April 5th 2020 and Contract Extension/Renewal April 5th 2020 and Contract Extension/Renewal - Page 4
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  1. #31

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    Quote Originally Posted by BABABlackSheep View Post
    What about, if the client decides not to make a decision if contractors are inside or outside IR35, but instead either doesn't renew contractors or forces contractors to go inside a brolly?
    Erm... that's a decision isn't it?
    My thinking is I can go brolly(I'm on the list to keep), MVL my limited company, and if the tax man queries it, I have a legitimate reason for doing so. The ER on liquidizing my company means I'll offset some of the loss of income for 2 years before I'm able to start another limited company in the same business.
    Odd way of thinking that. You aren't offsetting anything really, you are just using the ER to prop the rate up. You've still effectively lost out by a lot over the period. Doesn't solve anything,
    OR, if I want to start another limited company(on my own or with others) within the 2 year rule for MVL, then again I have an excuse as it couldn't be determined that I closed my business to get a tax advantage. I did so because I had work with a client who insisted on umbrella.
    Got nothing to do with it. You gained a tax advantage so you can't open another. Reason for it are absolutely meaningless. The legislation doesn't say you can't do it unless you have a good excuse.

    You are also missing the point around retrospective action. You were in a role that was outside and now you've gone inside. Client has effectively told HMRC you are worth looking at.
    Thoughts please.
    Stop smoking whatever it is you are smoking.
    Last edited by northernladuk; 20th September 2019 at 10:34.
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  2. #32

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    Quote Originally Posted by northernladuk View Post
    Erm... that's a decision isn't it?
    Of course its not a decision.

    Its a massive company, they don't want to spend the time determining if everyone is inside or outside, and they don't want to blanket everyone inside or outside either. Makes perfect sense to go brolly for the people they want to keep.


    Quote Originally Posted by northernladuk View Post
    Odd way of thinking that. You aren't offsetting anything really, you are just using the ER to prop the rate up. You've still effectively lost out by a lot over the period. Doesn't solve anything.
    How do you know that? Perhaps people have loans, mortgages. Getting a large amount of money out quickly paying 10% tax might actually be very sound financial advice for certain people. At least they are in control of when. Plenty of advice on here to close a company quickly if they are deemed to be inside IR35 come April 2020. If so then MVL can take 3 months, so people will may be forced to get money out in a less tax efficient way if they want to close within a week or so.


    Quote Originally Posted by northernladuk View Post
    Got nothing to do with it. You gained a tax advantage so you can't open another. Reason for it are absolutely meaningless. The legislation doesn't say you can't do it unless you have a good excuse.
    Sorry, I disagree. In a very difficult market, I have a client I know very well, offering me a contract if I go under an umbrella. It's not whether you "did gain an advantage", its whether you "intended to gain an advantage". Absolutely impossible to prove given this scenario.

    Quote Originally Posted by northernladuk View Post
    Stop smoking whatever it is you are smoking.
    Stop trolling. There's a number of new posters here who have become victims to your barbs lately.

    You said yourself you could be heading into ban season. I respectively suggest you think before the insults.
    Last edited by BABABlackSheep; 20th September 2019 at 11:05.

  3. #33

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    OK Lets got through this in detail. One of the things that strikes me overall is you are thinking like a permie not a contractor. Your career is contracting now and you'll have many contracts, some will work and some won't. We don't desperately hang on to single gigs if they just aren't working. I think you are missing that... but onwards.

    Quote Originally Posted by BABABlackSheep View Post
    Of course its not a decision.

    Its a massive company, they don't want to spend the time determining if everyone is inside or outside, and they don't want to blanket everyone inside or outside either. Makes perfect sense to go brolly for the people they want to keep.
    By forcing them to go brolly is admitting inside so it's a decision. BUT the client cannot (unless you are direct which we will ignore for the moment) make a decision on the role NOT what way you are paid. Many of the inside gigs now give you the option to go via agent PAYE or brolly. That is the decision of the agent with whom you are contracted to, not the client. They must make a decision. If it turns out your agent says it's via brolly then that is because the client has said inside.

    Your whole angle is not a realistic scenario.

    How do you know that? Perhaps people have loans, mortgages. Getting a large amount of money out quickly paying 10% tax might actually be very sound financial advice for certain people. At least they are in control of when. Plenty of advice on here to close a company quickly if they are deemed to be inside IR35 come April 2020. If so then MVL can take 3 months, so people will may be forced to get money out in a less tax efficient way if they want to close within a week or so.
    Maybe so but that is a personal financial decision so none of our business. We don't know your situation or how much you've got so can't advise.

    What you are missing, and this comes back to my point right at the top. This is a single gig, it could end the first day back in side, a week after, a month after. If it does you move to another client like we do. But in your situation you are now stuck paying permie rates. Why would you risk 2 years of outside income just to pander to your current client? Do the maths as well. 2 years at 30-40% less of £500 a day. That is A LOT of money.

