'Unnecessary' IR35 earns just £220,000

The Professional Contractors Group (PCG) has called on the government to explain why IR35 was retained after it yielded just £220,000 in the last tax year.

HMRC admitted, in response to a freedom of information request, that IR35 status enquiries fell from 158 in 2006/2007 to 23 in 2010/2011. The tax yield also highlights a dramatic reduction from more than £1.9m five years ago to £219,180 this year.

John Brazier, managing director of PCG, referred to IR35 as an unwarranted measure introduced by the previous government. He said: “These figures confirm what PCG has always said, that the tax yield from IR35 is minimal and that the stress and damage done to the UK’s 1.4 million genuine freelance businesses is completely unnecessary.

“It is now time for the decision makers to explain more clearly to freelancers and the public why the risk to the exchequer would be simply too great if IR35 was abolished or suspended," Brazier added.

Continued...

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bookmarklee's picture

Doh. Must admit I've always thought the answer is obvious

bookmarklee | | Permalink

The laws that were set out in IR35 remain on the statute book as a deterrent. Without them the Government (Lab and now ConDem) fear a free for all and more tax avoidance would ensue.

Mark

ShirleyM's picture

Just my opinion ...

ShirleyM | | Permalink

... but I think they chose a really bad way to deal with the problem, and are 'punishing' the wrong people.

listerramjet's picture

but surely this is the point

listerramjet | | Permalink

would more tax avoidance be a bad thing?  surely the point is that we would get more economic activity = more tax.  sounds like a win win to me

johnjenkins's picture

Totally agree

johnjenkins | | Permalink

It's time HMRC realised that they would get more income if there was more avoidance. No they wouldn't get it straight away but they would get more cos the more WE spend the more goes round and eventually lands in HMRC coffers.

ShirleyM's picture

?? Sorry John    1 thanks

ShirleyM | | Permalink

But I never understand that logic!

If someone pays £1,000 less tax, there is no guarantee that they will spend that £1,000, or that it will be spent on something that generates tax for someone else, and it certainly isnt going to generate extra tax elsewhere of £1,000.

They may just bung it in the bank for a rainy day, and then the country has lost £1,000 for some possible benefit many years into the future.

I'm happy to be persuaded though, if you can explain it to me.

BKD's picture

Spot on, Shirley

BKD | | Permalink

I save £1,000 through careful tax avoidance. I then go and spend that in a shop where the shopkeeper fully declares all his income and pays tax at the additonal rate of income tax. Assume that the £1,000 is pure profit in the shopkeeper's hands. So, HMRC get £167 in VAT and £417 in income tax, and a little bit of NI. HMRC are still £416 'out of pocket'. Even if the money continues along the tracks, the maximum that HMRC are going to get back is the £1,000 I've saved. In reality, it is likely to be consisderably less.

Unless there are some strange economics at work ;)

johnjenkins's picture

OK, I understand

johnjenkins | | Permalink

your concern. In the normal manner of things they will get more than their £1000 because the money is in the economy not in HMRC coffers. That £1000 will generate and create more in our hands than the governments. It really is a known fact that the more a government has (any government) the more it will waste. Maggie Thatcher had the right idea - she gave more back to the tax payers via various means (allowing council tennants to own your own property being one). It was a bad day for the tax payer when the Tories got rid of her. If 18year olds had to pay poll tax there wouldn't be that many on the "binge sprees" now.

Soap box now gone.

BKD's picture

Yep

BKD | | Permalink

I see where you're coming from, John - there is little doubt that the cash would be more productive in the public's hands than that of HMRC's. Even so, in my example, it would take quite some time for them to recoup the full £1,000, and then some.

ShirleyM's picture

I still don't understand    1 thanks

ShirleyM | | Permalink

So your logic is that it is better for it to stay in the hands of spenders, rather than it go to the government, because if they get a lot of money they will waste it. (much simplified version of your words if i have understood correctly!)

