Will it be END of contracting after IR35 to private sector ??

[virtualtechie]

Hi Guys
I dont usually post in here but thought may get involved in the community
Once the IR35 is applied to Private sector which seems imminent , will it be the end of contracting?
or are there any other (valid/legal) setups that one could use to continue to reap the tax and other benefits.
How do you see this progressing, will PERM jobs be the only option then as contracting (without any financial benefits of contracting) wouldnt make much sense.

I guess for people those who dont like commitment and like a bit of variety in their work, this may be an option?

Just trying to gather thoughts and understand everyone's next steps really?

Regards

[cojak]

No.

But there’ll be no ‘reaping the tax and other benefits’.

Dyed-in-the-wool contractors will be contractors because they like the freedom and being masters of their own destiny.

This may not make sense to you but it will make sense to them.

[eek]

No but you only have to look in the HMRC Tax Enquiries thread to see how things will play out for a lot of people as they will listen to the smooth talking salesman and let greed do the rest...

[Maslins]

My guess is the big corporates will after long chats with their legal/HR bods end up with two contracts for contractors, along with a list of "dos" and "do nots" for those that get each one.

Where they're happy to let the contractor work on the project as they see fit, negligible supervision or instruction, it'll be an outside IR35 contract. For these ones nothing will change, except happier days for the contractor as they can now sleep more soundly, without the fear of an IR35 enquiry/backtaxes.

Where the contractor needs close supervision/instruction, the big corporate will issue an inside IR35 contract. Many contractors in this position may well decide to work via an umbrella or some other (non Ltd Co) solution. Hopefully not too many will go the dodgy offshore loan scheme route...

[eek]

My guess is the big corporates will after long chats with their legal/HR bods end up with two contracts for contractors, along with a list of "dos" and "do nots" for those that get each one.

Where they're happy to let the contractor work on the project as they see fit, negligible supervision or instruction, it'll be an outside IR35 contract. For these ones nothing will change, except happier days for the contractor as they can now sleep more soundly, without the fear of an IR35 enquiry/backtaxes.

Where the contractor needs close supervision/instruction, the big corporate will issue an inside IR35 contract. Many contractors in this position may well decide to work via an umbrella or some other (non Ltd Co) solution. Hopefully not too many will go the dodgy offshore loan scheme route...

Your typical umbrella has the marketing budget of £2.50 while your offshore scheme has 10-15% of every contractors turnover to spend on marketing. Yes you can hope that many won't fall for a dodgy scheme but you only have to look at the current public sector market to see how well that is playing out...

[WordIsBond]

My guess is the big corporates will after long chats with their legal/HR bods end up with two contracts for contractors, along with a list of "dos" and "do nots" for those that get each one.

And, there will be a market for inside contracts and outside contracts, and rates will be somewhat higher for the inside contracts because contractors will strongly prefer the outside ones, so clients will have to pay more to fill the inside roles.

The rate differential will be mitigated somewhat by the fact that the outside roles will probably demand a higher level of expertise and professionalism, so that would drive higher rates for that kind of role.

[saptastic]

And, there will be a market for inside contracts and outside contracts, and rates will be somewhat higher for the inside contracts because contractors will strongly prefer the outside ones, so clients will have to pay more to fill the inside roles.

The rate differential will be mitigated somewhat by the fact that the outside roles will probably demand a higher level of expertise and professionalism, so that would drive higher rates for that kind of role.

Agree with WIB. The legislation will just help to determine rates.

[GreenMirror]

No but you only have to look in the HMRC Tax Enquiries thread to see how things will play out for a lot of people as they will listen to the smooth talking salesman and let greed do the rest...

The enquiries forum is just the tip. Closed forums are full of worse.

The issue is the SalesPeople say what they want without sanction from HMRC. And the users do no research. It has been very clear since March 2008 what HMRC are doing.

[Hobosapien]

And, there will be a market for inside contracts and outside contracts, and rates will be somewhat higher for the inside contracts because contractors will strongly prefer the outside ones, so clients will have to pay more to fill the inside roles.

The rate differential will be mitigated somewhat by the fact that the outside roles will probably demand a higher level of expertise and professionalism, so that would drive higher rates for that kind of role.

Cool. I'm planning on continuing using a brolly and stuffing first 40k earned pre-tax each year into a pension. How do you like them apples HMRC.

Got enough 'war chest' funds to live off while in the 'living wage' only part of the year. May also only work until higher rate tax threshold reached each year, though if the rate is high enough then all comes up roses anyway.

In summary, bring it on.

[JohntheBike]

Hi Guys
I dont usually post in here but thought may get involved in the community
Once the IR35 is applied to Private sector which seems imminent , will it be the end of contracting?
or are there any other (valid/legal) setups that one could use to continue to reap the tax and other benefits.
How do you see this progressing, will PERM jobs be the only option then as contracting (without any financial benefits of contracting) wouldnt make much sense.

I guess for people those who dont like commitment and like a bit of variety in their work, this may be an option?

Just trying to gather thoughts and understand everyone's next steps really?

Regards

"are there any other (valid/legal) setups that one could use to continue to reap the tax and other benefits."

given that HMG has indicated that "small" clients will not have to implement the new rules, I'd like to think that agencies might split their businesses up in such a way so as to come under this requirement. Spring, for example, whatever their size, are part of a much larger organisation. If such organisations were to avoid rate hikes to end clients by doing this, I guess market forces might drive such changes.