You might also be interested in
Replies (8)
Please login or register to join the discussion.
The ready mix concrete case should never have happened and is the reason why the employment status is in such a mess.
Let's get one thing straight. The law does not define employment status so it has been left up to the work giver and work doer to decide. That is until Gordon Brown got greedy and wanted the small self-employed to be on PAYE, which HMRC are still pursuing now via MTD.
A "worker" was created by the EU and greedy subcontractors decided to go to tribunal to get "holiday pay", which further complicated matters.
It is my opinion that if you have a proper "contract for services" in place and that contract is strictly adhered to then there is no complications and we go back to how it should be and that is between the work giver and doer. HMRC shouldn't even be getting involved in employment status as it is a commercial decision not a taxation one.
I have some sympathy for the view above but the world has moved on.
HMRC has convinced Treasury that the contracting sector is "getting away" with paying less tax than they should and therefore are applying ever more desperate measures to collect it such as retrospection and threats of bankruptcy.
Going back to a world which says that IR35 was wrong and should never have been applied is never going to gain the necessary political support. Instead the tax and employment status is now forever linked and only a complete reform will fix that.
The Taylor Report is a good start but fails in some areas because it ignores the basic truth above.
Politicians haven't got a clue what's going on and they don't want to know. They can't even decide on a brexit strategy.
As for IR35. Not only should it be scrapped along with MTD (mandatory) there should be a complete reform where HMRC do not get involved. If they want more money then they should put the basic rate up.
I believe it will come purely because MTD will not work and HMRC will actually have to start listeneing to us ground level Accountants, instead of our bodies that couldn't give a monkeys so long as the subs keep rolling in.
The simple answer is to abolish NI and adjust tax rates accordingly, with more generous age related personal allowances to protect the retired, means tested as age allowance is at present so the benefit gained by those who need it.
You could even make dividends paid by close companies tax deductible in the company and taxable as employed income on the recipient if they are also a director (with related party anti-avoidance provisions)
Even more radical, ban dividends in private companies where the owners and directors are the same, again with related party anti-avoidance provisions.
Why ban dividends? Why tax them? Tax has already been paid in the form of corporation tax. What the company does with what's left is up to it not HMRC.
If Government want more money then they should stop fart arsing around and just increase basic rate tax. They wont do that because come election time they would be held to account. So we get this non stop tinkering. Oh by the way Tax Avoidance is legal.
Be my guest. My mum used to use it years ago. I think it must have come from London originally as it has to be slang.