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Dave Chaplin's anti IR35 campaign

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    #31
    Originally posted by JohntheBike View Post
    Anyone who believes that IR35 is valid under any circumstances, should ask themselves is it fair that someone can be taxed as an employee without receiving employee benefits. This has always been the thrust of my position.
    Which is fair as far as it goes but the counterargument is that if the employer isn't giving employee benefits/rights, they, not HMG, should be the one paying for that, and you should and probably do have a rate that compensates you for that.

    The real unfairness in IR35 is that it is unfairly punitive. It doesn't just make you pay employment-level tax on the amount that the employee would be paid. It also makes you pay tax on that extra compensation you are getting for those employee rights.

    The employee gets the benefits and isn't taxed on them. The IR35-contractor may get pay in lieu of employee rights, but he has to pay tax on that extra pay. You get perhaps a 30-40% premium on your rate to compensate you for the rights you aren't getting. Unlike the employee, you have to pay tax on that.

    If IR35 weren't so punitive compliance would be better. The imbalances I talked about above are significant, but the real killer is that IR35 is so unfair. Contractors not only have a huge financial incentive to cheat, they also can salve their conscience for doing so because it really is unfair.

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      #32
      Originally posted by WordIsBond View Post
      Which is fair as far as it goes but the counterargument is that if the employer isn't giving employee benefits/rights, they, not HMG, should be the one paying for that, and you should and probably do have a rate that compensates you for that.

      The real unfairness in IR35 is that it is unfairly punitive. It doesn't just make you pay employment-level tax on the amount that the employee would be paid. It also makes you pay tax on that extra compensation you are getting for those employee rights.

      The employee gets the benefits and isn't taxed on them. The IR35-contractor may get pay in lieu of employee rights, but he has to pay tax on that extra pay. You get perhaps a 30-40% premium on your rate to compensate you for the rights you aren't getting. Unlike the employee, you have to pay tax on that.

      If IR35 weren't so punitive compliance would be better. The imbalances I talked about above are significant, but the real killer is that IR35 is so unfair. Contractors not only have a huge financial incentive to cheat, they also can salve their conscience for doing so because it really is unfair.
      I absolutely agree. We are often told that the extra remuneration compensates for the loss of employment benefits, but as you quite rightly point out, the employee isn't taxed on those benefits, but the contractor is taxed on the extra income. This point seems to have been omitted from the discussions in the past.

      Comment


        #33
        Originally posted by JohntheBike View Post
        I absolutely agree. We are often told that the extra remuneration compensates for the loss of employment benefits, but as you quite rightly point out, the employee isn't taxed on those benefits, but the contractor is taxed on the extra income. This point seems to have been omitted from the discussions in the past.
        No it hasn't.

        Nor has the point that most of the benefactors from IR35 are the clients such as the BBC who by offloading staff and rehiring them as contractors are avoiding 14% of so immediate costs plus at least as much again in overheads. You would be surprised how many hotel chambermaids are company directors.

        And let's never forget that IR35 is about vastly more than well paid knowledge economy workers.
        Blog? What blog...?

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          #34
          Originally posted by malvolio View Post
          No it hasn't.

          Nor has the point that most of the benefactors from IR35 are the clients such as the BBC who by offloading staff and rehiring them as contractors are avoiding 14% of so immediate costs plus at least as much again in overheads. You would be surprised how many hotel chambermaids are company directors.

          And let's never forget that IR35 is about vastly more than well paid knowledge economy workers.
          'No it hasn't'

          perhaps I've not noticed it then until recently. It's certainly a point that I had not considered.

          "Nor has the point that most of the benefactors from IR35 are the clients such as the BBC who by offloading staff and rehiring them as contractors are avoiding 14% of so immediate costs plus at least as much again in overheads."

          yes, this point has been made many times in the past. However, even now, as you can see what I posted about the reply from my MP, we are still labelled as tax avoiders, whilst the clients are not. Even in the new proposed rules, there is no penalty for clients for getting status assessments wrong in HMRC's favour, but there will be if the the status assessment is wrong in the contractor's favour.

          This has been mentioned, but I would contend that it is these injustices in the proposals which should form the basis of opposition, rather more than any arguments about the possible effects to the economy. The would appear to be more emotive in my opinion.

          Comment


            #35
            Originally posted by BoredBloke View Post
            Corp tax is due on profits - the likes of google and starbucks shift those profits to a subsidiary where they can pay the least tax. So it wouldn't raise anything - they would avoid it like they do already..
            Agree. A model is needed where this is not as easy, perhaps a CT rate is based upon the income generated in country.

            An even more radical approach might be a low flat CT rate (eg 5%) ON INCOME. Jonny Contractor hands over £5k from his £100k and Facebook hand over £60m from their £1.2bn

            Job done :0)



            Originally posted by BoredBloke View Post
            wasn't it the post office that was highlighted for getting their drivers to go self employed, yet have to work exclusively for them, turn up for shifts decided by their 'employer' wearing the uniform and driviTo me that is obviously caught by IR35 and what it was designed to prevent. It's only that HMRC see it as a way of grabbing taxes from the people who clearly were self employed by making sure the 'rules' were vague and open to (mis) interpretation. ..
            This also highlights part of the issue with HMRC stating tax position and employment position are not related. It keeps the door open for abuse.

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              #36
              Originally posted by northernladuk View Post
              I'm pretty sure he's fighting the off payroll rules about to hit the private sector and not IR35 itself.
              He is trying to save his business

              Comment


                #37
                Originally posted by youngguy View Post
                Agree. A model is needed where this is not as easy, perhaps a CT rate is based upon the income generated in country.

                An even more radical approach might be a low flat CT rate (eg 5%) ON INCOME. Jonny Contractor hands over £5k from his £100k and Facebook hand over £60m from their £1.2bn

                Job done :0)




                This also highlights part of the issue with HMRC stating tax position and employment position are not related. It keeps the door open for abuse.
                "This also highlights part of the issue with HMRC stating tax position and employment position are not related. It keeps the door open for abuse"

                and the contracting community has been slow to point out that there is no case law to support HMRC's contention that you can be an employee for tax purposes but not for employment benefits.

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                  #38
                  When the new rules were announced I believe Mr Chaplin's words were "We'll knock this out of the ballpark."

                  So far I've seen nothing that suggests the changes won't go through.

                  Comment


                    #39
                    Originally posted by Invisiblehand View Post
                    When the new rules were announced I believe Mr Chaplin's words were "We'll knock this out of the ballpark."

                    So far I've seen nothing that suggests the changes won't go through.
                    yes, however, I believe Dave's campaign is at least trying to use every means to counter the proposals. Others have also joined in with their open letters. But also there are others who claim to be influencing the situation, but I don't see any evidence of this.

                    Comment


                      #40
                      Originally posted by Invisiblehand View Post
                      When the new rules were announced I believe Mr Chaplin's words were "We'll knock this out of the ballpark."

                      So far I've seen nothing that suggests the changes won't go through.
                      I wish Mr Chaplin the best of luck.

                      But I agree I think the changes are inevitable - I hope I am wrong. Already several banks have rolled over.

                      Maybe some companiesw will take up QDOS insurance?

                      Comment

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