How will this work in practice?

[Tonyharding]

I'm totally lost atm to be honest, so if the client taxes us at source, how do we claim for a company pension, expenses, life insurance, accountancy bills etc which is currently paid via our ltd company? Will this all now come out of our personal monies ?

To me it sounds like that if you are going to be within IR35 I shall now not be entitled to a company pension etc.

[breaktwister]

Will this all now come out of our personal monies ?

The short answer is unfortunately Yes. The income that previously would have went directly into your PSC, from which you would have deducted legitimate business expenses before paying corporation tax, is now taxed at source before your PSC receives it. If the contract falls inside IR35 then essentially you can no longer deduct business expenses as HMRC claim you are not in business on your own account, you are a "deemed employee" of the end-client.

On one hand the law has been concocted to "imagine a scenario where the PSC does not exist" s61M Finance Bill 2017. But once that imagined scenario has been dealt with and HMRC conclude under said imagined scenario "you are really an employee, we are going to tax you at source and not allow any business expense deductions" suddenly the PSC company pops back into legal existence as per their various guidance? It is a sleight of hand that is pushing the boundaries of logic and law.

Trying to operate a PSC if a contract is inside IR35 is pointless.

Pensions are an altogether more complex topic as they are not a "business expense" in the same way as other outlays.

[breaktwister]

[/B]
HMRC are part of the government. The government controls parliament. Legally there is nothing that parliament can not do.
If they lose a legal challenge they can change the law and make it retrospective if they like. You can't beat these guys, but if you're fleet of foot you can stay a step ahead of them.

You are correct in theory as Parliament claims to be "sovereign" but in reality they are bound by various international conventions and treaties, in particular current membership of the EU and associated directions from Brussels, ECHR etc. At any point in time there is a legal framework that Parliament must work within which is why certain laws and the application of those laws, even by government agencies, can be challenged if inconsistent with other laws that are deemed by the Courts to take precedence.

But yes, in theory Parliament can withdrawn from everything and re-write laws as they please, easier said than done though.

[cojak]

I'm totally lost atm to be honest, so if the client taxes us at source, how do we claim for a company pension, expenses, life insurance, accountancy bills etc which is currently paid via our ltd company? Will this all now come out of our personal monies ?

To me it sounds like that if you are going to be within IR35 I shall now not be entitled to a company pension etc.

Regarding pensions, an answer to that is here: http://forums.contractoruk.com/umbre...-benefits.html