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MarkT
6th March 2017, 15:37
Seems to me that prior to the last few budgets/statements this site and others like it have been blind sided with the attacks on Contractors. They've not been able to predict anything from the red box, and have looked a little embarassed afterwards.
There's nothing to be embarassed about, nobody coudl imagine a government so hell bent on screwing us over.

However I noticed the headline on the site this morning about the public sector IR35 rules coming to the private sector. While I am not doubting the desire to do this within HMRC, I can't help but think that this is simply trying to call it just in case it happens.

It may well happen one day, but before the end of this parliament is unlikely and given that the tool is throwing up "outside" at almost everyone, it's clearly no where near ready to be implemented in a far more complex world of the private sector.

DotasScandal
6th March 2017, 15:47
Never underestimate a Chancellor's potential for stupidity. It's probably coming.

LondonManc
6th March 2017, 15:56
The PR on this is very simple; we're all tax-evading scum.

The problem is that they're the ones with the microphone so get heard far more than we do. Nobody will pick up and run with the argument about us being unable to claim any employment benefit whatsoever despite being taxed like one.

SueEllen
6th March 2017, 16:00
The PR on this is very simple; we're all tax-evading scum.

The problem is that they're the ones with the microphone so get heard far more than we do. Nobody will pick up and run with the argument about us being unable to claim any employment benefit whatsoever despite being taxed like one.

You can claim unemployment benefit though.

northernladuk
6th March 2017, 16:08
Seems to me that prior to the last few budgets/statements this site and others like it have been blind sided with the attacks on Contractors. They've not been able to predict anything from the red box, and have looked a little embarassed afterwards.

Embarrassed? Where do you get that from?

We had a lot of notice on some things that have come our way. Divi tax, changes to SDC for brollies, VAT changes... What do you think has blind sided us? Are you sure you weren't aware so assuming the rest of us weren't?

Could you give us some examples of what we were blindsided with... and if there is anything why that is something to be embarrassed about.

We certainly can't be blindsided by the implementation of this in to the Public Sector. We've been discussing it for months. We even had a sweepstake when we thought it would come in.

LondonManc
6th March 2017, 16:46
You can claim unemployment benefit though.

Well that's great. Rather than letting lots of tax payers keep paying into the pot, they're forcing them to take money from the put instead. You really couldn't make this up.

teapot418
6th March 2017, 17:25
... given that the tool is throwing up "outside" at almost everyone...

Methinks that people are being a little optimistic about how their client will view their RoS and D&C if this is the case.

DotasScandal
6th March 2017, 17:27
Well that's great. Rather than letting lots of tax payers keep paying into the pot, they're forcing them to take money from the put instead. You really couldn't make this up.

They are not capable of connecting these dots, and they simply don't care. The same logic was displayed when asked whether they'd make people bankrupt over APNs (even though it means these guys will go straight onto the dole) rather than accepting a reasonable payment plan that would allow the contractors to keep contracting (the answer was a resounding "YES, we'll make all of you bankrupt".)

LondonManc
6th March 2017, 17:28
They are not capable of connecting these dots, as they simply don't care. The same logic was displayed when asked whether they'd make people bankrupt over APNs, even though it means these guys will go straight onto the dole, rather than accepting a reasonable payment plan that would allow the contractor to keep contracting (the answer was a resounding "YES, we'll make all of you bankrupt".)

It should stop surprising us after a while, shouldn't it? :(

MrMarkyMark
6th March 2017, 17:48
They are not capable of connecting these dots, and they simply don't care. The same logic was displayed when asked whether they'd make people bankrupt over APNs (even though it means these guys will go straight onto the dole) rather than accepting a reasonable payment plan that would allow the contractors to keep contracting (the answer was a resounding "YES, we'll make all of you bankrupt".)

Regardless of whether they were on a scheme and the view you might have on them, that is absolutely wrong.
Must admit I always had trouble with the law change, then retro grab after.

It seems to have set a precedence for the upcoming PS changes and possible retro grab.

DotasScandal
6th March 2017, 18:20
It seems to have set a precedence for the upcoming PS changes and possible retro grab.

