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Hammond plans tax crackdown on self employed

IR35

Is this really going to happen? 29th October is going to be interesting. When I say interesting I mean a big pile of steaming horse outputs.

https://www.bbc.co.uk/news/business-45822650

what percentage of your client base would be affected?

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11th Oct 2018 14:18

Hmm. I think its one of those "announce we are cutting your arm off, so you are pleased when we only cut off your hand" type things.

it also gives plenty of room to backtrack and change before the day

I reckon they will do it, but from 2020.
And I also reckon they will be very disappointed by industries response which is likely to be a shoulder shrug and carry on as before as opposed to the capitulation we saw for the public sector who just put everyone on PAYE until they quit.

No doubt we will lose a few contractors, but I doubt it will be more than 10-20%.

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By Maslins
to ireallyshouldknowthisbut
12th Oct 2018 09:49

Every word of the above tallies with my thoughts/practice.

I also think it might even make IR35 a harder nut for HMRC to tackle in the future. Reason being now contractor and client will both very much be keen to work together to ensure outside IR35 status. Up to now, the end client doesn't really care whether the contract/working practices are inside IR35 or not as it doesn't impact them. Therefore sometimes the client can inadvertently "drop the contractor in it" by saying something unhelpful about how they do control the contractor/would not accept a substitute etc.

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to Maslins
12th Oct 2018 09:50

I hope so ...

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11th Oct 2018 14:42

There was an article in Taxation last week that demonstrates how the could yield less for the exchequer if implemented because the rate [aid to the contractor will be reduced to account for employer NI, resulting in an overall reduction in the take.

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By DJKL
11th Oct 2018 14:56

No clients (I do not deal with contractors) but my son will not be happy, I can see him strolling back to Frankfurt (with their special tax status for professional contractors) rather than him continuing to work on UK government software (What the company he currently contracts for does)

If the UK were smart it would just create a bespoke set of tax/NI etc rules for contractors rather than have them using either the employed or limited company routes, in effect think made to measure rather than trying to fit into off the peg.

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to DJKL
11th Oct 2018 15:14

Or just forget about IR35 as it doesn't work.

The dividend tax does for the lost NIC that Directors used to save.

You have to leave the self employed with something to cover for holidays, sickpay and pensions.

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to Glennzy
11th Oct 2018 15:21

Glennzy wrote:

You have to leave the self employed with something to cover for holidays, sickpay and pensions.

Taxpayers generally shouldn't be picking up the tab for the holidays of the self-employed. The self-employed shouldn't be paying for pensions and sick pay that they aren't entitled to.

More tinkering with the system is unlikely to improve matters.

A "root and branch" review of (personal) tax and NI is probably required but will never happen.

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By DJKL
to Glennzy
11th Oct 2018 15:25

The German system to a degree I think does that by opting them out of certain social payments, I recall my son saying something about paying less if he did not go to church; great excuse to give to his grandmother re his non attendance. :-)

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By RedFive
11th Oct 2018 15:23

Absolutely.

I don't understand the continued obsession with IR35 now that we have the Osbourne Tax.

For the record my contractor base is 7% of GRF.

I would imagine most firms have a similar %, maybe up to 15% ? Unless you are a dedicated contractor accountant sausage factory.

Does this not show its a fairly minor issue, but one that HM Gov have entirely misunderstood?

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11th Oct 2018 15:34

0%

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11th Oct 2018 16:03

There seems to be an equally bizarre obsession by the Tories in not increasing fuel duty by a few pence (which would easily solve this supposed IR35 tax gap with a lot less agony all round and an environmental benefit too).

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By DJKL
to Justin Bryant
11th Oct 2018 16:10

Its all down to number of votes invested within each method of cash extraction, the less people directly (so they notice) impacted the greater chance of the extra tax/greater hassle being applied.

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11th Oct 2018 17:53

Contractors are about 5% of GRF, but we have been talking about a big drive to make this 50% ...

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11th Oct 2018 22:00

I don't take on contractors. I should imagine it is going to hit some practices really hard.

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11th Oct 2018 22:01

Deleted double post

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12th Oct 2018 10:21

I have a similar amount of contractors probably as you Redfive.

I did manage to build up and get some good medical contractors whom ended just as SA clients after the last round of changes.

I have some good IT and Construction contractors but don't see it as an area I would want to grow although they are decent jobs they are never out of HMRC spotlight which I cannot see changing anytime soon.

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12th Oct 2018 15:06

So my friend who is a gardener can either now charge all his customers 20% VAT or just do it on the black. He will then also save income tax, Class 4 NIc and Class 2 NIC.

Wrong thread lol!

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