Discussion document on IR35 published

[TestMangler]

Not necessarily. Remember, clients and agents want contractors for a reason (and it isn't tax, except at the very low end of the chain), so there will be a greater incentive to ensure that the working practices are squarely absent of SD&C (where possible, so admittedly some sectors may be impacted more than others). The alternative is they don't, and everyone loses (inc. the UK economy and hence the Exchequer in the longer term). Likely, they would make everyone in the chain (the client, agent and PSC) jointly and severally liable, so this would catch all types of relationships, not just agency contracts, but with PSCs themselves remaining the police in some cases (e.g. client overseas, no UK agency).

LOL, OK.

Do you really think the government can see anything other than that contractors are disguised employees and avoiding tax ? Read the examples in the consultation document. they clearly don't 'get it'. If you think a government is capable of working out the consequences of legislation before they enact it, you must have been hibernating for the last 25 years.

[tractor]

....

I agree with you that there's a risk here (even a significant one), but I'd be genuinely surprised if the majority of agents and clients took a knee-jerk reaction to enforcement, because it would be the end of their business models w/r to contracting. It's analogous to Greece insofar as everyone could lose (including the Exchequer).

I don't know how long you have been around but if you were around in the 70's early 80's you have clearly forgotten the legislation that forced us into incorporation in the first place! That meant that agents simply would not deal with the self-employed anything but insisted upon Ltd Co.

[jamesbrown]

LOL, OK.

Do you really think the government can see anything other than that contractors are disguised employees and avoiding tax ? Read the examples in the consultation document. they clearly don't 'get it'. If you think a government is capable of working out the consequences of legislation before they enact it, you must have been hibernating for the last 25 years.

I've been contracting for a very long time, seen legislation come and go in various countries, and contracting has and will continue to remain a viable option IMO. HMRC has always pushed their own angle vigorously, including w/r to IR35 (see the nonsensical BETs, for example), but it has always been manageable for the vast majority of us.

[TestMangler]

I've been contracting for a very long time, seen legislation come and go in various countries, and contracting has and will continue to remain a viable option IMO. HMRC has always pushed their own angle vigorously, including w/r to IR35 (see the nonsensical BETs, for example), but it has always been manageable for the vast majority of us.

So have I. The thing with iR35's introduction was that it was made clear that there was no change to the legal definition of 'employment' i.e. current case law stood. I'll be jumping for joy if you are right but I fear this government will introduce some blanket catch all, badly thought out legislation (the 'business friendly' tories) that will destroy the current model. I agree that contracting will continue in some form but I reckon 90% of contractors will end up as FTC or some other invented model in a government mandated disaster.

Loss of revenue and loss of business doesn't seem to have figured much in government thinking. ICT's are only there to alleviate a massive skills shortage in UK IT. Did you know that ?

[jamesbrown]

So have I. The thing with iR35's introduction was that it was made clear that there was no change to the legal definition of 'employment' i.e. current case law stood. I'll be jumping for joy if you are right but I fear this government will introduce some blanket catch all, badly thought out legislation (the 'business friendly' tories) that will destroy the current model. I agree that contracting will continue in some form but I reckon 90% of contractors will end up as FTC or some other invented model in a government mandated disaster.

Loss of revenue and loss of business doesn't seem to have figured much in government thinking. ICT's are only there to alleviate a massive skills shortage in UK IT. Did you know that ?

There were many predictions of impending doom w/ IR35 and other pieces of legislation, and they were almost always overstated when the dust settled. However, if you're right, I'll consider heading overseas again. I'm not going to stop contracting (even if it becomes less lucrative than being a permie).

[WordIsBond]

One thing I'd like to know taking this and all the other changes. Exactly what does Mr Osborne think is a reasonable amount for us to earn. We aren't equivalent to permits. We take on risks they don't. That has to count for something. This flailing to bring us in to line is all OK but where is bench time, unpaid holidays and all that factor in to it? It's going to get to the stage where we get a one year contract and will end up earning less than a permie if he's not careful.

He's happy for us to earn a lot of money and be compensated for all that risk.

He just wants the engager to pay for that, rather than having any tax recognition of those risks. He wants his (your) money.

He wants to have low income people have more income, but he doesn't want to pay for it himself. Simple. He'll make companies pay for it. Magic!

Same with us. He's fine with independent workers being compensated well for the risk, he just wants the big companies to be the ones to pay for it.