    What about a better contractor approach and take the gig inside, go brolly and just keep the company open for when that one folds and you come back to market like a proper contractor. Money is still there to claim ER in the future and you haven't stuck yourself with 30-40% less income?

    That particular example mixes up contract options with financial planning so confusing.

    Sorry, I disagree. In a very difficult market, I have a client I know very well, offering me a contract if I go under an umbrella. It's not whether you "did gain an advantage", its whether you "intended to gain an advantage". Absolutely impossible to prove given this scenario.
    Gaining and advantage means getting a more favourable tax advantage when closing the company, i.e. 10% on CGT etc. You either do, or don't. Nothing to do with intend or did you. If you claimed ER you got a tax advantage and you are stuck for 2 years. If you didn't claim ER, no advantage and therefore you can open another company up.

    I think you've completely misunderstood MVL and the rules. If you are even vaguely considering this have a chat to Chris Maslin and Maslins. They run MVLOnline and they will give you a low down on it if you want.

    Stop trolling. There's a number of new posters here who have become victims to your barbs lately.

    You said yourself you could be heading into ban season. I respectively suggest you think before the insults.
    Not trolling and no insults here. We are professionals so nothing wrong with tough love.
    Last edited by northernladuk; 20th September 2019 at 11:39.
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  4. #34

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    Thanks for the reply. Just a few points that I'm not sure on still.

    Quote Originally Posted by northernladuk View Post
    By forcing them to go brolly is admitting inside so it's a decision. BUT the client cannot (unless you are direct which we will ignore for the moment) make a decision on the role NOT what way you are paid. Many of the inside gigs now give you the option to go via agent PAYE or brolly. That is the decision of the agent with whom you are contracted to, not the client. They must make a decision. If it turns out your agent says it's via brolly then that is because the client has said inside.

    Your whole angle is not a realistic scenario.
    The client has made the decision to say Brolly only. I know this for a fact.

    Client has not decided inside or outside, they have swerved it. Even if its assumed saying Brolly means everyone is inside, that doesn't mean the role was always inside, that makes no logic. The role is outside now, its not going to magically have become inside all the time because a client couldn't be bothered to decide.

    I know you disagree, and that's fine. I'm happy with my logic. If they start investigating everyone where I am now, then you'll hear about it here, that's for sure.


    Quote Originally Posted by northernladuk View Post

    2 years at 30-40% less of £500 a day. That is A LOT of money.
    Yes if that's true, however,

    Contractor Calculator - Your Expert Guide to Contracting. For UK Contractors, Freelancers, and Consultants states for £500 a day:

    Net income (per month) £5,755 ltd company(62% of revenue)
    Umbrella £4931 a month(53% of revenue)

    I will check myself but 15%-20% less is a massive difference than 30%-40% less. Obviously expenses and pension contributions all count into the equation.

    I'll definitely check more though with my accountant.


    Quote Originally Posted by northernladuk View Post
    What about a better contractor approach and take the gig inside, go brolly and just keep the company open for when that one folds and you come back to market like a proper contractor. Money is still there to claim ER in the future and you haven't stuck yourself with 30-40% less income?

    That particular example mixes up contract options with financial planning so confusing.
    This assumes everything else you said is spot on. If, as you say going brolly assumes you are inside, then the advice on the rest of this forum has been close your company down as soon as you can. I still maintain forcing me to go Brolly for a new contract means nothing as its a new contract,but anyway I would be foolish to keep my company open given the uncertainty of retrospective inspections . There's a lot of factors involved here, so agree confusing



    Quote Originally Posted by northernladuk View Post
    Gaining and advantage means getting a more favourable tax advantage when closing the company, i.e. 10% on CGT etc. You either do, or don't. Nothing to do with intend or did you. If you claimed ER you got a tax advantage and you are stuck for 2 years. If you didn't claim ER, no advantage and therefore you can open another company up.

    I think you've completely misunderstood MVL and the rules. If you are even vaguely considering this have a chat to Chris Maslin and Maslins. They run MVLOnline and they will give you a low down on it if you want.
    I read other links on here, as well as spoke to my accountant, and he made it clear that its the intention to gain an advantage and not gain advantage that's the driver. Plus your company is closed down after 3 months. I'm not aware of an instance when HMRC has re-opened a company, so how are they going to come after you.

    Again, I will take your advice and check.


    Quote Originally Posted by northernladuk View Post
    Not trolling and no insults here. We are professionals so nothing wrong with tough love.
    Yes and I really appreciate your advice, even if I don't always follow some of the logic, it has, and it will give me cause to investigate further. Thank you.

