Does anyone else feel like they are being financially ripped by the tax-man

[northernladuk]

I'll oblige. Finishing with existing client 3 April. Contract very much outside IR35 and I believe working practices also.

Sounds good. I wonder what the clients view on this is...

Client did SDS for all contractors and engineered inside IR35 determinations for all, based on incorrect working practices. Client very happy to ignore contract and true working practices to give them inside determination they wanted. Removes risk of HMRC from them and more importantly risk of bad publicity. As a consequence I terminated contract.

Ahh they don't agree. Unlucky. They dictate the working practices as they are the client, we are the supplier. Contract is a sham if it doesn't match the WP as well. What we do on site and a contract between agent and us which has no relation to what the client actually wants isn't a strong indicator of the status of the role when the client is being asked what do they expect.

Have a new contract lined up already which the client has already agreed to being outside IR35. Ironically, the delay of one year makes my position slightly worse in that the risk of an incorrect determination sits with me again rather than the client, however, with the SDS on the new contract stating outside IR35 I am more relaxed about this.

I think a lot depends on the question HMRC might ask of any client. Is it likely to be 'give me a list of all off-payroll employees with an SDS of inside IR35' and if that is the question would I be included as it was not their position to complete a SDS until after 5 April.

This won't happen. An SDS never came in to force so doesn't exist as a legal document. At best it's like a confirmation of arrangements which isn't a bad thing in the outside case. The new SDS means nothing legally but get a copy of it as it's great defence. Statements from the client have always been a good indicator as HMRC know from the off they are fighting you and the client so have an even bigger hill to climb.

So get the outside one to help you defend but I wouldn't worry about the inside ones pre April.

[SciaticaSucks]

Sounds good. I wonder what the clients view on this is...

Ahh they don't agree. Unlucky. They dictate the working practices as they are the client, we are the supplier. Contract is a sham if it doesn't match the WP as well. What we do on site and a contract between agent and us which has no relation to what the client actually wants isn't a strong indicator of the status of the role when the client is being asked what do they expect.

Thank you once again for your response. I think we may have to agree to disagree on this point. You are arguing that whatever the clients says are the working practices are the working practices despite evidence to the contrary. For example, the client might state that should they ask me to clean the toilets I would be obliged to do that, when in reality the working practice is that I would never do that for the client. We don't need to re-visit old arguments about what constitutes control or MoO but suffice to say the client are quite happy to make things up to suit their purposes knowing that we have no recompense other than to quit. The fact that so many people have rolled over and accepted outside to inside would suggest they might have been correct.

[northernladuk]

I get what you are saying and I think agreeing to disagree is perfect middle ground. I think we are both on the right track on somethings and opposite on others... But that appears to be the past for you so get the clients paperwork saying outside for the new gig, store it in the defense file and carry on.

[SciaticaSucks]

Blah.

I would also add that I think the contract should be between my Limited Co and client Limited Co, not the agency. If the client chooses to outsource recruitment, on-boarding, and payroll then that it is up to them, however the contract should be between supplier and client. That way there should be no ambiguity over the reality of the relationship.

How can it be right that I have a physical contract with an agency that is completely opposite to what the client considers working practice. This is even more relevant when I think back to the initial engagement. At that point I had no visibility of the agency<>client contract and no knowledge of the working practice. I accepted the role on the basis of the supplier<>agency contract which a year later proves to be a complete sham if the client is to be believed.

At one point I did toy with the idea of switching from outside to inside on the assumption that at least the new contract would emphasise the inside IR35 elements and subsequently be completely different to the existing contract. However, the new contract is exactly the same as before emphasising the outside IR35 elements, which according to the client do not exist.

The client and the agency are effectively in cahoots to create a scenario that suits them both. It is 'heads we win, tails you lose'. The only option for me was to quit, which I did.

Thank you again

[WordIsBond]

If we are talking about inside-IR35 contractors then they will ALWAYS pay more tax than the equivalent employee unless they are so stupid as to work for the same rate as the employee. the way IR35 works.

Can you demonstrate that in numbers?

Ok. Stupid inside-IR35 contractor has a fee of 400 / day, £2K a week, 46 weeks, makes 92K even though he doesn't get employment rights. Equivalent employee makes £92K.

1250 tax code.

Employee pays £24,300 Income Tax and £5804 EE NI. Take home £61,896.

Inside IR35 contractor, according to this if it is correct, pays £24,200 Income Tax, £5521 EE NI, and £9552 ER NI, for a take home of £51,853.

I haven't run the numbers to verify it, but it's very close.

The inside contractor is marginally worse off even if the client pays the ER NI (and many don't, they were just going to keep paying the same rate to the agency and have the agency deduct the NI).

That, of course, is for the stupid contractor who doesn't even get any uplift in his rate for the loss of employment rights. The guy who gets even £1K extra (at that level of income) will pay an extra £420 tax (£400 IT, £20 EE NI), and be clearly more than the equivalent permie. If the contractor is paid anything at all for giving up employment rights, and he is inside IR35, he will pay more tax.

[WordIsBond]

I work for HMRC. This is my job.

This almost made me feel bad for calling them stupid the other day.

I got over it.

[tinopener]

Out of interest.. you are constantly bashing members with your baseball bat, pushing the govt view, and often in a very condescending/abusive way. Posting constantly throughout business hours, do you have a job? Or is this it? What industry do you work in? And how do you function to meet all these requirements?

I think a few software developers exist somewhere on the spectrum, if you know what I mean.

NLUK seems to lack the empathy required to have a discussion, on what is essentially a discussion forum. I imagine he records discussions on his phone in the pub and plays them back when people attempt to broach the same subject again.

He seems to have a few admirers here though who back him up, and that sort of bullying is at least car-crash interesting, if not useful to the owners of the site who potentially want to attract people to discuss stuff on their discussion forum.

[BrilloPad]

I think a few software developers exist somewhere on the spectrum, if you know what I mean.

NLUK seems to lack the empathy required to have a discussion, on what is essentially a discussion forum. I imagine he records discussions on his phone in the pub and plays them back when people attempt to broach the same subject again.

He seems to have a few admirers here though who back him up, and that sort of bullying is at least car-crash interesting, if not useful to the owners of the site who potentially want to attract people to discuss stuff on their discussion forum.

If people want friends then they should get a dog.

NLUK knows what he is talking about - he has helped many over the years and was even poster of the year.

If you don't like his advice, then get some more. You may prefer it. Or you could ask him for a refund?

Yes he is blunt. Yes he is terse. But he really knws his stuff. Except about JSA - for that ask his bestie PsychoCandy.....

[BrilloPad]

PS - don't worry NLUK. I will be back to abusing you soon enough.....

[eek]

I think a few software developers exist somewhere on the spectrum, if you know what I mean.

NLUK seems to lack the empathy required to have a discussion, on what is essentially a discussion forum. I imagine he records discussions on his phone in the pub and plays them back when people attempt to broach the same subject again.

He seems to have a few admirers here though who back him up, and that sort of bullying is at least car-crash interesting, if not useful to the owners of the site who potentially want to attract people to discuss stuff on their discussion forum.

This is not a discussion forum - it's an advice forum - if you want empathy mumsnet is thataway...