being penalized by the 2 year rule, depriving me of many expenses.

Martin Scroatman
14th August 2015, 10:29
Yeah but I very rarely get emails about local work - it's mostly in Cambridge which is about the hardest place in England to commute to from the NE (I think?)

Hmmm... At least it's on the same side of the country.

You should try getting there from Yeovil. It's one part of the country I completely discount because it's so hard to get to.

I once had a chance of a lucradive number in Ipswich but the 5 hours it would take by public transport or driving had me thinking no way José.

I belive there was a time when you could fly into Norwich from Plymouth and/ or Bristol/Exeter but there seem to be no operators flying those routes any more.

How I miss Brymon Airways :sad:

Sysman
14th August 2015, 10:33
Yeah but I very rarely get emails about local work - it's mostly in Cambridge which is about the hardest place in England to commute to from the NE (I think?)

I see your Cambridge and raise you with Ipswich.

Compounded by minor roadworks on the way there (not too bad on a Sunday), and major ones on the way back (Friday night so very painful).

LisaContractorUmbrella
14th August 2015, 10:57
Yep. I'm coming to the conclusion that the only solution is something like anyone employed via an agency and paid less than national living wage (times x say 2) should be treated as subject to SD&C anything above is not SD&C.

It's hideous (and I really don't like it) but HMRC want something simple that works, the unions who screamed during the discussion phase don't want their members forced into using limited companies and end clients will want an easy to follow rule which means they don't need to take risks.

HMRC's beef is that more people than HMG intended are getting tax relief on T&S expenses. We can assume that this is due to the fact that vast numbers of low paid workers have been forced to work through brollies or PSC's so that companies can avoid employment costs. If that's the case then why not implement something along the lines that Eek's suggested but rule that workers under a certain income threshold cannot be engaged through an intermediary - that would move them all back into permanent employment or FTC's (banning of zero hours contracts would prevent exploitation) and lots of HMRC's problems would be solved. By constantly aligning tax legislation to employment law they have to use a sledge hammer to crack a nut most of the time - if they stick with numbers all our lives will be a lot easier

MicrosoftBob
14th August 2015, 11:02
But then HMRC can't punish people they're jealous of :wink

Zero Liability
14th August 2015, 11:15
We're already seeing this. Look at some of the recent articles on this website and contractorcalculator. I'm sure someone will post evidence to the contrary but it's interesting how skills shortages are rarely reported for "closed shops" such as lawyers, accountants and so on where the hourly rates can be eye watering.

They do actually get reported for accountants from time to time, in Accountancy Age, every few months or so. Not as acute as with IT.

d000hg
14th August 2015, 11:27
But then HMRC can't punish people they're jealous of :winkThe people making these decisions are probably earning more than us.

ShandyDrinker
14th August 2015, 11:45
They do actually get reported for accountants from time to time, in Accountancy Age, every few months or so. Not as acute as with IT.

That's me corrected :spank:

Joking aside I guess you're right with it not being as acute as IT. This is more than likely down to the fact that the IT industry moves so quickly and many use keyword searches so I can see how all of a sudden you have a shortage of Software Engineers but not Web Developers and so on.

jamesbrown
14th August 2015, 11:48
HMRC's beef is that more people than HMG intended are getting tax relief on T&S expenses. We can assume that this is due to the fact that vast numbers of low paid workers have been forced to work through brollies or PSC's so that companies can avoid employment costs. If that's the case then why not implement something along the lines that Eek's suggested but rule that workers under a certain income threshold cannot be engaged through an intermediary - that would move them all back into permanent employment or FTC's (banning of zero hours contracts would prevent exploitation) and lots of HMRC's problems would be solved. By constantly aligning tax legislation to employment law they have to use a sledge hammer to crack a nut most of the time - if they stick with numbers all our lives will be a lot easier

Instinctively, I'm against absolutely anything that makes a distinction between businesses. For example, any suggestion about automatic rules based on length of contract, numbers of contracts within a fixed period, or proportion of income from a particular client are anti-competitive and discriminatory. Inherently, I also don't like the idea of discriminating on the basis of trade or turnover. There's a divide and conquer element to this; naturally, it will please some, and you're probably talking to the converted on CUK with a low bar on income.