Taking your logic to its extreme, John, means that whenever any money ends up with the government, it will be wasted, so the method of how it gets there is irrelevant.

ps. I am not 'having a go' at you. I have heard this phrase said so often and I really don't understand the logic, but I would like to (if anyone has the patience).  :)

memyself-eye's picture

Simples..

memyself-eye | | Permalink

The thousand pounds isn't wasted in the bank it is lent out to someone else (who then invests it to grow their business or repay a mortgage) or is used to pay interest on depositors money. Either way some of that thousand gets returned to the government as tax revenue. The greater percentage of income the government wants or the more obstacles it puts in the way (IR35) the longer that return takes- which is what is happening at the moment. 

The issue is, or should be: 

Is the governments investment in resources on IR35 jusified by the return?

And yes, all government spending is wasteful.

BKD's picture

Simples?

BKD | | Permalink

So, I've avoided paying £1,000 in tax that could otherwise have been in George's trouser pockets. Rather than spend it, I put that £1,000 in the bank and earn (let's be generous) 5% gross interest (let's keep it simple interest). Of my £50 interest, I pay £25 over to HMRC each year. That is, let's see, 40 years before HMRC even break even on the tax I've avoided - in reality considerably longer given the time value of money and any tax deduction that I assume the bank would get in paying the interest.

ShirleyM's picture

Nope - still not getting it    1 thanks

ShirleyM | | Permalink

But thanks for trying, memyself-eye.

I don't see how spending it, even if invested in growing a business (and I doubt that much of the tax saved would go towards this), is going to replace the money lost to the government. Additionally, I know spending is necessary for the economy, but it still seems wrong to discourage people from saving, too.

Back to IR35. Sorry for sidetracking everyone. (but if anyone can satisfy my curiosity please PM me).

 

 

johnjenkins's picture

I'll try Shirley

johnjenkins | | Permalink

If you remeber GB took over probably one of the strongest economies going. He sold our gold. One of the things he did with all this extra money was to give highish earners childrens tax credits. Total waste of money but, perhaps, a vote puller.

Now, tax avoidance is legal and IR35 (which if you really look at it is illegal) was brought in to stop tax payers being employed one minute and self-employed, via a ltd. co., the next (my view is that employment status is nothing to do with HMRC, it should be left up to the individuals).

Back to the plot. You have to ask yourself the question why do we have a recession? The answer is - mainly money being pulled out of the economy via high taxation, banks not lending, high interest rates etc. In short when tax payers have money to spend things run along smoothly - a few natural bumps yes. So it stands to reason that if a tax payer has found a legal loophole they are very happy, and we all know a happy worker is a more productive worker.So, indirectly the real economy benefits.

Unfortunately it's one of those things you can't see until it's gone, hence global stagnation.If you really want proof, just look at what America is doing now. Even the EU is saying have a plan B (although I wouldn't trust thier judgement too much).

ShirleyM's picture

Thanks John    2 thanks

ShirleyM | | Permalink

Yes, I can see that 'happy' workers will be more productive, and feel secure enough to spend, rather than put money away for a rainy day. What about the 'feel good' factor of lower paid workers thinking that the big earners pay more on the top slice of their incomes. Is their happiness less productive than top earners?

I cannot see that some people taking advantage of tax avoidance, or even reducing tax altogether, would have that effect. If it really was that simple then governments would be queuing up to reduce tax the world over. The only low tax countries are the ones where nobody would choose to live (very generalised statement, but basically true).

There must be a reason for governments choosing not to follow this principle, ie. it is possibly a myth generated by the high rate tax payers, or at least the benefits of reducing tax being exaggerated beyond reality.

flaw

uktaxpal | | Permalink

can anybody else see the flaw in the argument?

i think you have to look at what the tax pays for...    1 thanks

justsotax | | Permalink

in the Uk.  We have a generous benefits system that supports people where required, provides support to families, provides a safe place to live (armed forces, fire service etc etc) - and attempts to do this through a 'progressive' tax system.  The £1,000 Mr IR35 pays in tax either goes into this (based upon policies he may or may not agree with) or if he 'avoids' the tax, then he will spend it on things he wants - may be more locally, maybe at expensive high street stores or at bargain shops - but the money still goes into the economy.....the only difference is how the money is spent. 

