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I am now retired but I really do sympathise with those brave souls who set up their own practices today. It must be nigh on impossible today to be a sole practitioner providing a comprehensive advisory services to small/medium sized clients.
There is no doubt that the real masters in this country - the senior civil service - follow an anti-SME agenda but instead of using the executioner's axe they prefer the more drawn out death by a thousand cuts.
This country is becoming ridiculously over-regulated, not least in the field of taxation. It really is about time the accountancy bodies used their influence - assuming they have any - to stop this ever increasing bureaucracy that must impede enterprise in this country.
We really are at the crossroads. We either go completely down the European style rigid codification , so eagerly implemented by our useless civil servants, or we get back to what made Anglo-Saxon (in the widest geographical sense) entreprise pre-eminent. There is no middle mashed up compromise available. It's either or.
So it would be refreshing indeed to hear the accountancy bodies tell the civil service, not least the HMRC, in strident terms that they, the civil service, do not have a clue on how to promote enterprise and the very best thing they could do would be to get lost.
What a disaster - HMRC has paid no heed whatsoever to the very justifiable concerns raised by contractors; the fact that it will not be possible to claim expenses, the lack of any benefits in return for this temporary employee status and that they already dealt with the perceived tax avoidance by the introduction of the Dividend Tax. And what a great time to smash the UK contracting industry just as Brexit looms. I will regrettably be moving the focus for my contracting to continental Europe and paying tax in whichever country I am working from the inception of these rules.
I have a client who works as an IT contractor for HMRC. When this whole IR35 was introduced to Government, HMRC was faced with a threatened massive exodus of IT contractors. Solution? HMRC agreed not to apply IR35 to their own contractors.
Note I have this on hearsay.
If true does that negate HMRC's submissions to any tribunal?
My main concern is the loss of very highly skilled people to other more tax favourable locations.
Generally people with these skills are contractors not to save tax but to be in control of his or her destiny.
The figures mentioned in extra tax revenue will only arise if they can be collected. Personally I would scrap this piece of legislation. It appears that we will be leaving the EU and when his happens we cant afford to loose any people paying taxes. But as a previous poster has said Civil Servants really have not a clue.
Unbelievably stupid & cynical from HMRC. As I suspected, they are pushing ahead with this, the 'consultation' was merely a facade.
The government claims there is a high degree of non compliance. This is clearly not supported by any evidence. In the last twelve case decisions, since April 2010 they have only fully won 1 case out of 12 - just an 8% win rate.
HMRC’s Litigation and Settlement Strategy (LSS) states (Page 7) "where HMRC believes that it is unlikely to succeed in litigation it will, in the majority of cases, concede the issue". If HMRC are litigating in a reasonable manner they should be winning at least half of cases.
This is also very damaging to the flexibility of the workforce for UK businesses, one of the key reasons why the UK has been a competitive economy relative to more inflexible economies in Europe.
HMG consultations are almost always a facade and the consultation on the IR35 rules to be applied in April 2020 is no exception.
It has been observed even by MP's that HMRC's policy is to tax first and deal with the fallout later. In this case, the fallout could be increased claims in the ET for employee benefits and it's only a matter of time before this happens and only when a high profile agency or client is hit with a huge retrospective bill for holiday pay and pensions rights will we see any real pressure from the clients.
When it comes to pensions, HMRC are singling out individuals caught under the new rules for special treatment. Now I understand that under EU rules, and this needs to be confirmed, it is illegal to target an identifiable section of the community with a specific tax law.
The issue with pensions is that every employed person and business is allowed to deduct pension contributions at source prior to any tax and NIC's being applied. This process will not be available to anyone caught by the new rules.
They may make pension contributions directly themselves, but this will come out of nett income. It's an issue that doesn't seem as yet to have been debated very much. But those of you on here who are eminently qualified in this area might be able to advise further.
However, the mantra must now be "no employee taxes without employee benefits".
I'm slightly confused by terminology - when it comes to determining 'small', is it the engager's or the PSC's size that is the deciding factor?
