If not IR35, then what?

[WordIsBond]

Surely the whole point of using a limited Company - and one that I've been saying for a long time - is that it allows you to even out an uneven income stream for times when you are not working? You don't need another layer of complexity in the tax landscape, merely accept that I left money in the company so that when I had a largely enforced 14 month break I could still pay the mortgage and feed the family. the major failing of IR35 is that it destroys that ability.

It's not tax avoidance, it's prudent fiscal planning.

No, part of the point is limited liability.

Of course it is about tax. You can even out an uneven income stream inside IR35 too, just by saving the money. The difference is that if you even it out within a Ltd Co and outside IR35, you can even it out for taxation. It's not prudent fiscal planning, it's prudent tax planning.

[WordIsBond]

And, incidentally, attacking the taxation aspect of contracting is a waste of time. Parliament simply aren't listening, and haven't been for several years.

And won't if no one ever presents a coherent solution to the problem. The problem is that contractors stuck in their heels and said, 'I like what I have, don't take it away.' We heard about contractors don't get employment rights so shouldn't be taxed the same, rather than that contractors shouldn't be taxed worse under IR35.

There was very little ever said about a coherent approach that actually addressed the imbalances and that there were a bunch of permie-tractors who were taking the mic. It was largely left as a binary choice between IR35 or 'as you were'. IPSE came out with a half-way approach, but it would have been optional, if I recall. No one ever tackled the fact that tax imbalances and human nature not mix and produce widespread compliance.

So yeah, Parliament hasn't listened because no one has been listening back and proposed anything else that achieved any of their objectives. No one proposed a win-win, and if anyone is going to win in that case it will be the one with the power, so here we are.

Your solution is to try to legislatively define the line between employment and self-employment. Good luck with that. They've been told to do that for years and they aren't listening to that, either. So if we're going to both be spitting into the wind we can at least try to come up with something coherent and workable that we can say, someday, if there ever is a sane Treasury / PM / Chancellor, "Look, what you've been doing isn't working, how about trying this?"

[WordIsBond]

In my view a lot of the claimed "advantage" from contracting via a PSC comes in the form of the PSC retaining money.

That's certainly not the case for me. But I do need to be able to keep a substantive reserve to pay staff if contracts dry up for a while.

I suspect that a lot of guys are using income splitting to draw out most or all of the profits rather than retaining huge sums. It might become an issue if they figured out a way to block income splitting.

[malvolio]

No, part of the point is limited liability.

Of course it is about tax. You can even out an uneven income stream inside IR35 too, just by saving the money. The difference is that if you even it out within a Ltd Co and outside IR35, you can even it out for taxation. It's not prudent fiscal planning, it's prudent tax planning.

Yes, I know that, oddly enough. But it's only part of the point, in the same way that agencies won't take us on as sole traders (thanks to another stupid piece of tax legislation that assumes employee/employer only).

That apart, I'm not interested in the finer detail of taxation. My point is that we won't get traction by complaining about tax but we will if we focus on what workers actually are, and therefore what workers' rights should apply, be they employees, deemed employees or genuine contractors, with gradations appropriate to each level. And that is the line most of the those dealing with government are focussed on.

IR35 changes are the catalyst (although I hadn't noticed a lot of change since 2017 myself) but HMG will not debate IR35 itself.

[JohntheBike]

Yes, I know that, oddly enough. But it's only part of the point, in the same way that agencies won't take us on as sole traders (thanks to another stupid piece of tax legislation that assumes employee/employer only).

That apart, I'm not interested in the finer detail of taxation. My point is that we won't get traction by complaining about tax but we will if we focus on what workers actually are, and therefore what workers' rights should apply, be they employees, deemed employees or genuine contractors, with gradations appropriate to each level. And that is the line most of the those dealing with government are focussed on.

IR35 changes are the catalyst (although I hadn't noticed a lot of change since 2017 myself) but HMG will not debate IR35 itself.

we will if we focus on what workers actually are, and therefore what workers' rights should apply, be they employees, deemed employees or genuine contractors

the problem has been that for most of the time that IR35 has existed, representative organisations have not been prepared to focus on these issues, but preferred to push the IBOYOA ideology. It's re-assuring to a certain extent that this position seems to be changing now.

[malvolio]

the problem has been that for most of the time that IR35 has existed, representative organisations have not been prepared to focus on these issues, but preferred to push the IBOYOA ideology. It's re-assuring to a certain extent that this position seems to be changing now.

