IR35 - does it need binning?

. I rely on the advice of tax professionals and do not want the hassle of running my own limited company.
There’s the badger.

I was trading as a sole trader in the 90’s and noted the increasing scrutiny by HRMC Of my spread of employments, and the increasing disinclination for anyone government related to use sole traders - they wanted me to be a registered business so they could be 100% square with the taxman. When I spoke to my accountant, he said the future was fully incorporated business and all the Pfaff that goes with that, or give it up and go back to PAYE, What about this new IR35 thing? ‘Wouldn’t touch that with a bargepole’.

It was no secret HRMC was on to hidden employment even in the late 90’s.
An aweful lot of ‘self employed’ weren’t , and the worst offenders were local authorities and the NHS who spoiled the pitch for the genuine self employed.
 
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Brexit_Pride

Old-Salt
Why should I be envious of people using a blatant tax evasion scheme and getting burned?
It appears squire, that you delight in tax avoidance measures taken in good faith is being retroactively made illegal and prosecuted against.

I've bombed through many an inner city road at 30mph. Should I be retroactively prosecuted now that the speed limit has come down to 20mph.

Her Majesty's Robbers and Crooks seem determined to kill off the flexible workforce and rather than seeing increased tax revenues, will see work packages offshored and lose all tax returns instead.

Those who stick up for large corporations paying no taxes seem to get a bee in their bonnet about PSCs making money on fixed term contracts, with no employment benefits, but a better rate.

As I say, politics of envy.

Loan charge and IR35 screams to business investment into the UK, "piss off!" at this crucial juncture.

Brain drain and a shrunken public purse are a certainty if we brexit with such a Draconian taxation policy
 

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LE
It appears squire, that you delight in tax avoidance measures taken in good faith is being retroactively made illegal and prosecuted against.

I've bombed through many an inner city road at 30mph. Should I be retroactively prosecuted now that the speed limit has come down to 20mph.

Her Majesty's Robbers and Crooks seem determined to kill off the flexible workforce and rather than seeing increased tax revenues, will see work packages offshored and lose all tax returns instead.

Those who stick up for large corporations paying no taxes seem to get a bee in their bonnet about PSCs making money on fixed term contracts, with no employment benefits, but a better rate.

As I say, politics of envy.

Loan charge and IR35 screams to business investment into the UK, "piss off!" at this crucial juncture.

Brain drain and a shrunken public purse are a certainty if we brexit with such a Draconian taxation policy
That's retrospectively made taxable by HMRC forcing through parliament (having misled it) legislation that not only covers up 20 years of HMRC inaction and incompetence but gets around an "inconvenient" Supreme Court ruling and removes all rights of challenge and appeal in the process.

Ignore the shills screaming "Tax Avoidance" as justification, that is contrary to natural justice and in the view of many amounts to Malfeasance in Public Office.

200 MP's have written letters to the Chancellor and the FS to Treasury on this appalling scandal.

Total silence in response.
 

Brexit_Pride

Old-Salt
That's retrospectively made taxable by HMRC forcing through parliament (having misled it) legislation that not only covers up 20 years of HMRC inaction and incompetence but gets around an "inconvenient" Supreme Court ruling and removes all rights of challenge and appeal in the process.

Ignore the shills screaming "Tax Avoidance" as justification, that is contrary to natural justice and in the view of many amounts to Malfeasance in Public Office.

200 MP's have written letters to the Chancellor and the FS to Treasury on this appalling scandal.

Total silence in response.
Astounding, considering Javids selling himself as a low tax guy.

Brexit sucks up all public effort at the moment.
 
It appears squire, that you delight in tax avoidance measures taken in good faith is being retroactively made illegal and prosecuted against.

I've bombed through many an inner city road at 30mph. Should I be retroactively prosecuted now that the speed limit has come down to 20mph.

Her Majesty's Robbers and Crooks seem determined to kill off the flexible workforce and rather than seeing increased tax revenues, will see work packages offshored and lose all tax returns instead.

Those who stick up for large corporations paying no taxes seem to get a bee in their bonnet about PSCs making money on fixed term contracts, with no employment benefits, but a better rate.

As I say, politics of envy.