And a lot of UK PLC will pay. They won't want the risk of unclear legislation being used against them. But they'll still need contractors, good ones. So what happens? They'll require their contractors to operate under IR35, and if that means they have to pay more, they'll pay more.

Or.... They will require their contractors to get a contract review and carry something like TLC35 on a per contract basis that complete indemnifies them. And that will cost maybe £5-10 a day on a six month contract, and many contractors won't even pass it on in their fees. But if they pay an extra £100 a week to have IR35 indemnification, that's nothing to much of UK PLC.

So, some will just say we always operate all our contractors under IR35, they'll pay more, and Georgie gets more money to waste. Others more savvy will require the contractor to indemnify them, and maybe pay a little more to cover the insurance. QDOS will make a lot of money offering insurance on a per contract basis. Others may be quite willing to work with contractors to stay IR35 friendly.

And others will just say, "Let's hire perms."

Of course, it is possible, since the government obviously cares more about UK PLC than small businesses, that the whole idea of making the engager liable will die, once the big corporate lawyers tell their clients to start screaming about it.

[LisaContractorUmbrella]

Employing permanent staff has become so, potentially, expensive in terms of employee entitlements and litigation that skilled contractors will always be in demand and net rates (so disregarding tax position) will have to be maintained for the supply to continue. What may stop is the forced move of low paid workers to umbrella companies and PSC's and I can't help thinking that's a good thing.

[northernladuk]

I think it ought to be a two phased approach to contracting.

Phase 1
Every new 'contractor' has to do a 1 year probation whereby they have to either go umbrella or be inside IR35 by default. 99.9% of new contractors are just doing it for the money and have no idea about being a business so how can they be a business in their own right and not a disguised employee? It will also make people think twice about taking what they see as an easy option to contracting so keeping more permies at clients and stops every idiot going contracting.

Phase 2
After the 1 year probation they are interviewed to find out what they know about their company finances and their attitudes towards their clients. If they can't distinguish between their money and company money and still have the mindset their client is their employer then they go back on probation. Instant fail if they don't use terms such as client, pimp, gig, warchest, boomed etc and fail a practical test to bleed a radiator. Not licking the chutney spoon and their view on gladiators will be a pointer but not absolute at this point. Those that can show some understanding of being a business and stand a chance of proving they can work outside IR35 then they can join the fray but still have to continue to prove they are outside on a contract by contract basis.

Dunno why it takes the government so long to do this. Piece of piss.

[aoxomoxoa]

I think it ought to be a two phased approach to contracting.

Phase 1
Every new 'contractor' has to do a 1 year probation whereby they have to either go umbrella or be inside IR35 by default. 99.9% of new contractors are just doing it for the money and have no idea about being a business so how can they be a business in their own right and not a disguised employee? It will also make people think twice about taking what they see as an easy option to contracting so keeping more permies at clients and stops every idiot going contracting.

Phase 2
After the 1 year probation they are interviewed to find out what they know about their company finances and their attitudes towards their clients. If they can't distinguish between their money and company money and still have the mindset their client is their employer then they go back on probation. Instant fail if they don't use terms such as client, pimp, gig, warchest, boomed etc and fail a practical test to bleed a radiator. Not licking the chutney spoon and their view on gladiators will be a pointer but not absolute at this point. Those that can show some understanding of being a business and stand a chance of proving they can work outside IR35 then they can join the fray but still have to continue to prove they are outside on a contract by contract basis.

Dunno why it takes the government so long to do this. Piece of piss.

Presumably referencing accountants in every forum post confirms status as a legit contractor.

[VectraMan]

One thing I'd like to know taking this and all the other changes. Exactly what does Mr Osborne think is a reasonable amount for us to earn. We aren't equivalent to permits. We take on risks they don't. That has to count for something. This flailing to bring us in to line is all OK but where is bench time, unpaid holidays and all that factor in to it? It's going to get to the stage where we get a one year contract and will end up earning less than a permie if he's not careful.

Again with the risk. Contractors don't take on any risk, other than not finding work, and that's no different than temps. But unlike temps you get paid a lot more than the equivalent permie, and you get to avoid tax to boot.

If you work for your own Ltd. then you do get paid holidays and paid bench time, just like any other employee it comes out of the company's funds. The thing that is totally wrong about IR35 is that they look at the company's income as yours; what they should do is tax you on your income like anyone else, but not allow dividends. Then you really are running a business - just pay yourself a salary through the year and it's up to you to make sure there's enough left to cover paid holiday or other periods when the company isn't earning. Simple.