If we are caught by IR 35, and all income (bar a pittance) is deemed to be salary, can we stop collecting VAT?
VAT is not currently collected or payable on salary, and it is unlikely that the 5% part of income not deemed to be salary will bring us near the VAT threshold.
What do you think ?
Leo Heffernan
Replies (6)
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The government want to have YOUR cake and eat it
This is one of the inequities of IR35.
A company hit by IR35 will still be regarded by the Customs and Excise as a legitimate business and have to collect VAT.
However, the Inland Revenue will effectively treat the company as an employee of the client, and not a business.
Given the government's and the Inland Revenue's reluctance to engage in meaningful dialogue about IR35 and its consequences, it shows how ill thought out these measures are.