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IR35 - Back to first principles....

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    #31
    Originally posted by eek View Post
    Reading the discussion document again (its too hot outside and unless I do it now I'll only have to do it later) I'm struck by a simple question....

    What do all the parties actually want from the issue / IR35 marketplace?

    HMRC - want as many people as possible paid by PAYE especially those who work for companies who force self employment or support staff to pretend to be self employed when clearly working like permanent staff... They also what as much money as possible (but that goes without saying)...

    Some companies - want people to be bogusly self-employed to save them costs and responsibilities.

    Consultancies and our end clients - want contractors either for specific periods / projects (to fill a resourcing or skills gap) or because the market can't provide those skills within the permanent market

    Us - we want to be freelance because of our skill sets (or possibly just the cash). We pretend to be able to provide substitutes for the sake of it, happily use Moo and try to ignore the whole SDorC thing.

    Other freelancers - may simply want to know who their employer is and being treated as an employee (examples from the CAB bogus employment survey are available)...

    Some freelancers - are actually permanent staff but want the tax saving options and flexibility..

    We know that every test HMRC have used for IR35 is insane and has made things worse. The question is can we identify the view point from all participants (I'm probably missing loads in the few actors above) and see if there are some sane features that could be used instead...
    If we imagine that HMG is acting on good faith and not just trying to serve larger consultancies interests then rather than going down the rabbit hole of legislating small businesses, significantly stifling one of the few ways where we actually have social mobility, then we should probably suggest they tackle the problem at hand.

    You don't like companies forcing the incorporation of staff, then you should legislate that companies can't have business to business relationships providing people under a certian limit. That way you have a couple of choices; You hire the staff directly, you pay another company that hires the staff, or you pay enough for it to be allowed.

    There would obviously be some caveats that need to be worked out but it'd be well worth it to remove the ir35 mess. If you need some more flexibility, then the size of the company and the % of outsourced work comes into play.

    The onus should be on big business to be regulated, they can afford to understand it, can afford to take the hit, and since theres less of them, will cost less to regulate.

    On the fairness issue, get merge both ni's and income tax and raise dividends tax bands. I'd rather not be paying higher taxes, but it's preferable to dealing with this god awful tulip.
    Last edited by fool; 23 August 2015, 17:09.

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      #32
      Originally posted by fool View Post
      If we imagine that HMG is acting on good faith and not just trying to serve larger consultancies interests then rather than going down the rabbit hole of legislating small businesses, significantly stifling one of the few ways where we actually have social mobility, then we should probably suggest they tackle the problem at hand.

      You don't like companies forcing the incorporation of staff, then you should legislate that companies can't have business to business relationships providing people under a certian limit. That way you have a couple of choices; You hire the staff directly, you pay another company that hires the staff, or you pay enough for it to be allowed.

      There would obviously be some caveats that need to be worked out but it'd be well worth it to remove the ir35 mess.
      That is basically at the heart of the proposal Lisa and I (among others) will be suggesting for the T&S consultation. Anyone paid less than national living wage * x is not covered by expenses (and ideally has to be paid PAYE)...

      Then we have the IR35 discussion document where we can probably directly suggest if people who are not paid national living wage * x should be subject to the legislation (and therefore will have to be paid via PAYE)...

      Yes the idea probably upsets a lot of people both here and elsewhere but since we started suggesting this as an option no one has come up with anything better... However its not enough for the IR35 discussion document as case study 1 is a lawyer paid well above the average wage...
      merely at clientco for the entertainment

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        #33
        Originally posted by squirrel99 View Post
        Sorry, I should have been clearer.

        I was referring to Eek's comment (sentence below). Does this mean that a person providing support would be 'clearly inside' of IR35?

        'Part and parcel (Secretary, Waitress) - clearly inside - very hard to define so probably not a suitable criteria'
        I can't see how tier 1 support could not be part and parcel of an organisation (as they take whatever calls come in)..

        I guess tier 2 or tier 3 (especially tier 3) probably could have a contract which places them in a project based environment. I think it would be incredibly hard to make that a project based full time job though.

        I know that's probably not what you want to hear but sadly HMRC want everyone on PAYE. We really need to find an approach that works for as many people as possible while not providing some companies with new means for them to abuse the system...
        merely at clientco for the entertainment

        Comment


          #34
          Originally posted by eek View Post
          That is basically at the heart of the proposal Lisa and I (among others) will be suggesting for the T&S consultation. Anyone paid less than national living wage * x is not covered by expenses (and ideally has to be paid PAYE)...

          Then we have the IR35 discussion document where we can probably directly suggest if people who are not paid national living wage * x should be subject to the legislation (and therefore will have to be paid via PAYE)...

