IR35: IPSE proposal for a ‘Freelancer Limited Company’ (FLC)
Discussion
Anyone else a member of IPSE (née PCG) had the email about the consultation document for a proposal to HMRC to end the uncertainty of IR35?
Since it's an internal consultation document, I won't (can't) post a link. But just like their contracts it tries to balance business reality with the needs of the respective shareholders (ie. make it too beneficial, or harsh, to any one faction and it won't get accepted).
It makes for interesting reading.
Since it's an internal consultation document, I won't (can't) post a link. But just like their contracts it tries to balance business reality with the needs of the respective shareholders (ie. make it too beneficial, or harsh, to any one faction and it won't get accepted).
It makes for interesting reading.
Eric Mc said:
I honestly don't think that the Treasurey is very receptive to any moves to lessen the harshness of IR35.
IPSE's goal is laudable though - an attempt to remove the uncertainty and make the whole thing more a matter of law than opinion. If freelancers end up paying more tax than we do now, well at least we know where we stand and aren't playing a stupid game of 'cat and mouse' with HMRC. Then they can concentrate their efforts on the real 'tax dodgers' (sic). As you say, though, I don't hold out much home for HMRC being receptive to of any kind of simplification or transparency. Even if it ends up netting them more tax by making things clearer and more deterministic.
Edit: Just to clarify, they're not seeking to lessen the harshness. They know that the reality is that HMRC want more money. What they are trying to do is remove the uncertainty even if it means we pay more tax than now (which, let's be honest, we're going to be anyway).
Eric Mc said:
It will probably achieve the same success as their attempt of having a Judicial Revue of the original IR35 legislation.
Well at least they are trying, which is more than can be said for most. I don't see the BCS or the FSB doing a whole lot to try to establish firm foundations on which to build a business. Anyway, the idea of this thread wasn't really to discuss whether or not IPSE are tilting at windmills and should just not bother; it was whether their proposal had any merit.
In many cases, IR35 may very well become irrelevant as the "employer" will be deducting tax on source on the payments to their "temporary" staff - whether that "staff" is genuine self employed, operating through their own company or under an umbrella set up.
It is going to operate a bit like sub-contractors in the construction industry.
It is going to operate a bit like sub-contractors in the construction industry.
Eric Mc said:
In many cases, IR35 may very well become irrelevant as the "employer" will be deducting tax on source on the payments to their "temporary" staff - whether that "staff" is genuine self employed, operating through their own company or under an umbrella set up.
It is going to operate a bit like sub-contractors in the construction industry.
Eric, I hope you are very wrong. If not I can see the contract market having to adapt to direct engagements. Neither the client or the contractor will relish the above scenario.It is going to operate a bit like sub-contractors in the construction industry.
JonRB said:
Well at least they are trying, which is more than can be said for most. I don't see the BCS or the FSB doing a whole lot to try to establish firm foundations on which to build a business.
The FSB exists to support real businesses, not IR35 self employed tax and NI dodgers.
Ean218 said:
The FSB exists to support real businesses, not IR35 self employed tax and NI dodgers.
Sometimes those operating through their own companies have no choice. I've had a couple of clients come to me who were more or less made set up a company just to get work. So, they weren't intending to dodge tax and NI. In fact, some even operate the full IR35 rules - so they aren't dodging much at all.I'm not really sure why some people seem to have a real downer for the freelance market. Surely taking on the risk of freelancing and believe me it is a risk, is a personal choice.
My company pays just as much tax now as I did when I was PAYE. corporation tax, VAT, NI all add up to A LOT and we don't have the option of paying it in nice monthly instalments either like PAYE employees so the tax take differential is actually nil.
I'm also not in the freelance game for the tax breaks as they make very little difference in the end and I'd rather spend my time working\earning than try to think up ways to sneak a few expenses past HMRC. What I am in it for is the flexibility it gives me in terms of the projects I work on with regards to type of work\hours\location and that to a greater extent than previously I am the captain of my own destiny rather than being at the whims of large corporate politics. The fact that I am often remunerated above permanent employees I just see as recompense for giving up all the benefits of being a permie like holiday pay, sick pay, health benefits, life insurance etc.