    On a professional forum(such as those as work), you don't ask people what they have been smoking.

  5. #35

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    Quote Originally Posted by BABABlackSheep View Post

    On a professional forum(such as those as work), you don't ask people what they have been smoking.
    True dat.

  6. #36

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    Quote Originally Posted by BABABlackSheep View Post
    Yes if that's true, however,

    Contractor Calculator - Your Expert Guide to Contracting. For UK Contractors, Freelancers, and Consultants states for £500 a day:

    Net income (per month) £5,755 ltd company(62% of revenue)
    Umbrella £4931 a month(53% of revenue)

    I will check myself but 15%-20% less is a massive difference than 30%-40% less. Obviously expenses and pension contributions all count into the equation.

    I'll definitely check more though with my accountant.
    That is assuming you draw the full amount out and pay full tax on it which contractors don't. We tend to stay under the tax bracket and keep in the company and then, as you say, distribute it more efficiently at the end which will make quite a difference. Year on year you aren't paying a big chunk at the top threshold of tax which you are in that calc so that will up your figures considerably. The 30%+ figure came from lots of discussions around how much increase would we have to make to be on like for like and it fell somewhere between those two figures.
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    The client has made the decision to say Brolly only. I know this for a fact.

    Client has not decided inside or outside, they have swerved it. Even if its assumed saying Brolly means everyone is inside, that doesn't mean the role was always inside, that makes no logic. The role is outside now, its not going to magically have become inside all the time because a client couldn't be bothered to decide.
    Well in that case you need to point them at pages such as this..

    April 2020 changes to off-payroll working for clients - GOV.UK

    What you need to do as a client
    You will be responsible for deciding the employment status of workers. You’ll need to:

    decide the employment status of a worker - you must do this for every contract you agree with an agency or worker
    pass your determination and the reasons for the determination to the worker and the person or organisation you contract with
    make sure you keep detailed records of your employment status determinations, including the reasons for the determination and fees paid
    have processes in place to deal with any disputes that arise from your determination
    No point them saying go brolly without a determination to try make it easy when that course of action is actually breaking the law. That doesn't make sense.
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  8. #38

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    Quote Originally Posted by northernladuk View Post
    Well in that case you need to point them at pages such as this..

    April 2020 changes to off-payroll working for clients - GOV.UK



    No point them saying go brolly without a determination to try make it easy when that course of action is actually breaking the law. That doesn't make sense.
    But they won't have a determination to make if there are no contractors as at April 2020.

    My client hasn't said anything official, but my contact there has said that no contracts have or will be been extended beyond the end of Feb 2020. Reading between the lines of that conversation, people will either be invited to go PAYE or go via a Managed Service company or umbrella (or leave at the end of their current contract)

    So, they won't have *any* contracts for which a determination is required.

    I can't see how that's breaking the law.
    Last edited by Paralytic; 20th September 2019 at 14:30.

  9. #39

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    Quote Originally Posted by Paralytic View Post
    But they won't have a determination to make if there are no contractors as at April 2020.

    My client hasn't said anything official, but my contact there has said that no contracts have or will be been extended beyond the end of Feb 2020. Reading between the lines of that conversation, people will either be invited to go PAYE or go via a Managed Service company or umbrella (or leave at the end of their current contract)

    So, they won't have *any* contracts for which a determination is required.

    I can't see how that's breaking the law.
    Interesting point but you'll still be an off payroll worker won't you? Forget the term contractor for now. So they've made a decision that all off payroll workers are inside hence take those options. If they have any off payroll people they should be following the rules. In the case above it looks like it's blanket inside and hence your options.

    You comment is putting the cart before the horse. They no longer have contractors because the rules were applied first.

    I do think even if big clients go down this route from April it will change further down the line. The same happened in the Public Sector and many (not all) have gone back to taking some outside guys so they will have to apply to rules to these outside guys as the inside ones.

    If you push these types of clients for their response I am sure eventually you'll get an inside response.

    I'm surprised companies are going down this route so, in a kind of perverse way, we need quite a few to do it and then there is more ammo to take it back to HMRC and point out the unintended consequences and it gets addresses. Won't be a quick process though I imagine.
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    Quote Originally Posted by northernladuk View Post
    That is assuming you draw the full amount out and pay full tax on it which contractors don't. We tend to stay under the tax bracket and keep in the company and then, as you say, distribute it more efficiently at the end which will make quite a difference. Year on year you aren't paying a big chunk at the top threshold of tax which you are in that calc so that will up your figures considerably. The 30%+ figure came from lots of discussions around how much increase would we have to make to be on like for like and it fell somewhere between those two figures.
    Exactly!!! If you only get 62% via ltd I wouldn't bother...

    I agree, being inside will drop your income ~30% and probably a further 5/10% if you spend much with accommodation/travelling!
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