The trouble is if you have a society where it is low tax and therefore a less generous benefits system then you will end up with a country of black spots to avoid, poverty, high crime etc etc, and the odd spot of wealth - who wants to live in a country like that.....

Conclusion....well I don't see a problem in a few thousand contractors avoiding tax, which will in all probability be spent within the local community.  The same cannot be said about the high earners (bankers etc - who enjoy the comfort of our country which is down to the welfare/benefits system in a large part but don't want to pay the taxes - and don't necessarily spend the money over here).

Glad I got that off my chest - back to work......

 

 

 

 

 

 

 

 

ShirleyM's picture

@justsotax

ShirleyM | | Permalink

Just to be clear ... I think IR35 is a bad solution and doesn't really tackle the problem, as it punishes the people who have (quite often) no choice in the matter.

Pity that's not what happens.

NeilW | | Permalink

Strange as it may sound, the idea that tax 'pays' for things is not what happens in reality.

It's obvious when you think about it. Why would an entity that owns a central bank and can therefore obtain all the money it wants at an effective rate of 0% need 'funding'?

Tax is there to prevent overheating of the economy and where necessary to make space for public goods by preventing the private sector from being able to purchase them. The latter being rarely required in a land where 4.8 million people want work and can't get it.

The 'tax pays for things' meme has created an attitude of entitlement: 'I want out at least what I put in', when in reality we need to decide what we want out of public goods and then design a tax system to make space for it.

 

 

 

 

johnjenkins's picture

I can see where you are all coming from.

johnjenkins | | Permalink

Let's look at countries that people don't want to live in. Most of these are changing and over the next few years many more will. We all know that so much has to be put in the pot to pay for our well being and that certainly is not in contention. Surely Shirley (sorry about that) if something is legal then it's not a question of taking advantage it's a question of allowing a tax payer to set up thier tax affairs in the most economical way - legally. Unfortunately GB tried to have tax avoidance tarred with the same brush as tax evasion and obviously some people have been duped.

When Government get too much money then waste rises dramatically because they have got to spend it on something. If you really want to get to grips with waste then we need to get rid of the EU in its present form. When were the accounts last ratified? Have they ever been ratified?  More proof if you need it, just look what's happening in Europe with a government (so-called) with pots of money - where from - yes tax payers.

As for IR35, should have been binned years ago. It is a law that tries to force tax payers into employment.

If you look at spending another way. Let's say government just give us pocket money for our work - the economy becomes limited to what is paid out and doesn't have any room for expansions so consequently stagnation. This is what we are heading for if things don't change soon. 

 

I still don't understand

bill ellison | | Permalink

Isn't this the Greek model of an economy we are talking about here, and look where that has gotten them!

IR35    1 thanks

Roy Price | | Permalink

In my opinion this legislation was well intended other wise why shouldn't all employees go self employed and the employer avoids 13.8% tax and the employee 12% - this is not acceptable to the country.  However it is legislation that is impossible to enforce in practice and has a poor yield : cost ratio.  It has spawned a whole industry of experts and wastes I should think £mn's of subcontractors' income belonging to professional groups and taking advice not say the countless hours of work (mine included).

There is a simple answer: they should reintroduce the Close Company additional tax on Distributions e.g. at say 18% but with extended relief's for genuine company's who invest in assets and people.  This would also stop the current situation where shareholder / directors can avoid NIC by paying themselves a dividend / minimum pay which has surely got to be quite iniquitable. - the original argument was that all tax payers should pay a fair proportion of tax.

The self employed Class 4 should similarly be higher but should give better entitlement to state pension.

The nature of industry and work has changed and sub contracting is now a necessary way of life and should be respected by the government.