Correct. As I have alluded to here (http://forums.contractoruk.com/public-sector-ir35/119843-ps-bodies-unite-try-shelve-ir35-plans-3.html#post2380422).

eek
6th March 2017, 18:31
They are not capable of connecting these dots, and they simply don't care. The same logic was displayed when asked whether they'd make people bankrupt over APNs (even though it means these guys will go straight onto the dole) rather than accepting a reasonable payment plan that would allow the contractors to keep contracting (the answer was a resounding "YES, we'll make all of you bankrupt".)

Standard debt recovery is based on getting what you can get now rather than possibly jam tomorrow. Especially if that jam tomorrow is from someone with previous form for cheating....

Equally there is an extra incentive for HMRC to take their usual blunt approach. It's designed to discourage others trying similar techniques...

Now I know you will continue to try and convince me that APNs are a forerunner of the other contractor attacks I just don't agree (heck I don't actually agree any of these attacks are directly aimed at contractors they are aimed at others using contractor like working methods to avoid tax).

MrMarkyMark
6th March 2017, 18:34
Correct. As I have alluded to here (http://forums.contractoruk.com/public-sector-ir35/119843-ps-bodies-unite-try-shelve-ir35-plans-3.html#post2380422).

As I said earlier somewhere it (scheme) is something I chose not to get involved in.

However, I didn't expect that they would do that, to me it is morally wrong to bankrupt people and change a law and then retrospectively grab.

I don't see how anyone wouldn't consider it wrong, or not be worried by the kind of precedent it could set..

SueEllen
6th March 2017, 18:38
Standard debt recovery is based on getting what you can get now rather than possibly jam tomorrow. Especially if that jam tomorrow is from someone with previous form for cheating....

Equally there is an extra incentive for HMRC to take their usual blunt approach. It's designed to discourage others trying similar techniques...

Now I know you will continue to try and convince me that APNs are a forerunner of the other contractor attacks I just don't agree (heck I don't actually agree any of these attacks are directly aimed at contractors they are aimed at others using contractor like working methods to avoid tax).

Footballers and pop stars have been caught using schemes and made bankrupt. Unlike IT contractors they aren't considered by many to be intelligent enough to work out it wasn't a good idea.

MrMarkyMark
6th March 2017, 18:43
Footballers and pop stars have been caught using schemes and made bankrupt. Unlike IT contractors they aren't considered by many to be intelligent enough to work out it wasn't a good idea.

And................still nothing happening to the providers of such schemes.

Strange :confused:

They talk about a retro tax grab against PS contractors for example, but no problems for the PS body not paying NI and making them work that way.

eek
6th March 2017, 18:52
As I said earlier somewhere it (scheme) is something I chose not to get involved in.

However, I didn't expect that they would do that, to me it is morally wrong to bankrupt people and change a law and then retrospectively grab.

I don't see how anyone wouldn't consider it wrong, or not be worried by the kind of precedent it could set..

The retrospective grab is against a small group of people (see BP and others who post on the BN66 threads). What happened there is utterly unfair amd highly dubious but for anyone who joined a scheme from 2007 onwards I'm sorry, but I have zero sympathy...

MrMarkyMark
6th March 2017, 19:03
The retrospective grab is against a small group of people (see BP and others who post on the BN66 threads). What happened there is utterly unfair amd highly dubious but for anyone who joined a scheme from 2007 onwards I'm sorry, but I have zero sympathy...

I agree to a point, however as SE said a lot of others have suffered who are "less aware", (I knew I would get there :tongue)

So, IMO, it is mis selling and should be treated as such.

SueEllen
6th March 2017, 19:11
I agree to a point, however as SE said a lot of others have suffered who are "less aware", (I knew I would get there :tongue)

So, IMO, it is mis selling and should be treated as such.

Good term.

Yeah I'm annoyed they don't go after the scheme providers as well.

DotasScandal
6th March 2017, 19:23
What happened there is utterly unfair amd highly dubious but for anyone who joined a scheme from 2007 onwards I'm sorry, but I have zero sympathy...

