Have contractors just been hummed in the budget

[Moonhawk]

ClockworkCupcake said:

That's not being "caught" by the IR35 legislation, that is declaring yourself inside it. I doubt there are any figures for that. I know some contractors who do this "for an easy life", but I consider them more to be "permatemps" just waiting for their next permie job rather than actual freelancers. Certainly none like this that I have met have had the contractor mindset.

Semantics - i'm simply using the terminology that appears to be in fairly common use - in this context "being caught" within IR35 appears to mean that you are subject to the legislation, as opposed to being 'caught out' by it.

http://www.contractoruk.com/ir35/how_will_i_know_i...

https://www.freelancerfinancials.uk.com/guides/ir-...

Edited by Moonhawk on Saturday 11th March 11:53

[ClockworkCupcake]

egomeister said:

At the last place I was at, I was (almost) happy that there was a subsidised price in the canteen for employees and one for the rest as it gave some kind of delineation between the two. On the whole, that place was pretty good at maintaining the separation which made life easier for both parties.

Indeed. I was at one place where the contractors were told that not only were they not invited to the staff Christmas Party in the canteen, but they had to be off-site by 12pm on the day that it occurred.
Frankly, I was fine with that as it was good from an IR35 point of view.

[Tonsko]

ClockworkCupcake said:

If only that was the case. The Sword of Damocles hangs over every contractor and there is often little rhyme nor reason for investigations.

Also, don't underestimate the stress, inconvenience and ballache of an investigation, even if it is then dropped.

I suppose. In 10 years, out of all the connies that I met and workded with not one (or anyone that they knew) was investigated under IR35. As you can imagine, it was quite the hot topic of chat at one time too. Anecdotal, yeh. But in all that time you'd've thought that at least some would be subject of investigation in that sample size.

[Eric Mc]

egomeister said:

It's a serious point in reality, and in some ways shows that there is some legitimacy to HMRC's clampdown if some people consider these changes to be a "Jobs & Employment Matters" issue.

Precisely. I always wonder why ANY queries on contracting through intermediaries are posted in this section - unless the poster underneath it all really does believe that the arrangement is an alternative form of "employment".

We have a separate "Business" forum for those who have "business" queries.

[Eric Mc]

ClockworkCupcake said:

egomeister said:

At the last place I was at, I was (almost) happy that there was a subsidised price in the canteen for employees and one for the rest as it gave some kind of delineation between the two. On the whole, that place was pretty good at maintaining the separation which made life easier for both parties.

Indeed. I was at one place where the contractors were told that not only were they not invited to the staff Christmas Party in the canteen, but they had to be off-site by 12pm on the day that it occurred.
Frankly, I was fine with that as it was good from an IR35 point of view.

Very good practice too - as HMRC has used "work related social interaction" between employees and outside contractors to argue that the contractors were really employees.

[Eric Mc]

Tonsko said:

I suppose. In 10 years, out of all the connies that I met and workded with not one (or anyone that they knew) was investigated under IR35. As you can imagine, it was quite the hot topic of chat at one time too. Anecdotal, yeh. But in all that time you'd've thought that at least some would be subject of investigation in that sample size.

Almost definitely down to lack of resources at HMRC.

[ClockworkCupcake]

Moonhawk said:

Semantics - i'm simply using the terminology that appears to be in fairly common use - in this context "being caught" within IR35 appears to mean that you are subject to the legislation, as opposed to being 'caught out' by it.

So when you drive down the motorway at 69mph you consider yourself "caught" by the 70mph speed limit then?

[Moonhawk]

ClockworkCupcake said:

Moonhawk said:

Semantics - i'm simply using the terminology that appears to be in fairly common use - in this context "being caught" within IR35 appears to mean that you are subject to the legislation, as opposed to being 'caught out' by it.

So when you drive down the motorway at 69mph you consider yourself "caught" by the 70mph speed limit then?

Like I already explained - I was using the terminology in the way it appears to be used elsewhere in contracting circles. I even gave a couple of examples to provide further clarity as to the context.

Here is one of those examples again:

"How will I know if I am caught by IR35?"

http://www.contractoruk.com/ir35/how_will_i_know_i...

"The test is to determine from the outset whether or not the worker is effectively an employee."