Roy Price

Tom 7000's picture

We get off the point

Tom 7000 | | Permalink

We get off the point

IR35 is there and its a speed limit sign. What this analysis shows is that the tax police no longer have speed guns or use them.

There has got to be 200,000 contractors in the uk. Half of them could be caught by this. Issue is they all have IR35 insurance and fight it and so it takes the tax inspectors ages to win  or lose a case. There are easier ways for them to make money.

It would also be interesting to see the number of tax inspectors in employment over the same period, I bet there is a similar fall in numbers as the govt. make them redundant to save tax.

What it says to me is I can tell the clients they have a 1/1000 chance of an IR35 investigatiion. The answer is to make all taxes equal so it doesnt matter if you are employee self employed or ltd. No more NIC, just one tax and its all the same

The bottom line is as long as there is room for arbitrage in the tax system people will take the route of lowest taxation

We have including all forms of nic

s/employed 29% ;employee 45.8% ;and ltd 20% ( ltd 17% for those vat registered on flat rate)

One rate for all.... now...you have to ask yourself....do you feel lucky and whats it going to be?

Tom

 

Probelm?

ThornyIssues | | Permalink

ShirleyM wrote:

Just to be clear ... I think IR35 is a bad solution and doesn't really tackle the problem, as it punishes the people who have (quite often) no choice in the matter.

So ShirleyM, just remind me what the problem is again?

 

Trickle-down Theory    1 thanks

chatman | | Permalink

The theory that ShirleyM is questioning is known as trickle-down theory and is not very well accepted.  See http://en.wikipedia.org/wiki/Trickle-down_economics . It is an argument for reducing taxes to zero.

Are those the figures for    1 thanks

Eric T | | Permalink

Are those the figures for situations where HMRC has collected EXTRA IR35 taxes and NI following an investigation/enquiry into a company's affairs?

 

I doubt that is the entire tax take for the whole of IR35 type liabilities.

*sighs*

ThornyIssues | | Permalink

bookmarklee wrote:

The laws that were set out in IR35 remain on the statute book as a deterrent. Without them the Government (Lab and now ConDem) fear a free for all and more tax avoidance would ensue.

Mark

I suppose that allowing HMRC to draft deliberately vague and woolly laws so that they can bully taxpayer (customers!) using Fear, Uncertainty and Doubt tactics is OK in your book? Well it is not in mine. The sooner we see a vastly simplified tax system, the better. The soone we see a proper and enforced "duty of care" being thrust upon HMRC, the better.

I'd like to point out that for an accountant, I find your use of "avoidance" at odds with your raison detre. Tax avoidance is legal.  

AMAZING. I did an FOI on this

bygwyg | | Permalink

AMAZING. I did an FOI on this very topic earlier this year and HMRC wrote back and told me that they don't keep any information on IR35.

 

 

Wrong!

ThornyIssues | | Permalink

Tom 7000 wrote:

We get off the point

IR35 is there and its a speed limit sign. What this analysis shows is that the tax police no longer have speed guns or use them.

There has got to be 200,000 contractors in the uk. Half of them could be caught by this. Issue is they all have IR35 insurance and fight it and so it takes the tax inspectors ages to win  or lose a case. There are easier ways for them to make money.

It would also be interesting to see the number of tax inspectors in employment over the same period, I bet there is a similar fall in numbers as the govt. make them redundant to save tax.

What it says to me is I can tell the clients they have a 1/1000 chance of an IR35 investigatiion. The answer is to make all taxes equal so it doesnt matter if you are employee self employed or ltd. No more NIC, just one tax and its all the same

The bottom line is as long as there is room for arbitrage in the tax system people will take the route of lowest taxation

We have including all forms of nic

s/employed 29% ;employee 45.8% ;and ltd 20% ( ltd 17% for those vat registered on flat rate)

One rate for all.... now...you have to ask yourself....do you feel lucky and whats it going to be?