It isn't. IBOYA is still the only valid defence to IR35. It's taken most contractors 20 years to work that one out. Snag is, (a) they don't know how to do it, (b) they won't be happy with the additional risks and potential costs, and (c) they won't realise it anyway.

And it still has nothing to do with your ancient history.

[JohntheBike]

It isn't. IBOYA is still the only valid defence to IR35. It's taken most contractors 20 years to work that one out. Snag is, (a) they don't know how to do it, (b) they won't be happy with the additional risks and potential costs, and (c) they won't realise it anyway.

And it still has nothing to do with your ancient history.

IBOYA is still the only valid defence to IR35

HMRC's position is that very few contractors are. Don't forget that the environment that we work in was created by the clients, not us.

they don't know how to do it

many are not able to

they won't be happy with the additional risks and potential costs

what would you say were the additional costs that indicated that a contractor was IBOYOA?

And it still has nothing to do with your ancient history

what has nothing to do with my ancient history? All I've said right from the beginning of IR35 is that if the FTT find that a contractor is subject to IR35, then it is possible that an ET will find them to be a bona fide employee using the judgement from the FTT. That isn't ancient history.

In the past the hurdle has been the time limit for lodging a claim in the ET. Given the 2020 roll out, which might affect some who will continue with their existing client under an inside IR35 contract, this might change. Again, this is the future, and not ancient history.

[malvolio]

OK, I'll bite one more time, just in case someone is listening to you...

HMRC's position is that very few contractors are. Don't forget that the environment that we work in was created by the clients, not us.

No, it was caused by the transfer of liabilities up the "employment" chain which in turn is a consequence of tax legislation not catering for non-employed small companies offering specific services to the knowledge economy.

many are not able to

So either they damned well should or they accept that they are caught by IR35.

what would you say were the additional costs that indicated that a contractor was IBOYOA?

Mostly indirect but will include better marketing to get the work, managing bad debts and extended payment cycles to name but three. Too many people are irretrievably wedded to weekly payments.

what has nothing to do with my ancient history? All I've said right from the beginning of IR35 is that if the FTT find that a contractor is subject to IR35, then it is possible that an ET will find them to be a bona fide employee using the judgement from the FTT. That isn't ancient history.

Just because it looks like a duck... You claimed that not having employment rights showed you weren't an employee. The current argument is totally the reverse: if you want an employee and will treat them as one, then f***ing well employ one or offer parallel rights to your temporary workers. Why else aren't the job boards full of FTCs - i.e. taking on temporary staff on the payroll with minimal rights - if not to avoid that level of costs?

In the past the hurdle has been the time limit for lodging a claim in the ET. Given the 2020 roll out, which might affect some who will continue with their existing client under an inside IR35 contract, this might change. Again, this is the future, and not ancient history.

Exactly. I'm not talking about 1999, I'm talking about 2020. Different rules, different challenges, different circumstances.

Now let's leave it there.

[northernladuk]

OK, I'll bite one more time, just in case someone is listening to you...

Don't have to worry about that.....

[JohntheBike]

OK, I'll bite one more time, just in case someone is listening to you...
No, it was caused by the transfer of liabilities up the "employment" chain which in turn is a consequence of tax legislation not catering for non-employed small companies offering specific services to the knowledge economy.




So either they damned well should or they accept that they are caught by IR35.




Mostly indirect but will include better marketing to get the work, managing bad debts and extended payment cycles to name but three. Too many people are irretrievably wedded to weekly payments.




Just because it looks like a duck... You claimed that not having employment rights showed you weren't an employee. The current argument is totally the reverse: if you want an employee and will treat them as one, then f***ing well employ one or offer parallel rights to your temporary workers. Why else aren't the job boards full of FTCs - i.e. taking on temporary staff on the payroll with minimal rights - if not to avoid that level of costs?


Exactly. I'm not talking about 1999, I'm talking about 2020. Different rules, different challenges, different circumstances.

Now let's leave it there.

OK, but just let me point this out in response to this -

Mostly indirect but will include better marketing to get the work, managing bad debts and extended payment cycles to name but three. Too many people are irretrievably wedded to weekly payments.

none of these apply to me, yet Markel Tax's assessment of my contract is that it is outside of IR35. So I guess you, and HMRC, would claim that I'm not IBOYOA. So, IBOYOA isn't the only arrangement which can place a contractor outside of IR35. The key elements if you remember are SDC and the overall picture, which also to a lesser extent, includes the intentions of the parties. These are what determines the status.