Replies (20)
Please login or register to join the discussion.
I am a sole trader working from
I am screwed! oh the 'risk factor' checklist only applies to 'contractors'....phew....and for a minute there i thought the risk factor list was reflective of what pointed someone towards being self employed....
More or less?
The section on the IR35 checklist manages to say that amassing points makes you both more likely and less likely to be investigated. I think the first reference, above the list of factors, is clearly wrong in saying it's more likely.
I don't see
how this will affect the normal contract for services (approved by HMRC) between contractor and subbie and then again subbie to office holder. As long as the wording of the contracts fit in with tribunal cases then really HMRC are back where they started from. The reason why IR35 doesn't and cannot work is because it is artificial or "agressive taxation".
It is time the government passed a law that it is up to the individual how they operate and not HMRC. I might put it to UKIP and see what they think.
Thanks @trevv69 - article has been corrected
Sorry to have misconstrued the scoring table - it may have been an error I introduced at the production stage, for which I have slapped my own wrists.
Your correction is greatly appreciated so that we don't mislead too many other members. Thanks.
who will police it?
They can write as a many rules as they like:
There is no money to pay for a correct analysis of the situation.
Complete denial by those that would be caught.
Mass marketed schemes and Managed Service providers.
and no one to police it.
It's a bit like having a "Beware of the Bull sign" when you can clearly see there is no Bull in the field and everyone knows there has not been one for years.
Section 5 vs (new) section 49
I am at a loss to see why the proposed change to s49 ITEPA is necessary - an office holder's fees are already subject to PAYE under s5 of the same Act. How are these two sections going to work together from 6 April 2013, and why was a change in legislation needed when HMT/HMRC was simply "putting beyond doubt" that IR35 applied to office holders for tax purposes?
Without wanting Margaret Hodge and the PAC to dictate tax policy, the grilling which the BBC suffered at their hands over the use of LtdCo contractors (and the unsaid reliance on IR35 to do the job of picking up the tax), why on earth is it considered sensible to bring office holders into IR35?
Instead of properly enforcing existing legislation, and changing the NIC "IR35" equivalent, thus having one "employer" from which to collect PAYE/NIC, HMRC will now have to check whether multiple board members are reporting under IR35. An already stretched team has just had its workload greatly increased, albeit that the automatic application of IR35 to office holders will make it easier than having to check business entity test results or debate hypothetical employment status.
Does anyone else think this is crackers!?
The Business Entity Tests bear little resemblance to reality
We need to remember that the business entity tests ("BETS") are NOT case law and are not a test for employment status. They are designed as a filtering mechanism to be used by HMRC when deciding which fish to pluck from the net and examine futher.
The problem however, as our recent survey of over 10,000 contractors pointed out, is that a contractors BETS score does not correlate to their IR35 status.
HMRC are picking out far too many contractor fish and wasting time (and taxpayers money) by processing them.
As for IR35 being nuts, I couldn't agree more. The steps genuine contractors have to take to cover their IR35 backsides are often crazy, and as I pointed out in my blog today, IR35 is anti-business.
Not worth working to become wealthy in this country - it will be stolen by either the tax system or the legal system... time to pack up & move to a more enlightened environment - or certainly one that doesn't seek to apply retrospective tax law!
.
Not worth working to becomequadra PM | Wed, 13/03/2013 - 16:32 | Permalink
Not worth working to become wealthy in this country - it will be stolen by either the tax system or the legal system... time to pack up & move to a more enlightened environment - or certainly one that doesn't seek to apply retrospective tax law!
Anywhere in mind? :-)
More IR35 nonsense
If the Government Agency in the copy letter posted on Elaine Clark's recent blog posting http://www.cheapaccounting.co.uk/blog/index.php/all-government-contractors-within-ir35/ is able to sever the contract just because the contractor is unable to demonstrate that they are paying their tax and NI or unable to provide sufficient evidence that the Revenue accept they are outside IR35, they do not sound like disguised employees. Not the normal grounds for being able to sever an employee/employer relationship - does that, in itself, mean they are outside IR35?!!