Loan charge and IR35 screams to business investment into the UK, "piss off!" at this crucial juncture.

Brain drain and a shrunken public purse are a certainty if we brexit with such a Draconian taxation policy

Have you been evading tax using IR35?
Oh dear, pay it back.....with interest and penalties.
 
Evasion is illegal

Avoidance is not.

Far be it for me to accuse Baglock of wilful intent to defraud HRMC!

Everyone who took even the most basic advise 20 years ago was advised to avoid these loan schemes with a very long bargepole.
Using a scheme that right from the get go smelled of schiesse and was swarming in bluebottles? Don’t complain you ended up with pooh on your boots.
 

A.N.Other

Old-Salt
Everyone who took even the most basic advise 20 years ago was advised to avoid these loan schemes with a very long bargepole.
That is so far off the mark it is amazingly wrong.

Numerous accountants, tax advisors and umbrella companies pushed these products. Some still are (at least a variation of). While some advisors warned people off these schemes not all did.

Maybe 20 years ago there was advice to avoid these but it is possible that as time went on and HMRC did not mount a challenge the industry started to recommend them.

Just because you were given good advice it does not mean we all were. It is unfair of you to berate and belittle others who relied on what may have been flawed advice.
 
That is so far off the mark it is amazingly wrong.

Numerous accountants, tax advisors and umbrella companies pushed these products. Some still are (at least a variation of). While some advisors warned people off these schemes not all did.

Maybe 20 years ago there was advice to avoid these but it is possible that as time went on and HMRC did not mount a challenge the industry started to recommend them.

Just because you were given good advice it does not mean we all were. It is unfair of you to berate and belittle others who relied on what may have been flawed advice.

If something seems to good to be true, it usually is.

A ‘loan’ you never have to repay? Yes, that’s a plausible business model.

Well all that’s happened is HRMC has invited people with these ‘loans’ to repay them.

Those that are repaying, alls good.
Those that cry, ‘I can’t afford to, I thought I would never have to’, well they do have a problem.
 

Brexit_Pride

Old-Salt
Seeing my accountant on Friday about this very touchy subject. I work outside IR35 providing services to a couple of local authorities. With one, it works very well, I pay my bills (Corporation tax, NI, high level insurance, own medical cover etc). Other one, doing everything to force me into a recruitment agency who will immediately add a minimum of £8 an hour. The agency cannot find a specialist because I wont work for them. HR (human remains) INSIST I work inside IR35 despite it costing them potentially around £400 a week extra. That is without me putting up my hourly rate to cover a huge loss in earnings. I estimate I will lose up to 45% of my salary because I wont get the perks that I currently enjoy. Seems strange that a recruitment agency can 'pursuade' the local authority despite them not being able to fill the post.

point of order though, I understand from my accountant that HMRC were involved in a court case when it turned out that most of their tax collectors are contractors working outside IR35 !!!! Pot - kettle
 

Brexit_Pride

Old-Salt
Seeing my accountant on Friday about this very touchy subject. I work outside IR35 providing services to a couple of local authorities. With one, it works very well, I pay my bills (Corporation tax, NI, high level insurance, own medical cover etc). Other one, doing everything to force me into a recruitment agency who will immediately add a minimum of £8 an hour. The agency cannot find a specialist because I wont work for them. HR (human remains) INSIST I work inside IR35 despite it costing them potentially around £400 a week extra. That is without me putting up my hourly rate to cover a huge loss in earnings. I estimate I will lose up to 45% of my salary because I wont get the perks that I currently enjoy. Seems strange that a recruitment agency can 'pursuade' the local authority despite them not being able to fill the post.

point of order though, I understand from my accountant that HMRC were involved in a court case when it turned out that most of their tax collectors are contractors working outside IR35 !!!! Pot - kettle
Her Majesty's Robbers and Crooks are well known for hypocrisy
 
Seeing my accountant on Friday about this very touchy subject. I work outside IR35 providing services to a couple of local authorities. With one, it works very well, I pay my bills (Corporation tax, NI, high level insurance, own medical cover etc). Other one, doing everything to force me into a recruitment agency who will immediately add a minimum of £8 an hour. The agency cannot find a specialist because I wont work for them. HR (human remains) INSIST I work inside IR35 despite it costing them potentially around £400 a week extra. That is without me putting up my hourly rate to cover a huge loss in earnings. I estimate I will lose up to 45% of my salary because I wont get the perks that I currently enjoy. Seems strange that a recruitment agency can 'pursuade' the local authority despite them not being able to fill the post.