Tom

 

 

There are over 200,000 contractors within the 1.4M freelancers in the UK and although most (sensible) carry tax investigation insurance, the point is that the PCG has lost only 4 cases out of over 1800 cases it has taken to tribunal. So, what does it tell you about IR35 legislation then?

IR35, as the PCG's win with s660 are landmarks in many ways. HMRC will no longer get away with draughting vague, woolly and vindictive laws in order that they can use Fear, Uncertainty and Doubt to coerce more tax than is legally due from taxpayers. Next stop, a vastly simplified tax system.  

 

HMRC data

ThornyIssues | | Permalink

bygwyg wrote:

AMAZING. I did an FOI on this very topic earlier this year and HMRC wrote back and told me that they don't keep any information on IR35.

As did the PCG. In fact, a minister is recorded in Hansard as saying that in a parliamentary answer. I suspect though, that question sparked some sort of data gathering at HMRC.

IR35

Denis Lyons | | Permalink

 

HMRC must be spending much more on IR35 reviews than they are obtaining in underpaid tax. I don't understand why this can be allowed to happen, someone should be taking the blame for this.

Is £2m enough...?

ferengi | | Permalink

What makes this an even more obvious waste to my mind is that even 5 years ago the tax take was £2m.  Really?  Take a guess at the cost of the legislation drafting, the green/white papers, the consultation, the implementation, the enquiries, the tax inspectors salaries, the commissioners' hearings, time and costs in the high court on appeals, costs incurred by the PCG etc, the number of hours racked up by lawyers (for contractors and HMRC) over such a trivial actual tax take?

Don't we have any common sense anymore??

listerramjet's picture

wow    1 thanks

listerramjet | | Permalink

I think that several different things are being mixed up here. 

1.  There is no doubt that governments are not very good at spending money. Just look at the various large IT fiascos they have presided over.  These are big buck cockups!

2.  Then there is the Laffer Curve.  The idea here is that as tax rates go up taxpayers are happy to sustitute 'less tax' activities for 'more tax' activities.  So they give up income for leisure time, or they engage in tax avoidance. 

3.  Then there is the 'red tape burden' which means productive time is diverted to non-productive time.  For example dealing with the tax man over IR35 issues.

 

I think my simple point was that IR35 is a drag on production.  Remove it and there would be more productive time, and hence more tax to collect (assuming the productive time was turned into profit).  As has been pointed out, there are a lot of contractors, and IR35 is a large damoclese sword, which does not collect much tax.

IR35's mean "5% allowance" may cause "Gauke-ward Growth Gloom!"?

dstickl | | Permalink

Shouldn't we try to get back to economic reality?

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
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.

 

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.

Letters after Name    1 thanks

chatman | | Permalink

dstickl wrote:
Don Stickland, BA (Oxf), MA (Oxf), BA (Open), ACMA, MIRM.

Why do you put all those letters after your name?

To encourage change to IR35 for the benefit of real grafters

dstickl | | Permalink

To show that I've worked damn hard, & to encourage change to IR35's crazy "5% allowance" for other grafters who do not wish to have an unecessary run in with HMIRaC.

Also to get my views retrievable via Google, etc, if any potential clients wish to find me.

The point of my moderate proposal is to neutralise IR35 for very small revenues, which I hope you'll confirm you support chatman

 

[That's enough letters, Ed]

johnjenkins's picture

@dstickl (letters & brackets)

johnjenkins | | Permalink

What makes you think that any politician is going to participate in your moderate proposal, when most of us have been on at them for years to change the tax system?

Accountablility

ThornyIssues | | Permalink

@Denis Lyons "HMRC must be spending much more on IR35 reviews than they are obtaining in underpaid tax. I don't understand why this can be allowed to happen, someone should be taking the blame for this."