Not interested in sympathy, as I have explained on these boards ad nauseam. Interested, however, in truth and in facts. Of which I will quote just two: 1/ there was nothing preventing HMRC from communicating to contractors who fell for the promoters' snakeoil that they disapproved. You know their cutesy little "tempted by tax avoidance" they started sending to everyone and their dog in 2016? They could have done this exactly back in 2006, but didn't. Why (https://www.dotas-scandal.org/a-can-of-worms/)?
2/ Prior to 2011, the concept of "disguised remuneration" didn't even exist. HMRC's attempt to say otherwise is pure revisionism. It's not me saying it, it's a renowned tax specialist not known for his tax avoidance sympathy. (https://www.dotas-scandal.org/how-often-does-your-government-lie-to-you/)

eek
6th March 2017, 19:24
I agree to a point, however as SE said a lot of others have suffered who are "less aware", (I knew I would get there :tongue)

So, IMO, it is mis selling and should be treated as such.

Actually less aware is not an excuse. They still let a salesman take advantage of their greed and put themselves in the situation. So you then get down to the question of is the issue a consumer issue (with the protection of innocents that implies) or a business issue (its up to you to get professional advice prior to signing something). And tax schemes have always fallen into the latter category rather than the former.

True these schemes were being targeted at a different (far less / utter unsophisticated) market to the more sophisticated investor schemes used to target but that doesn't mean it becomes a consumer issue especially as most of the schemes came from a different jurisdiction.

Oh and before DS has another dig unlike most here I do help the posters in the HMRC enquiry thread out - I seem to be the person who organises the PM access requests - my only issue is that I don't believe there is anything wrong with HMRC asking for the tax that should have been paid to be paid.... Now if you argued that the calculations are insane and unfair due to their insane assumptions I would agree with that.

MrMarkyMark
6th March 2017, 19:31
Actually less aware is not an excuse. They still let a salesman take advantage of their greed and put themselves in the situation. So you then get down to the question of is the issue a consumer issue (with the protection of innocents that implies) or a business issue (its up to you to get professional advice prior to signing something). And tax schemes have always fallen into the latter category rather than the former.

True these schemes were being targeted at a different (far less / utter unsophisticated) market to the more sophisticated investor schemes used to target but that doesn't mean it becomes a consumer issue especially as most of the schemes came from a different jurisdiction.

Oh and before DS has another dig unlike most here I do help the posters in the HMRC enquiry thread out - I seem to be the person who organises the PM access requests - my only issue is that I don't believe there is anything wrong with HMRC asking for the tax that should have been paid to be paid.... Now if you argued that the calculations are insane and unfair due to their insane assumptions I would agree with that.

Eek, in the eyes of the law, of that I'm well aware.
In the purest form, if you are in business you should know what you are getting into, nI fully agree.

However, the way they sold the schemes stank and as facilitators of tax avoidance I still believe they should face some kind of liability.
I know the law has nowhere for the marble to drop with regards to this, in reality.

eek
6th March 2017, 19:49
Eek, in the eyes of the law, of that I'm well aware.
In the purest form, if you are in business you should know what you are getting into, nI fully agree.

However, the way they sold the schemes stank and as facilitators of tax avoidance I still believe they should face some kind of liability.
I know the law has nowhere for the marble to drop with regards to this, in reality.

Sorry but's its hard to look at the loan sizes being quoted as examples on http://forums.contractoruk.com/hmrc-scheme-enquiries/119944-settling-more-expensive-paying-2019-loan-charge-2.html#post2383294 and seeing any member of the public sympathising...

DotasScandal
6th March 2017, 20:24
At the risk of sounding like a broken record: no one is after sympathy. 99% are ready to settle on a fair basis, it's HMRC who is playing all sorts of games to extort the maximum possible amounts, without admitting they have a part of responsibility in the whole fiasco. People are ready to make amends and move on with their lives, NOT be left holding the bag for bureaucrats attempting to cover up their failures of the last decade.
I refer you to the links in my previous post.
Loan sizes have nothing to do with it.

eek
6th March 2017, 20:29
At the risk of sounding like a broken record: no one is after sympathy. 99% are ready to settle on a fair basis, it's HMRC who is playing all sorts of games to extort the maximum possible amounts, without admitting they have a part of responsibility for the whole fiasco. People are ready to make amends and move on with their lives, NOT be left holding the bag for bureaucrats attempting to cover up their failures of the past decade.
I refer you to the links in my previous posts.