point of order though, I understand from my accountant that HMRC were involved in a court case when it turned out that most of their tax collectors are contractors working outside IR35 !!!! Pot - kettle
And which they've promised not to investigate allegedly
 

Hit the Tit

Swinger
I stand by my original comment that contracting is a lifestyle choice. You choose to forego the benefits of employment for flexibility and for financial reasons. Equally, choosing employment, entrepreneurship, retirement or the dole are lifestyle choices.
Everything is a lifestyle choice so what's your point? Google defines an entrepreneur as 'a person who sets up a business or businesses, taking on financial risks in the hope of profit' which is exactly what contractors are doing - trading the relative certainty of employment for the hope of higher pay.

My original response to the OP was regarding his assertion that contracting is somehow entrepreneurial. It isn’t. A contractor working an hourly rate is not taking any entrepreneurial risk. In fact, they are doing little different Roman employee; selling their personal time and expertise for compensation.
Utter bollocks. A typical private sector contract loads all of the risk onto the contractor. You **** it up, you fix it at your cost. £1,000,000 in professional indemnity insurance is the bare minimum in the oil industry. Anything goes wrong with the client or agency, your invoices don't get paid.

Hard for you to grasp perhaps, but there is rather more to the world of contracting than being an hourly paid brickie.
 
Everything is a lifestyle choice so what's your point? Google defines an entrepreneur as 'a person who sets up a business or businesses, taking on financial risks in the hope of profit' which is exactly what contractors are doing - trading the relative certainty of employment for the hope of higher pay.
The whole point of the IR35 tests is to identify whether the contractor is undertaking entrepreneurial risk and therefore making a profit or whether they are working as an employee on a daily rate.

You destroy any credibility in your argument when you talk about trading certainty of employment for higher pay. Pay is what employees get. Contractors take drawings from their business.

Finally, what about the many who choose to be a contractor in order to pay less tax?

Utter bollocks. A typical private sector contract loads all of the risk onto the contractor. You **** it up, you fix it at your cost. £1,000,000 in professional indemnity insurance is the bare minimum in the oil industry. Anything goes wrong with the client or agency, your invoices don't get paid.

Hard for you to grasp perhaps, but there is rather more to the world of contracting than being an hourly paid brickie.
No they don’t load “all the risk” onto the contractor. The contracting company can only load risk associated with performance of the contract and even then, if the contractor is operating as a personal services company, the liability is limited to the paid up share value of company. If he’s a sole trader, his liability is limited to his assets.

Professionally indemnity insurance is not there to cover risk entrepreneurial risk. It’s there to cover the insured for errors and negligence in carrying out their professional duties. Many employees carry it; I carry $50M as a chartered professional engineer, irrespective of whether I’m and employee or contractor as I’m personally liable for my actions as a CEng.

As for your sneery dismissal of bricklayers, think it through. A brick or can be a jobbing contractor, a genuine sole trader, a entrepreneurial business owner or an employee. The IR35 test applies as to how he is treated for tax.
 
A brick or can be a jobbing contractor, a genuine sole trader, a entrepreneurial business owner or an employee. The IR35 test applies as to how he is treated for tax.
And there is the issue with IR35.
Far too many are now de facto permanent full time employees minus the employers NI, Tax, SSP, redundancy liability.
 
And there is the issue with IR35.
Far too many are now de facto permanent full time employees minus the employers NI, Tax, SSP, redundancy liability.
Which is were employment and tax law need to converge, you shouldn't be able to tax someone as an employee whilst denying them the employment rights of an employee
 

Brexit_Pride

Old-Salt
Which is were employment and tax law need to converge, you shouldn't be able to tax someone as an employee whilst denying them the employment rights of an employee
Exactly, which is what blanket judgements of sticking everyone inside of IR35 achieves.

Contracting has to compensate for the lack of employment benefits and the potential of sudden loss of work
 

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