What will be the best way to provide services after the Budget in March 2011 has delivered its promised IR35 simplification changes.
Here are some "crystal ball gazing" options:
IR35 as we know it will be abolished. I am sticking my neck out here and saying this is a 100% cert. SO no more contract reviews.
It will be replaced with (or combination of):
A/ End Client having to make deductions at source from payments similar to that operated in the construction industry
B/ Agents will be forced to operate PAYE in respect of all contracts entered into that only involve the provision of one person. I guess this will cover the majority of contracts entered into by Agencies
C/ Personal Service Companies will NOT have to operate "Deemed salary calculations" or have IR35 proof contracts. However there will be national insurance added to Dividends paid to the contractor/director and to any of his relatives. This will still allow the contractor to use his/her spouses personal allowance and/or standard rate of tax. (This is my favorite and it has been recommended by a "Fiscal Thinktank" report published last week).
D/ A general anti-avoidance rule in respect of the new IR35 (i.e. any of the above) that basically outlaws any scheme that tries to circumvent/avoid tax payable based on the new rules . General Anti-avoidance rules have been around for some time in USA, Australia, New Zealand. l
Here are some "crystal ball gazing" options:
IR35 as we know it will be abolished. I am sticking my neck out here and saying this is a 100% cert. SO no more contract reviews.
It will be replaced with (or combination of):
A/ End Client having to make deductions at source from payments similar to that operated in the construction industry
B/ Agents will be forced to operate PAYE in respect of all contracts entered into that only involve the provision of one person. I guess this will cover the majority of contracts entered into by Agencies
C/ Personal Service Companies will NOT have to operate "Deemed salary calculations" or have IR35 proof contracts. However there will be national insurance added to Dividends paid to the contractor/director and to any of his relatives. This will still allow the contractor to use his/her spouses personal allowance and/or standard rate of tax. (This is my favorite and it has been recommended by a "Fiscal Thinktank" report published last week).
D/ A general anti-avoidance rule in respect of the new IR35 (i.e. any of the above) that basically outlaws any scheme that tries to circumvent/avoid tax payable based on the new rules . General Anti-avoidance rules have been around for some time in USA, Australia, New Zealand. l
Comment