It's a simple choice, more risk vs more reward but for some bizarre reason some people seem to take this as a personal affront, that somehow I am robbing THEM of their tax money. Very bizarre state of affairs. I'd also hope HMRC had bigger fish to fry, rather than going after the small business\freelancer market which can't number more than a few tens of thousands in the UK, they might be better spending their energy on the multinationals that avoid tax to the tune of millions every year but then it's far easier to intimidate small business owners then it is to large companies who can and do fight back.
My company pays just as much tax now as I did when I was PAYE. corporation tax, VAT, NI all add up to A LOT and we don't have the option of paying it in nice monthly instalments either like PAYE employees so the tax take differential is actually nil.
I'm also not in the freelance game for the tax breaks as they make very little difference in the end and I'd rather spend my time working\earning than try to think up ways to sneak a few expenses past HMRC. What I am in it for is the flexibility it gives me in terms of the projects I work on with regards to type of work\hours\location and that to a greater extent than previously I am the captain of my own destiny rather than being at the whims of large corporate politics. The fact that I am often remunerated above permanent employees I just see as recompense for giving up all the benefits of being a permie like holiday pay, sick pay, health benefits, life insurance etc.
It's a simple choice, more risk vs more reward but for some bizarre reason some people seem to take this as a personal affront, that somehow I am robbing THEM of their tax money. Very bizarre state of affairs. I'd also hope HMRC had bigger fish to fry, rather than going after the small business\freelancer market which can't number more than a few tens of thousands in the UK, they might be better spending their energy on the multinationals that avoid tax to the tune of millions every year but then it's far easier to intimidate small business owners then it is to large companies who can and do fight back.
Guvernator said:
The fact that I am often remunerated above permanent employees I just see as recompense for giving up all the benefits of being a permie like holiday pay, sick pay, health benefits, life insurance etc.
It's a simple choice, more risk vs more reward but for some bizarre reason some people seem to take this as a personal affront, that somehow I am robbing THEM of their tax money. Very bizarre state of affairs.
Indeed. As I usually say to permanent employees who give me stick about it, "if you think that I'm so much better off than you financially, then why aren't you doing it too? I'm happy to help you get into freelancing if you want to". Amazing how quickly they come up with all the reasons why they can't / won't. It's a simple choice, more risk vs more reward but for some bizarre reason some people seem to take this as a personal affront, that somehow I am robbing THEM of their tax money. Very bizarre state of affairs.
It's swings and roundabouts, and just a different way of working. It's also off-topic for this thread.
JonRB said:
It's swings and roundabouts, and just a different way of working. It's also off-topic for this thread.
Sorry I know it's slightly OT but just interesting to see all the knives come out whenever the sticky topic of IR35 comes up. It's almost as if people relish HMRC giving freelancers a hard time, not really sure why (although I can make a few guesses). 
Guvernator said:
I'd also hope HMRC had bigger fish to fry, rather than going after the small business\freelancer market which can't number more than a few tens of thousands in the UK
You're kidding, right? By all estimates there are well over a million; IPSE, for example, put it at 1.88million 'freelancers'. Over 40% of limited companies are one-man bands, we (I mean "they", cough) are easy targets.bigandclever said:
You're kidding, right? By all estimates there are well over a million; IPSE, for example, put it at 1.88million 'freelancers'. Over 40% of limited companies are one-man bands, we (I mean "they", cough) are easy targets.
Wow, I had no idea there were so many. OK I can see now why HMRC have got a real hard-on over it and want to shut it down. Were all doomed to become PAYE wage slaves! Guvernator said:
My company pays just as much tax now as I did when I was PAYE. corporation tax, VAT, NI all add up to A LOT and we don't have the option of paying it in nice monthly instalments either like PAYE employees so the tax take differential is actually nil.
You wouldn't be charging VAT and therefore not paying it across if you were PAYE. So clearly there is an overall tax differential, and in your case its quite possibly the amount of VAT charged.Guvernator said:
bigandclever said:
You're kidding, right? By all estimates there are well over a million; IPSE, for example, put it at 1.88million 'freelancers'. Over 40% of limited companies are one-man bands, we (I mean "they", cough) are easy targets.
Wow, I had no idea there were so many. OK I can see now why HMRC have got a real hard-on over it and want to shut it down. Were all doomed to become PAYE wage slaves! Be honest, lots of contractors are basically temp employees. They are not really running a business in any real sense.
Gassing Station | Business | Top of Page | What's New | My Stuff