Of equal importance though, such rules will be easier to circumvent through other artificial structures and, for that reason, they will be more difficult to sell. I think it's an idea worthy of further consideration and development, but it would need to overcome some difficult problems: 1) the potentially discriminatory nature of such rules; 2) the opportunities for avoidance; and 3) the practical issues surrounding enforcement. For example, what happens when a contractor has a quiet period or decides to take several months out? Quite quickly, you either need to complicate the rule of suffer the inequity of the simpler rule. Perhaps we're at that point. However, my sense is that we're better off pushing back on a more fundamental level in terms of the implied discrimination between small and large businesses and the implications for the flexible workforce (including for gov't departments, I might add), even if that doesn't ultimately work - and I don't think the prospects are good.

LisaContractorUmbrella
14th August 2015, 11:57
Instinctively, I'm against absolutely anything that makes a distinction between businesses. For example, any suggestion about automatic rules based on length of contract, numbers of contracts within a fixed period, or proportion of income from a particular client are anti-competitive and discriminatory. Inherently, I also don't like the idea of discriminating on the basis of trade or turnover. There's a divide and conquer element to this; naturally, it will please some, and you're probably talking to the converted on CUK with a low bar on income.

Of equal importance though, such rules will be easier to circumvent through other artificial structures and, for that reason, they will be more difficult to sell. I think it's an idea worthy of further consideration and development, but it would need to overcome some difficult problems: 1) the potentially discriminatory nature of such rules; 2) the opportunities for avoidance; and 3) the practical issues surrounding enforcement. For example, what happens when a contractor has a quiet period or decides to take several months out? Quite quickly, you either need to complicate the rule of suffer the inequity of the simpler rule. Perhaps we're at that point. However, my sense is that we're better off pushing back on a more fundamental level in terms of the implied discrimination between small and large businesses and the implications for the flexible workforce (including for gov't departments, I might add), even if that doesn't ultimately work - and I don't think the prospects are good.

What avoidance schemes do you think could be put in place - with RTI it would be tricky I would have thought. It is discriminatory yes but contractors are being discriminated against already. Again with RTI and agency reporting it should be much easier to enforce than IR35 or determining SDC

SlipTheJab
14th August 2015, 12:44
Permies get a lot of things that contractors don't. Holiday pay. Sick pay. I am sure there are loads more.

They also get (quite rightly) to claim 100% of ad hoc travel costs as the permies I work with do, I pay 100+ for an occasional return to london and get 20% tax relief, the permies get 100% of that cost back.

jamesbrown
14th August 2015, 12:52
What avoidance schemes do you think could be put in place - with RTI it would be tricky I would have thought. It is discriminatory yes but contractors are being discriminated against already. Again with RTI and agency reporting it should be much easier to enforce than IR35 or determining SDC

As I say, I think it's worthy of further consideration and development. In terms of simpler rules being easier to circumvent through artificial structures, I'm speaking generally rather than specifically; it would depend on the specific proposal. For example, what would prevent a number of low-paid workers collectively forming a company and meeting a turnover requirement? If it's based on hourly or daily rate, would it be possible to circumvent this through artificial (tiered) rate structures or nominally "fixed price" work? It depends on the proposal. However, low paid workers aren't driving this avoidance; it's being driven by employers that are trying to save employment taxes and avoid regulations. They have the resources to develop ingenious mechanisms to circumvent simple rules and remain within the letter of the law. It's tougher to circumvent the vagaries of SDC. A scalpel is naturally better than a sledgehammer, but there's a reason that this hasn't been possible before; nevertheless, I think it's worthy of consideration and development.

Platypus
14th August 2015, 15:14
They also get (quite rightly) to claim 100% of ad hoc travel costs as the permies I work with do, I pay 100+ for an occasional return to London and get 20% tax relief, the permies get 100% of that cost back.

