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I have a few public sector contractors who were affected by the new rules. One has taken a PAYE job, and the others have spent the last year or so either not working or working less than they wanted.
Personally I support contractors paying a bit more tax and/or NI. But forcing them to choose between unemployment and inflexible, high cost PAYE jobs doesn't seem the best way to proceed.
So, in my experience, the extra cash to Treasury coffers has come at a very high cost, both in terms of people's lives and valuable skills lost to the public sector.
The usual HMRC drivel, what is this now the sixth or seventh consultation on this?
They already get more tax from contractors. The changes to flat rate tax, plus dividend tax, have added over £10k to the annual tax bills of many of my clients.
This is the real story of the extra Government tax revenues of £8bn or so trumpeted by Hammond in the Autumn Statement. But of course "we've hammered small businesses for extra tax" is never going to make the cut on the fancy speeches. Better to use smoke and mirrors and claim that HMRC is wonderful.
“It’s very important that we recognise the hard work of contractors across all sectors, who contribute to our growing economy,” said Stride, “but it’s also right that we have a fair tax system that balances efficiency and simplicity for taxpayers, while also supporting our vital public services.” I wish I could comment on this most idiotic comment but can't find any polite words to use!
These are the morons governing the economy expecting it to flourish and Britain to be competitive!!!! Yes and I am the king of the world
The real scandal is the one that will not be addressed.
If a hirer hires an employee, they should get an employee in employment law - and no amount of intermediaries should change that.
Then the tax follows as a natural consequence.
HMRC have constantly failed to fix the root causes of the issue - employment avoidance by large businesses.
"It is interesting to note that the existence of MOO is not tested at all by the HMRC’s check employment status for tax tool (CEST), which public sector bodies are supposed to use to test whether a contract lies within IR35. HMRC states this is because MOO is assumed to always be present in public sector contracts, so there is no need to test for it."
from https://www.accountingweb.co.uk/tax/hmrc-policy/ir35-slam-dunk-win-for-c...
CEST cannot be used for private sector contracts as it stands as MOO cannot be assumed for these contracts.
Will HMRC rewrite CEST so that it actually does the job it is supposed to, including MOO, or will there another fudge brought in.
In my opinion it will be easy for all private sector contracts to confirm there is no MOO between the parties and therefore any such contract will be outside IR35.
I would like to see HMRC try to tell private companies that they heve to have assume MOO for such contracts
The consultation rather confusingly seems to deem sole traders as personal service companies (PSCs). It all sounded a bit muddle to me.
I suspect what might result is the requirement for lots of time consuming forms before private sector companies can place work with someone external which will burden both sides but not do much good.
The problem ever since IR35 was introduced is that the Government bottled making employers responsible for employers' National Insurance contributions, after heavy lobbying from big employers. As a result, employers (not contractors) have abused the system. Employers (like the BBC) have demanded that irregular contractors use personal service companies, to shield the employer from any risk. If both the employer and the contractor were responsible for their share of the tax and NI due then employers would work with contractors to ensure that the engagement was really for services, and that true employment was recognised. There would be no need for obtuse tests or uncertain rules.
"This has resulted in an additional £410m of income tax and NICs being paid since the public sector reforms were introduced."
What is the figure net of Corporation and Dividend Tax?