More IR35 nonsense thank you
If the Government Agency in the copy letter posted on Elaine Clark's recent blog posting http://www.cheapaccounting.co.uk/blog/index.php/all-government-contractors-within-ir35/ is able to sever the contract just because the contractor is unable to demonstrate that they are paying their tax and NI or unable to provide sufficient evidence that the Revenue accept they are outside IR35, they do not sound like disguised employees. Not the normal grounds for being able to sever an employee/employer relationship - does that, in itself, mean they are outside IR35?!!
Very good point :-) Thank you
Trying to keep things general to avoid breach of confidentiality in the case in question; the contractor has taken appropriate step to assess his IR35 position etc; such steps are as any good accountant would normally advise a contractor to take :-)
The risk for any contractor in this position is having this “blanket decision” imposed on them but, having taken advice, deciding to “fight” against it. IMO this potentially increases their risk of an IR35 investigation being started e.g. “we think you are all caught by IR35; if you don’t agree we’ll tell HMRC and you’ll be top of their IR35 investigation hit list”.
Let’s face it; HMRC have limited resources to look at every IR35 case – where do you think they will go to pick their “targets”?
Oh the risk of taking a Government contract!
Of course IR35 cases should be fought where appropriate, but the contractors need to understand that whilst they may win the “fight” is stressful, time consuming, lengthy and costly. Would you really advised any contractor to operate without tax investigation insurance in this day and age :-)
Wouldn't it be simpler if we just had transparency of taxation for single-owner (or effectively single-owner) companies? And of course merge NI and tax to avoid that loophole...
Wouldn't it be simpler if we - oh yes but .....
Wouldn't it be simpler if we just had transparency of taxation for single-owner (or effectively single-owner) companies? And of course merge NI and tax to avoid that loophole...
Yes I can just see it now, the government of the day, voted in as a result of a popularity contest, upping the basic rate of tax to a combined NI & income tax rate of circa thirty odd percent.
The combined rate would of course solve the problem – do we think it will happen though?
Merging tax & NI
Sorry to burst the bubble, but this is a fallacy that I hear all too often re merging tax/NI.
When people say that they are thinking of income tax and employees NI, but the real injustice of IR35 is employers NI - asking one income to pay both types of NI is simply wrong.
The fact is that employers NI simply cannot be merged into personal taxes on income because it is a business tax and it is a tax n employment, not on income.
Imagine they merged income tax and employees NI, and then you decide to run a PAYE system - you may be somewhat surprised to find that you're just as badly off than you would have been under IR35 (a bit worse, actually). You'd be paying 31% "merged tax" and your company would be paying 14% employers NI - the net effect is that the money you received from your client is taking all of those hits before anything gets into your pocket.
So please, please spread the word - merging PERSONAL tax and NI is not any kind of solution to IR35.
The solution is to get rid of higher rate tax - people with incentives do more.Alternatively, having a flat rate of 30% on dividends, as in Australia, might work but governments are so concerned about investors and so unconcerned about those who work... don't hold your breath.
Economically employer's NI always falls on the employee.
Since employer's NI is a tax on jobs, it really needs to go as well. An engager should pay an amount of money and the engagee should pay an amount of income tax on that money after legitimate expenses. Those expenses, the calculation and everything else should be the same whether you are an employee, sole trader, partner, limited parter or limited company.
The mode of business engagement should never affect the taxation. Then business can make the engagement decision solely based upon business requirements.
It is only when
immense pressure is put on the government that they will even think about doing what is right. That is very evident from the press scandal. So come on you big Accountancy and Taxation bodies, put pressure on Lib Dems and Labour to allow people to decide their own way of working without getting caught up in political money chasing.
There should be clear rules as to what constitutes working under PAYE for both sides so that tax payers and employers can make proper decisions as to how they wish to work. Oh yes and it is time employers nic went and quickly. If Government need more money do what they used to do and raise basis rate.
Single Tax
This is a good start on the road to a single tax a and the abolition of employee NIC, at least to start with.
The only people that
don't know what to do and the way forward are those that have the control. Maybe that's the way "they" want it.
Ulterior motive
don't know what to do and the way forward are those that have the control. Maybe that's the way "they" want it.
Exactly.
There are usually a lot of vested interests who would lose out from apparently sensible rationalisations:
It is the drug barons and SOCA who are most opposed to legalisation, after all!