IR35 is still missing the target
During the deliberations of the OTS Small Business Advisory group earlier this year, quite a lot of time was taken up by IR35, reports Simon Sweetman.
There were a fair few who wanted to abolish it right away, and ultimately the suggestion seemed to be that it might be suspended for a year or two. But nothing of the sort: in the end nothing was done, apparently because HMRC and the Treasury were nervous about the tax effect.
The Professional Contractors’ Group has now used a freedom of information request to discover just what HMRC has been doing with IR35. It is thought that there are 1.4 million contractors affected.
Continued...
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this time dstickl!
What really makes you think that any politician is going to give any moderate alternative creedance to "their way"? We have been trying for years to get the tax system changed, even simplified. We even have an "office of simplification" which is doing absolutely nothing. What's that record OGA ah yes "War" "what is it goog for? absolutely nothing". All talk with no substance. We don't have a politician with guts enough to put a bit of faith in the working population of this country and change the tax system. They're all too frightened - bring back Maggie - at least she had the guts to change thing and wasn't frightened to put her job on the line.
Politicians do, have
and will contiue to have gutlessness, not only that, they have complete contempt for tax payers until election time. So what can we do? There is nothing we can do cos they won't LISTEN so we wait until, like EU, they collapse around their own ineptitude, which isn't far away. Even red Ed realises things have to change and not just for the unions benefit.
The era of real politicians went out with Maggie. John Major (bless) didn't have a clue - the rest is history.
IR35 again
Sorry Simon, IR35 was never designed for large employers. It was targetted at small "one man bands".
I think all that IR35 is good for is stimulating responses to articles about same. Doh....
A 2 Simon's Q: So what is the behaviour to be deterred ?
It's always difficult to prove a negative, Simon, and equally it's difficult to identify the behaviour to be deterred by HMIRaC - unless one examines their actions.
Right now, HMIRaC have declined to take up my suggestion to moderate the "5% allowance" figure of SI2000/727, which I quote [1] below:
QUOTE 1
Here's an alternative way to support StartUp Britain - and as David Gauke MP is minister i/c IR35 - by a quick change to IR35 secondary Legislation, to moderate IR35's mean "5% allowance" [whose 5% rationale still appears to me to be unexplained]:
A- As there was no change to the IR35 regime in the ’11 Budget for "growth" (contrary to the 20 May'10 announcement) may I suggest you alert the Chancellor (and PCG etc etc) to a potential change to the "Social Security Contributions (Intermediaries) Regulations 2000 SI 2000/727" Section 7 (1) Step One that reads:
QUOTE 2
7 Worker's attributable earnings—calculation
(1) For the purposes of regulation 6(3)(a) the amount of the worker's attributable earnings for a tax year is calculated as follows:
Step One
Find the total amount of all payments and benefits received by the intermediary in that year under the arrangements, and reduce that amount by 5 per cent
ENDQUOTE 2.
B- I suggest that the words "by 5 per cent" be replaced by:
"by a monetary amount that is the greater of either (1) £40,000 (forty thousand pounds) or (2) 15 (fifteen) per cent"
C- Reasons: (1) Need for economic growth to be stimulated in the private sector, eg by redundant public sector workers, with commercial certainty. (2) Some startup etc small business costs are fixed, i.e. independent of company revenue, and I have selected a "Highest Common Figure" reflecting (a) IPSA's costs for an MP's one person office in London, which is (b) justified for other UK locations because many small contractor businesses have to travel to London to work, network, for marketing, training, etc, etc.
BUT If it's claimed that £40K is too high, why not start with £5,000 pa, or £10,000 pa, or £12,500 pa [the latter to reflect a full timer on minimum wage!].
D- More: I gather from evidence set before Parliament that the tax cost might be less than £1m pa, or £220,000 on latest figures! i.e. negligible!
And for civil servants [perhaps stimulated by self-interest, perish the thought!]: It may help newly redundant public sector workers seek new work, through releasing their entrepreneurial talent.
If you can give this moderate proposal some more traction with your support, e.g. by writing a stiff letter to your MP requesting "Action this day" to quote W Churchill, I'd appreciate it!
Brgds - Don Stickland, BA (Oxf), MA (Oxf), BA (Open), ACMA, MIRM.
ENDQUOTE 1.
So the only credible conclusion - if HMIRaC is behaving as a rational economist - is that HMIRaC apparently believe that the majority of people who would be deterred by the present IR35 regime is those potential taxpayers for whom a "5% allowance" accurately represents a credible level of fair costs.
On this basis, HMIRaC apparently are acting as if they believe that the following very high paid people are being deterred by IR35:
* Footballers,
* Bankers,
* Very highly paid consultants, such as Mr Tony Blair, an ex-PM, and
* Perhaps people such as the present Lord Birt, who in my opinion alledgedly worked through a limited company when he was DG of the BBC, and perhaps as the leader part and parcel of a large people organisation.
IF the above conclusion is correct, i.e. that IR35 is essentially to deter the very highly paid, THEN surely IR35 should be modified without delay to rule out the inclusion of the lowly paid - which could easily be done by a minor modification of secondary legislation [i.e. without using up a lot of parliamentary discussion time] as I have indicated above.
Time, dear Readers, to dip your pens in vitriol and write to your MP's about
"Gauke-ward Growth Gloom" and its solution!