Just what point are you trying to make by continuing to argue about this. Regardless of whether you agree that the terminology is correct or not - based on my explanation and the examples I gave - do you understand what I meant?

If it helps - I have just gone back and edited my posts. Hopefully the new terminology won't offend your sensibilities to the same degree.

Edited by Moonhawk on Saturday 11th March 14:11

[RockyBalboa]

Dr Jekyll said:

Corporation tax is paid largely by shareholders, partly by employees, partly by customers. All of whom pay plenty of tax as it is.

Are large organisations paying their fair share of (corporation) tax?

[RockyBalboa]

Moonhawk said:

RockyBalboa said:

For me, the two huge elephants in the room which are NOT being addressed by the Government are:

1. Corporation tax is being lowered (gives a bit to contractors et al operating via Ltd but also to big corporations who aren't paying enough tax as it is).

2. 'Cash in hand' work - garages, builders, plumbers, electricians, handymen, local shops, taxi drivers (non-Uber) etc. Many often also claiming Income Support and/or other benefits too.

The big one for me is why the government are targeting the contractors by changing the tax on dividends, implementing things like IR35 - yet they appear to be doing nothing about the companies who are willingly employing contractors in lieu of hiring permanent staff (and thereby avoiding paying employers NI and being able to disregard many of their other employment responsibilities). It needs to be tackled from both sides.

With regards to your points - the investment and employment opportunities that could be brought into the country by lowering corporation tax may offset the loss. As for 'cash in hand' transactions - I don't think there is any way to prevent them. Cash is by it's very nature - hard to track and account for. I suspect the cost and effort required to police cash in hand transactions would massively outweigh the tax take that could be achieved.

Agree with your first point. In addition, contracting by it's nature is more risky and contractors often arrive in roles pre-experience, pre-qualified and ready to hit the ground running. As such, they should be remunerated fairly (also taking into account the other things mentioned on this thread such as no permanent-employee benefits).

With regards to cash, I think more should be done to curb this.

A THIRD elephant I forgot to mention is large consultancies bringing in non-UK contractors on specially arranged visa arrangements. This is not being addressed at all.

[ClockworkCupcake]

Moonhawk said:

Like I already explained - I was using the terminology in the way it appears to be used elsewhere in contracting circles. I even gave a couple of examples to provide further clarity as to the context.

Here is one of those examples again:

"How will I know if I am caught by IR35?"

http://www.contractoruk.com/ir35/how_will_i_know_i...

"The test is to determine from the outset whether or not the worker is effectively an employee."

Just what point are you trying to make by continuing to argue about this. Regardless of whether you agree that the terminology is correct or not - based on my explanation and the examples I gave - do you understand what I meant?

If it helps - I have just gone back and edited my posts. Hopefully the new terminology won't offend your sensibilities to the same degree.

Yes, I do understand what you meant and I was trying to point out that you seemed to have things slightly confused. I can see why the link you posted causes the confusion though. It should really be saying "does the IR35 legislation apply?" rather than "am I caught by it?"

I agree that a PSC can self-declare that they are inside IR35 and pay tax accordingly, but that is not the main contention on IR35. In most discussions of IR35, the PSC declares themselves to be outside of IR35 and then HMRC say that they disagree, and that is the context that most contractors will say that they have been "caught" by IR35.

You may think that I'm being picky here, and I sincerely apologise if you do, but it seemed to me that you misunderstood what we were talking about and I was trying to clarify it. It hasn't in any way offended my sensibilities, although I seem to have offended yours.

Edited by ClockworkCupcake on Saturday 11th March 14:26

[Moonhawk]

ClockworkCupcake said:

I agree that a PSC can self-declare that they are inside IR35 and pay tax accordingly, but that is not the main contention on IR35. In most discussions of IR35, the PSC declares themselves to be outside of IR35 and then HMRC say that they disagree, and that is the context that most contractors will say that they have been "caught" by IR35.

Well - given I wasn't talking about the 'main contention' of IR35 - that's kinda irrelevant.

I was discussing the reason IR35 exists at all and why all of the burden for being a 'disguised employee' falls on the contractor - when the real driving force behind the use of 'disguised employees' are the companies employing their services in lieu of permanent staff.