Rubbish! I personally get 100% back from MyCo when I buy a train ticket. MyCo and I are not the same thing, as you very well know.

SlipTheJab
14th August 2015, 15:22
Rubbish! I personally get 100% back from MyCo when I buy a train ticket. MyCo and I are not the same thing, as you very well know.


Jeez... you know what I mean...

MarillionFan
15th August 2015, 15:29
It may have been said already. I got 10 pages in and didn't see it. But why not negotiate a contract where T&E is part of the contract. That way you push the T&E onto the client. I do this with my contractors now. Any expenses they accrue I pay them back.

Contreras
15th August 2015, 16:37
It may have been said already. I got 10 pages in and didn't see it. But why not negotiate a contract where T&E is part of the contract. That way you push the T&E onto the client. I do this with my contractors now. Any expenses they accrue I pay them back.

I think it remains to be seen whether or not this would be allowed or seen as a 'loophole'.

As it stands currently we have to declare travel expenses on P11D and claim back via personal SA to cancel out the tax. What a lot of people don't realise is that technically (HMRC rules) the expenses must be declared on P11D regardless of whether paid out-of-pocket and reclaimed, paid directly by YourCo, or paid directly by the client. In other words it's still regarded as a benefit.

Depending upon how the new rules get implemented/enforced, your contractors could potentially be worse off (it could be treated as BiK, with tax and NICs to pay). At the moment P11D rules are often overlooked, being a nil-sum game it's a minor technicality that HMRC don't seem to care about - that will change if there is tax to be had.

Martin Scroatman
15th August 2015, 23:13
It may have been said already. I got 10 pages in and didn't see it. But why not negotiate a contract where T&E is part of the contract. That way you push the T&E onto the client. I do this with my contractors now. Any expenses they accrue I pay them back.

Because it will be taxed as a benefit in kind.

A lose lose situation if I've ever seen one.

EternalOptimist
16th August 2015, 10:23
I run a ltd because I was forced to. The only way I could get contract work was via an agency using a ltd. Which means I use an accountant, indemnity , VAT FRS, etc etc.

Over the years I have had to adapt and I will adapt to this as well. The key fixed points are
1. minimise aggro for the client
2. costs will go up, particularly for staying away
3. SDC will be certain, but then longer contracts are back on the agenda
4. Agencies practices might change and not for the better

Seems to me that I will be going for longer contracts, insisting on a 3 or 4 day week with 10 - 12 hour days, pushing hard for WFH, pushing harder for direct

suityou01
16th August 2015, 10:44
I shall not worry while we have great minds like MarillionFan on the case.

centurian
16th August 2015, 11:29
I run a ltd because I was forced to. The only way I could get contract work was via an agency using a ltd. Which means I use an accountant, indemnity , VAT FRS, etc etc.

So they wouldn't even let you go through a PAYE umbrella - surprised agencies are that fussy. Heard that some agencies got touchy about certain offshore schemes masquerading as umbrellas, but thought most were more than happy to allow PAYE umbrella's

MarillionFan
16th August 2015, 12:47
Because it will be taxed as a benefit in kind.

A lose lose situation if I've ever seen one.

I'm not sure you're right. I spend around 30k in T&E every year via my company. It is not a BIK its expenses for doing business and it certainly does not appear on my SA. As a contractor T&E also did not appear on my SA (post further above). Consultancy works in the same way. There is no BIK.

If companies > 3 employees can claim expenses then it makes sense you can push legit expenses back on to the client and thee is no BIK

Can one of our learned accounts chip in please?

MarillionFan
16th August 2015, 12:49
I shall not worry while we have great minds like MarillionFan on the case.

I look forward to your posts about how you keep failing to get through a permie inteview

mudskipper
16th August 2015, 13:01
I'm not sure you're right. I spend around 30k in T&E every year via my company. It is not a BIK its expenses for doing business and it certainly does not appear on my SA. As a contractor T&E also did not appear on my SA (post further above). Consultancy works in the same way. There is no BIK.

If companies > 3 employees can claim expenses then it makes sense you can push legit expenses back on to the client and thee is no BIK

Can one of our learned accounts chip in please?