And I refer you to mine on this page and the previous ones. I'm not offering sympathy just showing why few outside those who joined a scheme believes anyone is being unfairly treated.. Heck just look at the examples someone is posting in link above - no one is going to believe you are an innocent victim after pulling £0,000s of income out as loans....

DotasScandal
6th March 2017, 20:47
And I refer you to mine on this page and the previous ones. I'm not offering sympathy just showing why few outside those who joined a scheme believes anyone is being unfairly treated.. Heck just look at the examples someone is posting in link above - no one is going to believe you are an innocent victim after pulling £0,000s of income out as loans....

Taken out of context any figure is meaningless. By focusing on some guy's APN figure rather than paying attention to the narrative HMRC have built with the help of professional propagandists (Behavioural Insights Ltd. (https://www.dotas-scandal.org/behavioural-insights-ltd-at-it-again/)), you're like the guy who's being shown the moon but keeps staring at the finger. Given your lack of understanding of the subject and your apparent unwillingness to familiarize yourself with the FACTS, I suggest we leave this conversation at this.

eek
6th March 2017, 21:07
Taken out of context any figure is meaningless. By focusing on some guy's APN figure rather than paying attention to the narrative HMRC have built with the help of professional propagandists (Behavioural Insights Ltd. (https://www.dotas-scandal.org/behavioural-insights-ltd-at-it-again/)), you're like the guy who's being shown the moon but keeps staring at the finger. Given your lack of understanding of the subject and your apparent unwillingness to familiarize yourself with the FACTS, I suggest we leave this conversation at this.

Nope I'm fully aware of the facts that HMRC haven't exactly being playing fair. The problem with the argument, however, is that the people using schemes were equally taking the mickey and its hardly surprising that the general public believes they should be (re) paying the tax they previously avoided - whether it was legally avoided at the time or not. And as people far more learn'd than myself have taking everything to court and those courts have found all this legal including the retrospective bits I think the best you can hope for is legal but unfair and I've already stated that the calculations are unfair.

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

northernladyuk
6th March 2017, 22:34
Seems to me that prior to the last few budgets/statements this site and others like it have been blind sided with the attacks on Contractors. They've not been able to predict anything from the red box, and have looked a little embarassed afterwards.
There's nothing to be embarassed about, nobody coudl imagine a government so hell bent on screwing us over.

However I noticed the headline on the site this morning about the public sector IR35 rules coming to the private sector. While I am not doubting the desire to do this within HMRC, I can't help but think that this is simply trying to call it just in case it happens.

It may well happen one day, but before the end of this parliament is unlikely and given that the tool is throwing up "outside" at almost everyone, it's clearly no where near ready to be implemented in a far more complex world of the private sector.

Look to Ireland for a simple solution. Tax dividends as earned income including NIC and then let contractors do what they like with salary and dividends.

jamesbrown
6th March 2017, 22:53
Look to Ireland for a simple solution. Tax dividends as earned income including NIC and then let contractors do what they like with salary and dividends.

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

eek
7th March 2017, 07:29
Look to Ireland for a simple solution. Tax dividends as earned income including NIC and then let contractors do what they like with salary and dividends.

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

The issue the government has is that it needs to change things in such a way that there are no get outs. Suppose you decide the answer is the 80% rule as used in Australia (and a variation in Germany). Instantly you would have care workers working for 2 different companies with their clients being billed across the 2 different companies..

And as I'm continually repeating here we are not the direct targets in this (I think the fact the ESS tests give us a chance of passing them shows that much) we are merely caught in the crossfire...

WordIsBond
7th March 2017, 08:01
The PR on this is very simple; we're all tax-evading scum.

The problem is that they're the ones with the microphone so get heard far more than we do. Nobody will pick up and run with the argument about us being unable to claim any employment benefit whatsoever despite being taxed like one.
Somebody is going to have to do it in court. THAT will be heard loud and clear. It has to be someone in the PS whose client declared them inside IR35. By declaring that, they are declaring that you work like an employee, and so should be taxed like an employee. When your employer says that and doesn't give you employment benefits, it's court time.