          Yes the idea probably upsets a lot of people both here and elsewhere but since we started suggesting this as an option no one has come up with anything better... However its not enough for the IR35 discussion document as case study 1 is a lawyer paid well above the average wage...
          So I expanded slightly, but the key point I was trying to make is IR35 shouldn't exist. HMG & HMRC need to stop caring about what type of companies we are or what our working conditions are. It's impossible to police and they really have no place deciding what's good for small business.

          Anybody who wants to incorporate should be able to, even if they're just doing it to avoid tax. Minimizing your tax bill is natural and if the guy running a 200 person company is able to do it, then you and I should be able to too. That should be the fairness that HMG is talking about.
          Last edited by fool; 23 August 2015, 17:30.

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            #35
            Originally posted by eek View Post
            I can't see how tier 1 support could not be part and parcel of an organisation (as they take whatever calls come in)..

            I guess tier 2 or tier 3 (especially tier 3) probably could have a contract which places them in a project based environment. I think it would be incredibly hard to make that a project based full time job though.

            I know that's probably not what you want to hear but sadly HMRC want everyone on PAYE. We really need to find an approach that works for as many people as possible while not providing some companies with new means for them to abuse the system...
            Thanks, Eek. Of course, I would like to be outside of IR35 and Qdos said my contract passes for 'outside IR35'.

            I will be contracting as a Programme Support Admin which is supporting PM's on budget management, project plan updates etc. They didn't provide a schedule of deliverables, but I am still negotiating.

            I feel like it would be hard to prove that I am not under control of a client though.

            Comment


              #36
              Originally posted by eek View Post
              That is basically at the heart of the proposal Lisa and I (among others) will be suggesting for the T&S consultation. Anyone paid less than national living wage * x is not covered by expenses (and ideally has to be paid PAYE)...
              The problem with this solution is that it punishes the worker rather than the engager.

              That's the problem with HMRC's approach, too. They are claiming that the problem they are trying to solve with this expenses thing is to combat employers pushing low-paid employees into self-employment / Ltd Co contracting. So what are they going to do? Punish the workers who already lost their employment rights by taking away their expenses, too, so they have to pay more taxes.

              What a very good idea.

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                #37
                Originally posted by WordIsBond View Post
                The problem with this solution is that it punishes the worker rather than the engager.

                That's the problem with HMRC's approach, too. They are claiming that the problem they are trying to solve with this expenses thing is to combat employers pushing low-paid employees into self-employment / Ltd Co contracting. So what are they going to do? Punish the workers who already lost their employment rights by taking away their expenses, too, so they have to pay more taxes.

                What a very good idea.
                But shouldn't those workers be permanent employees? I guess that HMG/HMRC need to do something to make that happen.
                "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
                - Voltaire/Benjamin Franklin/Anne Frank...

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                  #38
                  Originally posted by cojak View Post
                  But shouldn't those workers be permanent employees? I guess that HMG/HMRC need to do something to make that happen.
                  Which is why I think the ir35 discussion document is such a catch all document. As that is the piece that forces everyone to paye.

                  You could argue that the one bit of the actual problem here is the agencies themselves. Malvlio pointed out elsewhere that he thought everyone will end up in an office angels situation. I think your typical bogus self employed person would like that as it would remove the umbrella charges from their pay.

                  Sadly the office Angels approach of paying directly via paye disappeared years ago for many agencies.

                  Oh and yes the argument that the low paid should be able to claim expenses was lost in the discussion phase. (I lot of my Saturday reading was the responses to that and the low pay campaigners all emphasized that point). What is now left is hmrc wanting to put everyone on an even footing. The problem is that by fixing the problem to be fair for the low paid permanent employee they are about to screw up things for me (and the company's that require my reasonably expensive skills).
                  Last edited by eek; 24 August 2015, 06:10.
                  merely at clientco for the entertainment

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                    #39
                    I like the idea of the 'part and parcel' test. It could nicely encompass some aspects of the existing criteria, such as MOO.

                    Could it give more confidence to umbrella users that they're outside? I guess that would be a no-no for HMRC.

                    Comment


                      #40
                      Originally posted by teapot418 View Post
                      I like the idea of the 'part and parcel' test. It could nicely encompass some aspects of the existing criteria, such as MOO.

                      Could it give more confidence to umbrella users that they're outside? I guess that would be a no-no for HMRC.
                      The problem there is that we need a part and parcel tat hat would actually work.

                      Sadly moo and substation are things hmrc want gone as they have been abused in the past by people who are part and parcel
                      merely at clientco for the entertainment

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