My ClientCo Just Blanketed Everyone Inside

[krytonsheep]

Financial services businesses, or just in general?

House hold names from finance, media and telecommunications. Hopefully it's just a temporary least risk/effort approach, which will change over time.

I know behind the scenes HMRC are supposed to have direct contact with the big employers, which probably has a bearing on what's going on at the moment.

"We’ve set up dedicated teams to provide education and guidance to around 60,000 businesses, public bodies and charities in scope of the
reforms. This includes one-to-one support for around 2,000 of the UK’s biggest employers and direct communications to around 15,000 medium-sized businesses.
This is supported by workshops, guidance, online learning, round tables and an enhanced online tool that will help them make the right decisions"

HMRC update issue 74, Oct to Nov 2019

[DealorNoDeal]

Out of interest, what is it that bothers people the most about having to be inside IR35? Is it just the lower net retention ie. paying more tax, employers NICs? Or is there more to it than that?

I assume there's nothing you can do to mitigate employers NICs but you can relieve some of the tax with pension contributions. For the more adventurous, there's also EIS etc.

What is EIS, VCT or SEIS?

[GhostofTarbera]

Out of interest, what is it that bothers people the most about having to be inside IR35? Is it just the lower net retention ie. paying more tax, employers NICs? Or is there more to it than that?

I assume there's nothing you can do to mitigate employers NICs but you can relieve some of the tax with pension contributions. For the more adventurous, there's also EIS etc.

What is EIS, VCT or SEIS?

No expenses. If you commute every week to London it’s £3K a month - that now comes from net income, you net more working in a local Burger King


Sent from my iPhone using Contractor UK Forum

[original PM]

No expenses. If you commute every week to London it’s £3K a month - that now comes from net income, you net more working in a local Burger King


Sent from my iPhone using Contractor UK Forum

I sympathise with you guys but as a business if the only way you can be profitable is to rely on the tax relief on expenses then possibly you need to review your business model.

[DealorNoDeal]

No expenses. If you commute every week to London it’s £3K a month - that now comes from net income, you net more working in a local Burger King

I guess there's always the hope, over time, that this will have the effect of pushing rates up.

[ladymuck]

Out of interest, what is it that bothers people the most about having to be inside IR35? Is it just the lower net retention ie. paying more tax, employers NICs? Or is there more to it than that?

I assume there's nothing you can do to mitigate employers NICs but you can relieve some of the tax with pension contributions. For the more adventurous, there's also EIS etc.

What is EIS, VCT or SEIS?

The problem is that the IR35 legislation is a sledgehammer to crack a walnut.

Instead of encouraging businesses who hire contractors to take a proper assessment of the resources they need, it promotes a culture of tax evasion and fear. Those contractors who actively dodge their tax obligations deserve everything they get. Those who properly assessed their position and took appropriate, legal action to manage their tax affairs are being vilified as tax dodging scum.

I don't think any sensible freelancer has an issue with paying tax. It's the manner in which this legislation is being enforced and implemented that is the problem.

Sadly, no-one has come up with a viable alternative option (AFAIK) so HMRC is able to do what it wants because they are the tail wagging the HMG dog.

[eek]

I sympathise with you guys but as a business if the only way you can be profitable is to rely on the tax relief on expenses then possibly you need to review your business model.

Not quite - the issue is as follows - from the time when HMRC was trying to remove all expenses not just from those inside IR35 (we won that battle BTW).

As a contractor I compete against larger consultancies who allow their consultants to work from their home base and so can claim expenses for all travel (even if the end-client isn't paying those expenses).

And while there are a whole set of people on here who may just be performing the tasks an employee could be performing there is also another set of people who contract who perform project type tasks that companies only require once (or once every few years) for a short period of time.

It is the second set of people that are impacted when companies are making blanket policy decision. Now things will probably change over time but for the next year or 2 it's likely to be bleak for a lot of contractors who live outside of London.

[GJABS]

I sympathise with you guys but as a business if the only way you can be profitable is to rely on the tax relief on expenses then possibly you need to review your business model.

That's not true. If it was, it would be to say that no business is viable, that makes less than a 40% profit margin.

[Lance]

I sympathise with you guys but as a business if the only way you can be profitable is to rely on the tax relief on expenses then possibly you need to review your business model.

Indeed. But if running a proper business, it's quite irksome to not be allowed to run the company like a proper business. Albeit most contractors aren't running proper businesses, and should have been inside IR35 since pussy was a kitten.

[DealorNoDeal]

As a contractor I compete against larger consultancies who allow their consultants to work from their home base and so can claim expenses for all travel (even if the end-client isn't paying those expenses).

Wouldn't it be possible for contractors to band together and form their own consultancy? Or is it hard to get around the MSC legislation?

Managed Service Company (MSC) legislation – key guide for contractors and agencies
Managed Service Company legislation: unpaid PAYE and Class 1 NI contributions avoidance schemes (Spotlight 32) - GOV.UK