Where the contractor is treated as a deemed employee; am I correct in thinking the engaging entity will deduct both employees and employers NIC, in addition to the tax from the PSC's invoice. I can't see the engaging company increasing their overall spend by the amount of the employers NIC
Where the contractor is treated as a deemed employee; am I correct in thinking the engaging entity will deduct both employees and employers NIC, in addition to the tax from the PSC's invoice. I can't see the engaging company increasing their overall spend by the amount of the employers NIC
Where the contractor is treated as a deemed employee; am I correct in thinking the engaging entity will deduct both employees and employers NIC, in addition to the tax from the PSC's invoice. I can't see the engaging company increasing their overall spend by the amount of the employers NIC
Where the contractor is treated as a deemed employee; am I correct in thinking the engaging entity will deduct both employees and employers NIC, in addition to the tax from the PSC's invoice. I can't see the engaging company increasing their overall spend by the amount of the employers NIC
Where the contractor is treated as a deemed employee; am I correct in thinking the engaging entity will deduct both employees and employers NIC, in addition to the tax from the PSC's invoice. I can't see the engaging company increasing their overall spend by the amount of the employers NIC
I don't understand here, which is the engaging company, is it the end-client or the agency?
The way I read it is that the organisation which has the work done for them, i.e. "the end client" will make the status determination and that determination will need to be passed down the chain until it reaches the individual contractor.
It is the size of the end client which will determine if the rules are to be applied.
I'm not convinced this legislation will go through.
Finance Bill 2019-2020 has yet to be voted-on in the HoC. The tory government is now a minority one. Brexit is a mess, whether you voted Leave or Remain. The Tories are vulnerable to losing votes to the LibDems and dozens of Tory constituencies with tiny majorities will be lost if contractors/self-employed choose to switch their vote on this subject alone, if not Brexit itself.
Even getting the Finance Bill through Parliament will be an effort, as, at-the-time-of-writing, Johnson's government can't win any vote at all.
The Tories need every vote they can muster and IR35 is a sure-fire vote-loser - no-one will vote for them because they introduced IR35 to the private sector; its a Labour policy that Hammond took on to promote.
I'll be amazed if it gets through, and if it does, amazed that the Tories win the next Election outright. On the day after the GE, I suspect someone in the Tory Policy Unit will figure-out they blundered with the nations' self-employed and contractor community.
The most highly-skilled contractors will simply decline to work for the Banks and Finance industry firms that decline to use the assessment tool. That will provide their competitors with a commercial advantage; being able to use contractors that the likes of Lloyds and Barclays have deliberately denied themselves access-to.
The next tier down will likely either retire, take a sabbatical and perhaps update skills, will find roles abroad, find roles with different client who properly assess (see above) or occasionally, give-in a go for the umbrella option. Those that accept 'in' contracts will always be looking for an 'out' contract to hop-to at the first opportunity.
The next tier down are those contractors who really could rightly be described as disguised employees. They don't earn the top rates so they won't generally find switching to umbrella firms that different. Other than those who have travelling/subsidence costs - in which case they will likely throw the towel in.
The main losers;
* The Conservative Party. With 4.8 million self-employed including 2 million freelancers, plus other voters in their households, the Tories are looking at a measure that will adversely impact circa 6 million potential voters - most of whom will vote normally either Tory or LibDem. Potentially this measure alone will lose the coming Election for Johnson if IR35 is publicised to enough of those 6 million before the polls open.
* The end-user clients who don't choose to assess roles - they're access to skilled contractors will be vastly reduced
* The 'body-shop' consultancies - who won't have easy access to highly-skilled contractors if the end-user clients don't perform proper assessments of role
* Recruitment firms and accountants
* Associated industries - like the vehicle contract hire/leasing infrastructure, which will see a rather substantial drop in income April 2020
* The Treasury - IR35 might realise £1 billion, but it will lose a lot more as the economy shrinks, impacted by the lack of access to skilled contractors and a flexible workforce
* The UK economy - see Treasury above. Any tax shortfall will have to be made up from primary tax
* Former contractors with insufficient skills-in-demand