LandRover
7th March 2017, 08:14
Then as I said before once you get past that point you are left with the question are those people innocent consumers who should be protected from their mistakes or were these decisions business decisions for which there is no excuse - and in that case I disagree with MMM as I do believe people should be held responsible for their decisions no matter how misguided their were....

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

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

Very easy for those not affected to be righteous.

eek
7th March 2017, 09:16
Many of us are not technical accounting experts, we went to so-called professional Chartered Accountants. For example I went to my local High Street Chartered Accountant to setup a LTD company, and after having the IR35 fear driven into me by the accountant, was offered an alternative by the very same accountant to join a scheme that mitigated IR35.

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

Very easy for those not affected to be righteous.

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

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

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

eek
7th March 2017, 09:18
Somebody is going to have to do it in court. THAT will be heard loud and clear. It has to be someone in the PS whose client declared them inside IR35. By declaring that, they are declaring that you work like an employee, and so should be taxed like an employee. When your employer says that and doesn't give you employment benefits, it's court time.

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

LondonManc
7th March 2017, 09:22
The unions will - I believe the court cases are already being prepared....

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

northernladyuk
7th March 2017, 09:42
Remind me of the structure in Ireland; isn't it just a dividend witholding tax at normal income tax rates (to which CT doesn't apply)? What about NICs? Unless there's a look-through structure whereby company income (minus limited expenses) is fully (or almost fully) taxed under PAYE on the controlling persons, there will always be the perception of a "tax gap". Having income deferred and taxed at lower marginal rates in future is generally a bigger issue than the marginal rates themselves, at least for higher paid contractors. In other words, the only "simple" solution that achieves the objective of equivalent tax treatment across different forms of income is also pretty drastic. Perhaps an equivalent treatment of different forms of income, as it arises, is an acceptable compromise, but it's far from equal treatment. Obviously, there's a reasonable justification for this too, because we can only do this with a warchest and, from our perspective, it's punitive to heavily tax a good year when a bad year is around the corner, but this isn't an easy argument to win.

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

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

northernladyuk
7th March 2017, 09:43
Doesn't work as JB states you need to change a lot of other things to get to that point.



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

PurpleGorilla
7th March 2017, 10:23
The tax collection system is a slow response system, much like your domestic heating controls. Hammond's existing changes with Div Taxes have yet to have full effect, and he is currently turning the dial up with PS off book. If he reaches for the control again and hits the private sector with off book, the latent carnage that awaits will be huge.

LondonManc
7th March 2017, 10:26
Could be that people will need to be declaring sizeable dividend at the end of March based on the upcoming budget.

RonBW
7th March 2017, 10:57
Somebody is going to have to do it in court. THAT will be heard loud and clear. It has to be someone in the PS whose client declared them inside IR35. By declaring that, they are declaring that you work like an employee, and so should be taxed like an employee. When your employer says that and doesn't give you employment benefits, it's court time.

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

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

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

Timescale: Before 2025

barrydidit
7th March 2017, 11:00
The tax collection system is a slow response system, much like your domestic heating controls. Hammond's existing changes with Div Taxes have yet to have full effect, and he is currently turning the dial up with PS off book. If he reaches for the control again and hits the private sector with off book, the latent carnage that awaits will be huge.

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


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

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

jamesbrown
7th March 2017, 11:02
A contractor can of course hold funds over in the Ltd, but is then paying CT this year, and being taxed on divis as income down the road. There is also an Entrpreneurs Tax Relief Scheme which reduces CGT from 33% to 20% with T's and C's.

Right, but that's the point, especially with the high marginal rates you allude to. Obviously, Ireland isn't a great place to do business as a PSC, but everything is relative. I would think that most highly-paid contractors defer income(?). I also vaguely recall a consultation on the use of PSCs last year so, unless I'm recalling incorrectly, or there has been a recent overhaul, there's still a perception that a tax gap arises.

northernladyuk
7th March 2017, 11:07
Right, but that's the point, especially with the high marginal rates you allude to. Obviously, Ireland isn't a great place to do business as a PSC, but everything is relative. I would think that most highly-paid contractors defer income(?). I also vaguely recall a consultation on the use of PSCs last year so, unless I'm recalling incorrectly, or there has been a recent overhaul, there's still a perception that a tax gap arises.