Yes, but you're a permie. The proposal is to disallow expenses for those working through a brolly or PSC who are subject to SDC, with the premise (maybe - I'm still not convinced) that if you work via an agency, SDC is a given.

One of the primary objections is that this puts myCo at a tax disadvantage to bigCo, whose employees get tax free expenses.

MarillionFan
16th August 2015, 13:14
Yes, but you're a permie. The proposal is to disallow expenses for those working through a brolly or PSC who are subject to SDC, with the premise (maybe - I'm still not convinced) that if you work via an agency, SDC is a given.

One of the primary objections is that this puts myCo at a tax disadvantage to bigCo, whose employees get tax free expenses.


Yes. But you either claim your expenses via the Brolly or your own Ltd company. I'm talking about having the client pay your expenses.

For example we have contractors we fly to the U.S. They regularly rack up 5k in expenses per trip. It's not a BIK and even with the changes they won't get taxed on that.

If in your T&E with a client that your based at home and they must pay T&E to travel to their sites and you use their expensing processes it's not a BIK. Now in a number of cases where you're based at one site it won't work, but for those who do travel and stay away & also at more than one site I think it's a goer.

mudskipper
16th August 2015, 13:33
Yes. But you either claim your expenses via the Brolly or your own Ltd company. I'm talking about having the client pay your expenses.

For example we have contractors we fly to the U.S. They regularly rack up 5k in expenses per trip. It's not a BIK and even with the changes they won't get taxed on that.

If in your T&E with a client that your based at home and they must pay T&E to travel to their sites and you use their expensing processes it's not a BIK. Now in a number of cases where you're based at one site it won't work, but for those who do travel and stay away & also at more than one site I think it's a goer.

I think you're still OK for travel and subsistence to sites other than the regular site. It's the site that is the base for the duration of the "employment" that isn't going to be allowed.

EternalOptimist
16th August 2015, 14:19
So they wouldn't even let you go through a PAYE umbrella - surprised agencies are that fussy. Heard that some agencies got touchy about certain offshore schemes masquerading as umbrellas, but thought most were more than happy to allow PAYE umbrella's

lol

there were no brollies when I started out.

EternalOptimist
16th August 2015, 14:22
Let me be clear. I am disagreeing with premise that we must change the lazy way we find work. I am saying that I will adapt. see above ^^^

TestMangler
16th August 2015, 14:37
lol

there were no brollies when I started out.

^^ This !

Some agencies operated PAYE but were reluctant and pinched the tulip out of rates. Sole trader was not an option so LTD was the only practical route available. Some of you Johnny come lately know it all's with less than 20 years experience need to get a history lesson. :wink

EternalOptimist
16th August 2015, 14:54
^^ This !

Some agencies operated PAYE but were reluctant and pinched the tulip out of rates. Sole trader was not an option so LTD was the only practical route available. Some of you Johnny come lately know it all's with less than 20 years experience need to get a history lesson. :wink

Also, for the noobs, bear this in mind.

An agent as a middleman has an overwhelming interest in minimising your rate
An agent headhunting has an overwhelming interest in maximising your rate

there are lots of factors at play here, but my fallback is simple. you don't fight fire with fire
you fight fire with water
those that adapt will survive.

tomtomagain
16th August 2015, 23:34
I think you're still OK for travel and subsistence to sites other than the regular site. It's the site that is the base for the duration of the "employment" that isn't going to be allowed.


So if your contract explicitly had you working from your office ( i.e your home address or the local business centre ) for the duration of the contract then would you be able to deduct expenses incurred for trips to the client site?

PurpleGorilla
17th August 2015, 06:22
If you stop by a staples and pick up office supplies on your way back from client office to home office perhaps you could claim the mileage?

suityou01
17th August 2015, 11:17
I had acronyms. WTF is SDC? :bang:

MicrosoftBob
17th August 2015, 11:32
I had acronyms. WTF is SDC? :bang:

Supervision or Direction or Control

jamesbrown
17th August 2015, 11:33
So if your contract explicitly had you working from your office ( i.e your home address or the local business centre ) for the duration of the contract then would you be able to deduct expenses incurred for trips to the client site?

