Is George Osbourne keeping you awake?

[MarkT]

He bloody well is me.

Although I have been thinking - if the only way around this is to have more than one client, we need to band together as contractors, run Ltd's through for three or four of us, and split the dividends/salaries ourselves between us according to our invoices.

If we are on the bench, we resign as a director and become directors again when we get a role. SDC won't matter, T&S won't matter, would we not be consultancies?

There'd need to be some honesty, but I'd be looking to go in with someone, this could ruin my family if I don't find a way around it!

[jamesbrown]

I'm afraid that won't work. Currently, IR35 is determined on a contract-by-contract basis, and there's no indication that part will be changing. As things stand, so long as you meet the preconditions (e.g. 5%+ shareholding), you're potentially liable, and status will need to be determined on each contract. The point is that clients will have a role in policing status, and most likely in assessing it (directly or concurring), as well as managing a liability, and there's really no obvious way to circumvent that, unless the client is very motivated.

It should be obvious, but they aren't going to put a rule in place w/r to multiple clients that has a very low bar (anyone who pictures doing a few minor gigs on the side is deluded) and there will most likely be a TAAR clause to avoid the sort of TMI you suggest. Obviously, there are clever people that will look for holes, but HMG can achieve what they want (whatever that is) if they are sufficiently determined. Even before any new rules bite, the whole contracting landscape could change quite substantially as clients and agencies begin to preempt any changes.

But let's wait, eh? It's only a few days away, and there should be some more clarity at that point (although don't expect complete clarity).

[MarkT]

So 3 contractors, all working through 1 ltd company as directors would be treated as a PSC? Damn...

I've been watching the news for the past few weeks and Wednesday seems a long way away!

All I can do is pray, I've got a feeling the game is up....probably still worth going through a ltd as you'd get flat rate vat. But we are basically done for aren't we.

Personally, we may just about make it through, we need to cut spending and I need a better rate in a year, some chance!

[jamesbrown]

So 3 contractors, all working through 1 ltd company as directors would be treated as a PSC? Damn...

I've been watching the news for the past few weeks and Wednesday seems a long way away!

All I can do is pray, I've got a feeling the game is up....probably still worth going through a ltd as you'd get flat rate vat. But we are basically done for aren't we.

Personally, we may just about make it through, we need to cut spending and I need a better rate in a year, some chance!

The intermediaries legislation is not restricted to a particular corporate structure, and certainly not a "PSC", because it doesn't exist in law. It is concerned with "looking through" an intermediary (using a notional contract) to determine whether a worker would be an employee of their client were it not for the intermediary. There are similar rules on false self-employment for sole traders (w/ different liabilities). There are various possible outcomes at this point, but it may end up being no worse than contracting through agency/umbrella payroll on specific contracts (which is substantially better than being shoehorned into permie pay grades), but with the downside that home-to-work travel is no longer tax free. Obviously, it doesn't look good, but experience suggests that the worst case scenario rarely happens and that enacted legislation rarely works out exactly as intended, especially in this area.

[meridian]

He bloody well is me.

Although I have been thinking - if the only way around this is to have more than one client, we need to band together as contractors, run Ltd's through for three or four of us, and split the dividends/salaries ourselves between us according to our invoices.

If we are on the bench, we resign as a director and become directors again when we get a role. SDC won't matter, T&S won't matter, would we not be consultancies?

There'd need to be some honesty, but I'd be looking to go in with someone, this could ruin my family if I don't find a way around it!

Dividends are based on your shareholding, not your invoices issued or whether or not you are a director.

You could structure your salaries, but if you pay out the full amount of your net revenue as PAYE them you're no better off than being in a brolly.

[WordIsBond]

Dividends are based on your shareholding, not your invoices issued or whether or not you are a director.

You could structure your salaries, but if you pay out the full amount of your net revenue as PAYE them you're no better off than being in a brolly.

His idea probably won't work. But I think you could find a way to set up a pool of contractors, say 25, with 4% shareholding each (which makes you IR35 exempt), and get at least some of the proceeds out in dividends rather than PAYE.

You'd have to avoid MSC restrictions. And I think you'd have to end up paying a chunk of income as PAYE to reflect differences in revenue brought in. But I think it could be done. Not going to waste the time to try and think it through until we see what actually happens, though.

[meridian]

His idea probably won't work. But I think you could find a way to set up a pool of contractors, say 25, with 4% shareholding each (which makes you IR35 exempt), and get at least some of the proceeds out in dividends rather than PAYE.

You'd have to avoid MSC restrictions. And I think you'd have to end up paying a chunk of income as PAYE to reflect differences in revenue brought in. But I think it could be done. Not going to waste the time to try and think it through until we see what actually happens, though.

25 contractors? What are the odds that one of them would want to resign every six months to go on JSA to tide him over and then rejoin once he has another contract? ;-)

[WordIsBond]

25 contractors? What are the odds that one of them would want to resign every six months to go on JSA to tide him over and then rejoin once he has another contract? ;-)

If you use redeemable shares (such as other employee-owned businesses use), so that you could buy them back from someone who resigns, then he has no shares once he resigns. And he can "want" to rejoin all he wants, but he only gets back in if the existing shareholders are willing to let him.

Anyway, haven't thought it all through. Doesn't make sense until we find out what they are going to do, anyway. And we probably won't find out next week, either. We'll probably get an announcement of a consultation, but no IR35 changes on legislation this year. Could be wrong, of course, they seem in a hurry.

[cojak]

Is George Osbourne keeping you awake?

I would advise considering cutting your cloth in the New Year to suit the new conditions.

If the worse doesn't happen, then you have extra money to spend.

[pjt]

Is George Osbourne keeping you awake?

He's not keeping me awake but he's getting me very angry!
If he succeeds in destroying the contracting market theirs going to be a lot of people severely affected including me.

What I would give to have him in a room for 5 minutes