 

Indeed and the subject of yet another FoI request but the answer has always been "HMRC do not maintain that data". Now this is ether the truth or is a blatant lie, If it is the truth, things need to change. There is no way that this level of lack of accounting and accountability can go unaddressed. As of being a lie, possibly only time will tell. There is another twist to that lack of real answers. It is well know that a lot of the Government data is held and maintained by "service providers" and that accessing and collating the data will be a billable activity. Those charges are exhorbitantly high and is why FoI requests have a cap of £500 per question (also that it lets HMG use the cost as a reason now to divulge information).

Risk Dumping in an Accountability Vacuum?

dstickl | | Permalink

Spot on, Thornyissues, what we are seeeing IMHO is Risk Dumping in an Accountability Vacuum!

HMIRaC by their indolence of their answer which has always been "HMRC do not maintain that data" are dumping the risk [by their Risk Transfer approach] of the scandalous tax regime away from politicians and onto the grafting tax payers who are obliged to frund their astonishing expenses etc etc.

 

For conosours, there are at least two hilarities here:

* Labour under T Blair were very keen to introduce Risk Management techiques more widely into the public sector, BUT guess what, their approach seems to be "Do what I say, not do what I do", especially over that treatment of risk known as "Risk Transfer" and

* Labour implemented IR35 just after the Y2K work efforts were over - failed to get a significant number of IT pros who inevitably went abroad to work - and are now stuffed because they cannot now admit that moderation of IR35 is needed to launch new careers for newly redundant public sector workers! I'm truly surprised that the Tories don't jump to moderate IR35.

 

fertinB's picture

£1000 will generate and

fertinB | | Permalink

£1000 will generate and create more in our hands than the governments. It really is a known fact that the more a government has the more it will waste. A week ago Bank of America declared that it will be charging consumers for utilizing their debit cards. Brand new federal regulations capping how much banks may charge merchants for credit card purchases have prompted the shift, which is expected to be taken up by other banks also. In a recent AP-GFK poll, 66 percent of those interviewed said that, in the light of such action, they would consider switching financial institutions. However, if not done carefully, a bank switch can present its own risks. You might be able to avoid needing cash-advances if you just change your bank.

Tom 7000's picture

It seems to me IR35 doesnt    1 thanks

Tom 7000 | | Permalink

It seems to me IR35 doesnt work, so why change it for something that does and see all of our contractor clients nailed to the wall You dont think they are going to change it and let them off do you...

johnjenkins's picture

Ah Tom there-in    1 thanks

johnjenkins | | Permalink

lies the crucial point. First IR35 has to be admitted by politicians to be a white elephant -or whatever.

A change of attitude back to what it should be is called for. The only reason HMRC get involved in employment status is to manipulate the market to increase the "take". For any business to pay NIC for employing someone is lunacy.

All we need is a basic rate of tax that all tax payers can come to terms with. All business to be exempt from VAT which negates the need for turnover limit and problems business have on turnover between £73k and £100k (VAT is not supposed to be a tax on business so how come it is?) Oh yes to increase the "take" which is the only reason IR35 is there.

 

Wrong in a few points

ThornyIssues | | Permalink

Roy Price wrote:

In my opinion this legislation was well intended other wise why shouldn't all employees go self employed and the employer avoids 13.8% tax and the employee 12% - this is not acceptable to the country.  However it is legislation that is impossible to enforce in practice and has a poor yield : cost ratio.  It has spawned a whole industry of experts and wastes I should think £mn's of subcontractors' income belonging to professional groups and taking advice not say the countless hours of work (mine included).

There is a simple answer: they should reintroduce the Close Company additional tax on Distributions e.g. at say 18% but with extended relief's for genuine company's who invest in assets and people.  This would also stop the current situation where shareholder / directors can avoid NIC by paying themselves a dividend / minimum pay which has surely got to be quite iniquitable. - the original argument was that all tax payers should pay a fair proportion of tax.

The self employed Class 4 should similarly be higher but should give better entitlement to state pension.

The nature of industry and work has changed and sub contracting is now a necessary way of life and should be respected by the government.