Subject to the conditions outlined in the consultation, each contract will be considered a separate employment for the purposes of sections 337, 338 and 339 of the ITEPA. Subject to those conditions, you will not be able to claim tax relief on T&S for home-to-work travel, as it will be considered "ordinary commuting" (s338). Travel that is necessary to perform the duties of the employment (s337) will be unaffected (i.e. if you need to attend a meeting or conference in the ordinary course of your work; hence the tulip about a "level playing field"). Bottom line, if you meet the conditions, you will not be able to claim relief.

jamesbrown
17th August 2015, 11:34
If you stop by a staples and pick up office supplies on your way back from client office to home office perhaps you could claim the mileage?

:laugh No, that's specifically addressed in the consultation. You won't be able to turn ordinary commuting into a business trip.

Danglekt
17th August 2015, 11:37
all my contracts so far have been direct with clients.

Next I'll start calling myself a "real contractor" :D:D:D

CloudWalker
17th August 2015, 12:40
So how much would this affect me... ?
Most of my gigs are in London and I pay £96 pw on a rail card which I clame back in full through my company on my monthly expencies.
So if this comes in thats £384 pm I can't clame back, but surely my dividends would increace? :confused:

suityou01
17th August 2015, 12:45
So how much would this affect me... ?
Most of my gigs are in London and I pay £96 pw on a rail card which I clame back in full through my company on my monthly expencies.
So if this comes in thats £384 pm I can't clame back, but surely my dividends would increace? :confused:

:spel

The Spartan
17th August 2015, 12:50
So how much would this affect me... ?
Most of my gigs are in London and I pay £96 pw on a rail card which I clame back in full through my company on my monthly expencies.
So if this comes in thats £384 pm I can't clame back, but surely my dividends would increace? :confused:

Not unless you want to hit the higher limit.

LondonManc
17th August 2015, 12:52
Ah, so the long game may be to push us into collecting larger warchests?

CloudWalker
17th August 2015, 13:23
Not unless you want to hit the higher limit.

Great :frown And They keep changing the MAX Dividend threshold each year:

Tax year Salary Max net dividend
2004-05 £4,745 £28,260
2005-06 £4,895 £29,160
2006-07 £5,035 £29,970
2007-08 £5,225 £31,140
2008-09 £5,435 £31,860
2009-10 £5,715 £34,344
2010-11 £5,715 £34,344
2011-12 £7,225 £31,725
2012-13 £7,605 £31,383
2013-14 £7,755 £30,326
2014-15 £7,956 £30,518
2014-15 £10,000 £28,679
2015-16 £8,060 £30,893
2015-16 £10,600 £28,607

The Spartan
17th August 2015, 13:36
Great :frown And They keep changing the MAX Dividend threshold each year:

Tax year Salary Max net dividend
2004-05 £4,745 £28,260
2005-06 £4,895 £29,160
2006-07 £5,035 £29,970
2007-08 £5,225 £31,140
2008-09 £5,435 £31,860
2009-10 £5,715 £34,344
2010-11 £5,715 £34,344
2011-12 £7,225 £31,725
2012-13 £7,605 £31,383
2013-14 £7,755 £30,326
2014-15 £7,956 £30,518
2014-15 £10,000 £28,679
2015-16 £8,060 £30,893
2015-16 £10,600 £28,607

There will be no net dividend from next financial year, as the 10% credit is being abolished so it should be up to the gross amount when the dividend tax is introduced.

vetran
17th August 2015, 13:39
Great :frown And They keep changing the MAX Dividend threshold each year:

Tax year Salary Max net dividend
2004-05 £4,745 £28,260
2005-06 £4,895 £29,160
2006-07 £5,035 £29,970
2007-08 £5,225 £31,140
2008-09 £5,435 £31,860
2009-10 £5,715 £34,344
2010-11 £5,715 £34,344
2011-12 £7,225 £31,725
2012-13 £7,605 £31,383
2013-14 £7,755 £30,326
2014-15 £7,956 £30,518
2014-15 £10,000 £28,679
2015-16 £8,060 £30,893
2015-16 £10,600 £28,607

its been about £38k since 2008? Was 333-34 before that. They have however doubled the tax free amount.