So you apply UK marginal rates to the model. Ireland is not a great place for PSCs and a lot of people use a Director's Umbrella (MSC kind of) and pay full whack tax.

But we are discussing this from the echo chamber. Look at it from HMRC's perspective and it's an opportunity to deal with the IR35 mess once and for all.

PurpleGorilla
7th March 2017, 11:08
You won't get employment rights. You might get worker rights, though. There is a big difference.

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

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

Timescale: Before 2025

As a 'worker' you can pay your pension out of you or GROSS, if you are in ir35 do you pay it out of your NET?

LondonManc
7th March 2017, 11:14
As a 'worker' you can pay your pension out of you or GROSS, if you are in ir35 do you pay it out of your NET?

It's a path to the Dark Side....

https://www.gov.uk/employment-status/worker

jamesbrown
7th March 2017, 11:15
So you apply UK marginal rates to the model. Ireland is not a great place for PSCs and a lot of people use a Director's Umbrella (MSC kind of) and pay full whack tax.

But we are discussing this from the echo chamber. Look at it from HMRC's perspective and it's an opportunity to deal with the IR35 mess once and for all.

It doesn't matter what marginal rates you apply if the majority of the tax gap arises through income deferral. I am looking at this from HMRC's perspective, which is why I believe they'd ultimately want to prevent income deferral too (e.g. using an adapted version of the pre-1989 close company apportionment rules or, indeed, the IR35 rules if they can increase "compliance"). They've alluded to income deferral as being a major problem in recent consultations. However, if HMG has any sense, they won't do something as drastic as look through. I think they'd favour rolling out the PS rules before that.

WordIsBond
7th March 2017, 11:36
You won't get employment rights. You might get worker rights, though. There is a big difference.

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

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

Timescale: Before 2025
That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

LondonManc
7th March 2017, 11:37
That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

That'll be insignificant compared to the claims for backdated equality of pay from the perms :D

PurpleGorilla
7th March 2017, 11:39
That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

But don't you need to work somewhere over 6months to qualify?

Which is why so many low paid workers get chopped just before the six months, then re-hired under a different contract.

eek
7th March 2017, 11:39
That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

+1. The idea that you can claim that someone can only have worker rights and not employment rights is going to go down like a lead balloon with the unions. They will be seeking the latter and will be picking only those examples that justify the latter (for they will carefully pick the cases going to tribunals).

Workers rights are what the unions are gunning for if no one has any rights at all. If other people doing similar work have employee rights you can bet workers rights will be neither requested nor acceptable.

MrMarkyMark
7th March 2017, 11:41
That'll be insignificant compared to the claims for backdated equality of pay from the perms :D

Ah, but how would you calculate the differential?

Given the true "cost" of a perm is largely the same as a contractor, in any case?

LondonManc
7th March 2017, 11:43
Ah, but how would you calculate the differential?

Given the true "cost" of a perm is largely the same as a contractor, in any case?

You've missed what I was saying I think; if inside IR35 contractors get employment rights, then permies will, in theory, be entitled to the same salary as the contractor day rate, i.e. c. £1200-1500 per week rather than the 40k pa that they've been getting. Then back date it....

WordIsBond
7th March 2017, 11:49
You've missed what I was saying I think; if inside IR35 contractors get employment rights, then permies will, in theory, be entitled to the same salary as the contractor day rate, i.e. c. £1200-1500 per week rather than the 40k pa that they've been getting. Then back date it....
By the time this is done, the Tories may manage to make Corbyn look electable.

RonBW
7th March 2017, 12:26
That might be what business says and they might convince government.

Will the courts agree? Because I think the courts are likely to rule within a year or two that those declared inside IR35 get employment rights. And the hurt that PSBs think they are feeling now is nothing compared to what happens when thousands of inside contractors file claims for holiday pay, etc.

I disagree - if you look at the recent tribunals around the gig economy the judgements have been that people are workers, not employees. It's a massive hurdle to push for full employment rights, hence people not asking for them but taking workers rights. If there is a review of workers rights, then the criteria of being a worker will also be reviewed - that's already happening as part of the Taylor review and the six (seven? eight?) other consultations that the government are currently undertaking into flexible working / self employment / tax motivated incorporation / whatever label someone chooses to put on it. The courts may decide before then that an IR35 caught worker is actually an employee (they could do that now, but haven't - why not?) but when the review comes (and it will come) then the legislation will change to render that inconvenient judgement that an IR35 caught worker is an employee irrelevant - you will be a worker with workers rights, not an employee.