Roy Price

Firstly, there is nothing wrong with anyone wanting to be self-employed (Sched D) or under incorporation if they so wish. It s a free country. IR35 should have ONLY addressed the issue of employees being FORCED to go SE or incorporate by unscrupulous employers, leave their jobs on a Friday and return as SE or LtdCo on a Monday. 

The PCG are fighting for a level playingfield and tax simplification, not adding additional complexity that only targets unfairly, a small number of businesses, so the points you put in your second paragraph are most definately not the answer.

You last point is entirely valid and I concurr.

"We have a generous benefits    1 thanks

mikewhit | | Permalink

"We have a generous benefits system ..."

Hmm, which country are you talking about ? "Adequate" perhaps.

listerramjet's picture

pardon me

listerramjet | | Permalink

mikewhit wrote:

"We have a generous benefits system ..."

Hmm, which country are you talking about ? "Adequate" perhaps.

 

generous in the extreme.  if you don't think that then one would wonder which planet you are inhabiting?

Fear of insufficient economic growth may lead to IR35 compromise

dstickl | | Permalink

In direct answer to your question of 03 Oct'11: "What makes you think that any politician is going to participate in your moderate proposal, when most of us have been on at them for years to change the tax system?" my short answer is "Fear of insufficient economic growth may lead to an IR35 compromise with my moderate proposal, which could encourage workers to set up embryonic businesses without the fear of any IR35 challenge to their small business with a low revenue".

A slightly longer answer is to quote the late and great PM Sir Winston Churchill on the cynically obstinate [as the IR35 squad seem to me]: "Want of foresight, unwillingness to act when action would be simple and effecetive, lack of clear thinking, confusions of counsel, until the emergency comes [dstickl adds here i.e. of lack of growth and increasing unemployment of 400,000 redundant public sector workers], until self-preservation strikes its jarring gong - these are the features that constitute the endless repetition of history."

The more observant of you will recognise that WS described the economic cycle, as caused by risk dumping by the indolent! Pity Gordon Brown thought he had ended boom and bust, could walk on water ... or whatever he had spilt on the floor.

My KISS summary of all this is that continuing the "water on the stone" approach will inevitably lead to a crack in the IR35 too simplistic "5% costs allowance" in order to make economic sense for very small businesses, which would otherwise be caught by IR35. In addition, I believe that the OTS review of small businesses could lead to recognition that public policy join to IR35 implentation policy is needed.

Finally, a quote from page 211 of Alastair Darling's new book titled "Back from the brink": "They had failed simply because no one, at whatever level, hd been asking the right questions with sufficient determination."

In the present IR35 case - in my opinion - the PCG has been asking the wrong question of "When will IR35 be abolished", whereas I think I'm asking the right question of "How can the present IR35 cost allowance of 5% be moderated to reflect economic reality?" Hence my moderate proposal for an easy amendment to a clause in the secondary legislation of SI 2000/727.

Winston Churchill

chatman | | Permalink

dstickl wrote:
great PM Sir Winston Churchill

Would this be the same Winston Churchill who was responsible for the Gallipoli disaster, who wanted to gas "foreign tribes" and shoot the tonypandy miners, and was greatly admired by Adolf Hitler?

johnjenkins's picture

Sorry dstickl

johnjenkins | | Permalink

PCG are indeed asking the right question. It's not about modifying it's about getting rid of, but you are right, nothing will happen until it all falls around HMRC's backside, which I don't think will be too long now.

Funny thing about GB, it wasn't until he became PM that he realised how much damage he had done and tried to put things right - but, of course all too late.

Response to chatman on Churchill - None of us is perfect ...

dstickl | | Permalink

None of us is perfect, of course, but that does not mean that some of the things that Churchill said are incorrect. It's one of the lessons of life, that people who you don't like (for whatever "reason") may be more correct than you from time to time, and at instances that may be very inconvenient!