vetran
17th August 2015, 13:55
HMRC's beef is that more people than HMG intended are getting tax relief on T&S expenses. We can assume that this is due to the fact that vast numbers of low paid workers have been forced to work through brollies or PSC's so that companies can avoid employment costs. If that's the case then why not implement something along the lines that Eek's suggested but rule that workers under a certain income threshold cannot be engaged through an intermediary - that would move them all back into permanent employment or FTC's (banning of zero hours contracts would prevent exploitation) and lots of HMRC's problems would be solved. By constantly aligning tax legislation to employment law they have to use a sledge hammer to crack a nut most of the time - if they stick with numbers all our lives will be a lot easier

New lie forced employment costs on almost every employer and Agency. Large companies realised they could force people to pay to work by making them incorporate and work self employed.

Instead of finding new ways to tax people they should look for ways to stop employers screwing the vulnerable. With the exception of a few posters on here I wouldn't count us as 'vulnerable'.

As for IR35 I'm all for an employees & 80/20 rule to start selection then follow with some concrete tests e.g. significant expenses,premises, staff , advertising, creation of product, liabilities etc.

suityou01
17th August 2015, 14:34
There will be no net dividend from next financial year, as the 10% credit is being abolished so it should be up to the gross amount when the dividend tax is introduced.

With crayons, and Alphabites please explain what you just said. :confused:

LisaContractorUmbrella
17th August 2015, 14:35
New lie forced employment costs on almost every employer and Agency. Large companies realised they could force people to pay to work by making them incorporate and work self employed.

Instead of finding new ways to tax people they should look for ways to stop employers screwing the vulnerable. With the exception of a few posters on here I wouldn't count us as 'vulnerable'.

As for IR35 I'm all for an employees & 80/20 rule to start selection then follow with some concrete tests e.g. significant expenses,premises, staff , advertising, creation of product, liabilities etc.

Couldn't agree more and if the T&S proposals go through as they are then the vulnerable are going to be further screwed and I wonder if it will screw them to a point that they'll decide it's not in their interests to keep on working

suityou01
17th August 2015, 14:36
Couldn't agree more and if the T&S proposals go through as they are then the vulnerable are going to be further screwed and I wonder if it will screw them to a point that they'll decide it's not in their interests to keep on working

Sorry, more acronyms. T&S? :bang:

LondonManc
17th August 2015, 14:54
Sorry, more acronyms. T&S? :bang:

Travel & Subsistence - claiming for digs and meals

suityou01
17th August 2015, 15:03
Travel & Subsistence - claiming for digs and meals

Ta muchly. :happy

Did you understand a word of that dividend 10% no net new gross next year stuff?

FatLazyContractor
17th August 2015, 15:06
Ta muchly. :happy

Did you understand a word of that dividend 10% no net new gross next year stuff?

Either you have become a saint or a cretin :D

Either way, ignore my recent nastiness and Welcome back :hug:

suityou01
17th August 2015, 15:15
Either you have become a saint or a cretin :D

Either way, ignore my recent nastiness and Welcome back :hug:

Ah you're having a "good day" today are you. :happy

One cannot become a :cretin: when one already is one. :D

LondonManc
17th August 2015, 15:17
Ta muchly. :happy

Did you understand a word of that dividend 10% no net new gross next year stuff?

Didn't read it. I pay my accountant to tell me the most tax-efficient way of going through life.

suityou01
17th August 2015, 15:18
Didn't read it. I pay my accountant to tell me the most tax-efficient way of going through life.

WLMS :laugh

MrMarkyMark
17th August 2015, 15:32
Didn't read it. I pay my accountant to tell me the most tax-efficient way of going through life.