You haven't offended my sensibilities. If you really did understand what I was saying (as you now admit) - then your speed limit analogy served no purpose other than as a petty point scoring exercise.

Edited by Moonhawk on Saturday 11th March 14:52

[Tonsko]

Eric Mc said:

Almost definitely down to lack of resources at HMRC.

Ye. And as I heard my accountant say over the years, plus see news items about cuts, the resources got smaller.

I always tried to ensure that i was not eligible for it, bit i didn't lose to much sleep over it for the above reason.

Edited by Tonsko on Saturday 11th March 14:54

[Tonsko]

Moonhawk said:

When I say "caught by subject to* IR35" - i'm not talking about declaring you aren't subject to IR35 - but are caught out and prosecuted because you should be.

When i'm talking about being caught by subject to* IR35 legislation - i'm talking about all of the people who self declare that they are subject to IR35 and taxed as such. I suspect that figure is rather higher than 5 in 2012/13.

edit due to PH pedantry and nitpicking

Edited by Moonhawk on Saturday 11th March 14:08

And yes, sorry i see what you mean now. The number of folk who could be investigated and found to be subject to IR35 was very likely >50% of contractor population... But the chance of investigation and successful prosecution was vanishingly small.

[ClockworkCupcake]

Moonhawk said:

Well - given I wasn't talking about the 'main contention' of IR35 - that's kinda irrelevant.

Oh, fair enough.

Moonhawk said:

I was discussing the reason IR35 exists at all and why all of the burden for being a 'disguised employee' falls on the contractor - when the real driving force behind the use of 'disguised employees' are the companies employing their services in lieu of permanent staff.

Well, that's the thing. The reasons why a company would want to outsource work to an outside contractor are many-fold, and not just down to cost. It is often the case that they don't need specialist knowledge for an open-ended amount of time of a permanent employment, or the skills aren't available because the people with them are all freelancers, or any number of other issues.
For example, if you're fitting out a new building, you bring in plumbers, electricians, and the like on a contract basis. You don't hire them as PAYE employees and then make them redundant at the end of it.

Yes, it does happen that some larger companies hold on to their contractors for years, and in part it is often the case that this is the only way to retain them as they will just leave if the company tries to bring them into the payroll.

But for shorter term engagements, the "easy hire, easy fire" service we provide is certainly a big plus. It's often said that freelancers are the first out the door when the going gets lean, and the first back in the door when things pick up as it de-risks the whole issue of taking on people when you don't know if things might suddenly go lean again.

[ClockworkCupcake]

Tonsko said:

And yes, sorry i see what you mean now.

I rest my case.

[zippy3x]

Eric Mc said:

egomeister said:

It's a serious point in reality, and in some ways shows that there is some legitimacy to HMRC's clampdown if some people consider these changes to be a "Jobs & Employment Matters" issue.

Precisely. I always wonder why ANY queries on contracting through intermediaries are posted in this section - unless the poster underneath it all really does believe that the arrangement is an alternative form of "employment".

We have a separate "Business" forum for those who have "business" queries.

I'm sorry, but this is all complete nonsense. This is precisely where we end up when HMRC delivers intentionally vague guidelines like IR35 and then instigates court cases based on those rules.

To follow this logic, if I ask a question about my Alfa in the BMW forums, does that make my Alfa a BMW?

[Dr Jekyll]

RockyBalboa said:

Dr Jekyll said:

Corporation tax is paid largely by shareholders, partly by employees, partly by customers. All of whom pay plenty of tax as it is.

Are large organisations paying their fair share of (corporation) tax?

I refer you to my previous answer. Ultimately organisations don't pay corporation tax, people do, the question is therefore meaningless.

[ClockworkCupcake]

Dr Jekyll said:

I refer you to my previous answer. Ultimately organisations don't pay corporation tax, people do, the question is therefore meaningless.

Eh? Corporation Tax is a tax on company profits paid by the company.

[Dr Jekyll]

ClockworkCupcake said:

Dr Jekyll said:

I refer you to my previous answer. Ultimately organisations don't pay corporation tax, people do, the question is therefore meaningless.

Eh? Corporation Tax is a tax on company profits paid by the company.

Oh that's all right then. The government can increase it much as they like and no actual people (such as the shareholders whose profit it is) will be affected because it all comes from the money tree.