Although I'm not a historian by any means, chatman, may I briefly comment on each of your points in turn as follows:

* Re 'responsible for the Gallipoli disaster', which seems to me to have been a source of essential lessons that had to be learnt for the successful WW2 D-Day invasion of Normandy, some of the problem was apparently a day's delay in getting "our" troops off a bay/beach and onto some commanding heights, whilst they still had the element of surprise. The day's delay meant that the enemy took the heights instead. CONCLUSION: Implementation is more important than "a bright or lousy idea", which suggests to me that the modification of IR35 may be more successfull than pushing for its removal without a clear idea of its replacement.

* Re 'wanted to gas "foreign tribes" and shoot the tonypandy miners' please advise me when and where these alleged actions happened, as I'm as yet ignorant of same.

* Re 'was greatly admired by Adolf Hitler', are you suggesting that AH was always wrong? Seems to remind me that: one of the lessons of life is that people who you don't like (for whatever "reason") may be more correct than you from time to time, and at instances that may be very inconvenient!

Point?

Churchill

chatman | | Permalink

dstickl wrote:

None of us is perfect, of course, but that does not mean that some of the things that Churchill said are incorrect. It's one of the lessons of life, that people who you don't like (for whatever "reason") may be more correct than you from time to time, and at instances that may be very inconvenient!

Although I'm not a historian by any means, chatman, may I briefly comment on each of your points in turn as follows:

* Re 'responsible for the Gallipoli disaster', which seems to me to have been a source of essential lessons that had to be learnt for the successful WW2 D-Day invasion of Normandy, some of the problem was apparently a day's delay in getting "our" troops off a bay/beach and onto some commanding heights, whilst they still had the element of surprise. The day's delay meant that the enemy took the heights instead. CONCLUSION: Implementation is more important than "a bright or lousy idea", which suggests to me that the modification of IR35 may be more successfull than pushing for its removal without a clear idea of its replacement.

* Re 'wanted to gas "foreign tribes" and shoot the tonypandy miners' please advise me when and where these alleged actions happened, as I'm as yet ignorant of same.

* Re 'was greatly admired by Adolf Hitler', are you suggesting that AH was always wrong? Seems to remind me that: one of the lessons of life is that people who you don't like (for whatever "reason") may be more correct than you from time to time, and at instances that may be very inconvenient!

Point?

http://en.wikipedia.org/wiki/Tonypandy_Riots

http://www.globalresearch.ca/articles/CHU407A.html Sorry - he didn't say "foreign tribes" he said "uncivilised tribes", so I take it all back

Gallipoli: you can always blame someone else, but as far  as I can see, if you plan something, you should plan for what might  go wrong too.

Regarding Adolf Hitler, I am not suggesting anything; I just asked a question. It seems the answer is yes, it is the same Churchill. By the way, didn't he order the carpet bombing of Dresden too?

I loved the comment "None of us is perfect" in response to allegations of wanting to use mustard gas and sending in troops against people on strike.

I'm not sure why you put "reason" in inverted commas, so I may be missing some of your meaning. Please let me know if I have.  The same goes for the single word "point" followed by a question mark.

johnjenkins's picture

Dstickl, you keep

johnjenkins | | Permalink

harping on about modifying or replacing IR35. Get a grip - IR35 should never have been thought of never mind implemented. You cannot take Limited Company status away just because you don't like the way it does business. One point which doesn't seem to have been made clear. It is not illegal to be employed on friday and self-employed (in whatever guise) on monday doing exactly the same work for the same entity (at most tax avoidance). It is illegal to stop something that is legal.

You are quite right about "none of us is perfect". History has shown time and time again that good will come out of bad and vice versa. The question is have we really progressed? Technology wise most certainly. We still have governments sqeezing everything they can (under different guises) (yes I do like that word) out of us. We still have religions fighting each other. Money (fuel property, etc. etc.) is still the root of all evil. However on a lighter note I do have a feeling that things are going to change quite dramatically over the next few years. Sometimes you need to hit rock bottom (9/11) before things can get better.

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