Holiday pay etc is (currently) available to workers as well as employees, which is why the push is going to come from business that workers shouldn't have that particular right and then everyone other than the contractor will be "happy". And when that happens, there is no longer any real incentive for the client to fight that you are outside IR35 - at the moment there is a bit of an incentive because their costs rocket and you have options, when their costs aren't rocketing and you have no option then there is even less reason to care than they have now.

eek
7th March 2017, 12:49
You've missed what I was saying I think; if inside IR35 contractors get employment rights, then permies will, in theory, be entitled to the same salary as the contractor day rate, i.e. c. £1200-1500 per week rather than the 40k pa that they've been getting. Then back date it....

Yep and the unions knew this back in November... It was one of those times when I wished I had been in London rather than on a conference call as it dawned on them.... :cool:

The great thing is that I have a response to my letter outlining the issue saying that its been noted - only to watch this mess be continued a week later...

WordIsBond
8th March 2017, 18:47
Holiday pay etc is (currently) available to workers as well as employees, which is why the push is going to come from business that workers shouldn't have that particular right and then everyone other than the contractor will be "happy".
If you are saying the legislation may change once the mess explodes, you may be right -- but the disaster will already be all over balance sheets and employment tribunals and everywhere else, and a lot of engagers are going to be in a right mess. That's NOT something they can change retroactively.

DotasScandal
8th March 2017, 23:33
If you are saying the legislation may change once the mess explodes, you may be right -- but the disaster will already be all over balance sheets and employment tribunals and everywhere else, and a lot of engagers are going to be in a right mess. That's NOT something they can change retroactively.

I fear than from the level of hubris they're operating from, they might well be deluded that they actually can.

northernladuk
13th March 2017, 15:18
I fear than from the level of hubris they're operating from, they might well be deluded that they actually can.

Are you in this part of the forums to discuss the changes or just to complain about HMRC?

DotasScandal
13th March 2017, 15:37
Are you in this part of the forums to discuss the changes or just to complain about HMRC?

I'm in this part of the forum to help readers take some altitude so they can see the big picture.

eek
13th March 2017, 15:40
I'm in this part of the forum to post gibberish based on HMRC's treatment of me following my use of a dodgy loan scheme.

ftfy - and I know you are going to disagree but meh....

DotasScandal
13th March 2017, 15:55
ftfy - and I know you are going to disagree but meh....

Hi eek.
Thought you had me on ignore?

munkee
17th March 2017, 08:28
The tool still seems to be receiving updates as the right to sub question has gone through a number of iterations the last few weeks. Today its pretty clear cut.

eek
17th March 2017, 10:43
The tool still seems to be receiving updates as the right to sub question has gone through a number of iterations the last few weeks. Today its pretty clear cut.

It should be the same as it was early last week as the version number hasn't changed from 1.1.1final

PartOfTheUnion
17th March 2017, 12:32
It should be the same as it was early last week as the version number hasn't changed from 1.1.1final

Most clients I work with don't know what version control is and just change stuff without updating the version numbers or keeping records of changes.

Mark2009
19th March 2017, 12:03
Which is why Hammond should hold off on Private Sector - he hasn't even seen the fallout of Public Sector go-live yet.
I work In the private sector ( i.e. ) construction, we will down tools In protest like we did last time It's a very flexible industry and this is Hammonds biggest hurdle to make the industry PAYE will it work I have my doubts, they tried It before banning CIS under IR35 ( working under supervision ) only to bring CIS back one year later, so what was the point in banning It.
I will leave the industry If Hammond gets his way.

SussexSeagull
19th March 2017, 13:58
Before the budget I would have put good money on the HMRC steaming ahead with bringing this to the Private Sector in 2019 but with the backlash over NIC I suspect they will be treading carefully trying to tax self employed people.

The Taylor report will be interesting but these things do have a habit of being ignored.