What, you don't subscribe to the DIY approach :rolleyes:

MarillionFan
17th August 2015, 15:34
Look on the bright side people. When you all have to go permie, think of the 2k a year you'll save in Accountancy fees.

Every cloud...:tongue

The Spartan
18th August 2015, 07:16
With crayons, and Alphabites please explain what you just said. :confused:

You don't understand the current difference between net and gross dividends?

NibblyPig
18th August 2015, 07:29
You don't understand the current difference between net and gross dividends?

There is no net dividend next year according to what you said, so either your dividend has no tax on it and thus is equal to gross, or the nasty HMRC wizard comes along and steals the entire thing

The Spartan
18th August 2015, 07:50
There is no net dividend next year according to what you said, so either your dividend has no tax on it and thus is equal to gross, or the nasty HMRC wizard comes along and steals the entire thing

Well the difference I suppose is for one you will no longer receive the dividend credit which confuses a lot of people.

So say for instance that the higher tax limit is 42k
At present £10k salary and £28,800 net dividends (£32,000 gross dividends)

Next year higher tax limit £43k
£11k salary, £5k dividends tax free and £27k taxed @ 7.5%

suityou01
18th August 2015, 08:36
You don't understand the current difference between net and gross dividends?

Play fair, it was the entire diatribe I didn't understand, not just part of it. IIRC correctly my accountant told me gross divvies are 10/9s of net divvies.

LondonManc
18th August 2015, 08:42
What, you don't subscribe to the DIY approach :rolleyes:

Only in London. :D

The Spartan
18th August 2015, 08:45
Play fair, it was the entire diatribe I didn't understand, not just part of it. IIRC correctly my accountant told me gross divvies are 10/9s of net divvies.

Ah right, yeah they don't make it easy

suityou01
18th August 2015, 09:33
Ah right, yeah they don't make it easy

Cheers bud, that's absolutely cleared everything up for me. :laugh

ItRYmyBEst
9th October 2015, 11:26
Rate rise?

I'll be bumping up rates to 600 pd and taking a huge salary per year

northernladuk
9th October 2015, 11:36
I'll be bumping up rates to 600 pd and taking a huge salary per year

It would be nicer if you retired this sockie instead.

ItRYmyBEst
9th October 2015, 14:52
It may have been said already. I got 10 pages in and didn't see it. But why not negotiate a contract where T&E is part of the contract. That way you push the T&E onto the client. I do this with my contractors now. Any expenses they accrue I pay them back.

Even if you push it to the client, from april 2016 won't we have to pay your travel from your personal expenses? And that can hurt if you are staying under the 40'odd k a year you take personally?

ItRYmyBEst
9th October 2015, 14:56
I run a ltd because I was forced to. The only way I could get contract work was via an agency using a ltd. Which means I use an accountant, indemnity , VAT FRS, etc etc.

Over the years I have had to adapt and I will adapt to this as well. The key fixed points are
1. minimise aggro for the client
2. costs will go up, particularly for staying away
3. SDC will be certain, but then longer contracts are back on the agenda
4. Agencies practices might change and not for the better

Seems to me that I will be going for longer contracts, insisting on a 3 or 4 day week with 10 - 12 hour days, pushing hard for WFH, pushing harder for direct

How many remote contracts will let you take the same rate as being on site?

Ie I would like 600 pd contract working from home.

ItRYmyBEst
9th October 2015, 15:07
Ah, so the long game may be to push us into collecting larger warchests?

This sounds like a good plan, but aren't we all doing that anyway?

LondonManc
12th October 2015, 10:52
This sounds like a good plan, but aren't we all doing that anyway?

I take it you're not married then? ;)

DodgyAgent
12th October 2015, 11:15
How many remote contracts will let you take the same rate as being on site?

Ie I would like 600 pd contract working from home.

Place 10 contractors and charge £300 per week margin. Not only can you "work" from home you won't have to do anything other than shuffle some invoices around. :happy

ItRYmyBEst
12th October 2015, 14:34
I take it you're not married then? ;)


yeah not married

NotAllThere
12th October 2015, 16:08
Please refrain from the sockie accusations.