This is the end of contracting...
Discussion
madmover said:
Couldn't agree more. I think we've seen the death of umbrella schemes etc but contracting will resume. It would decimate too many businesses should the proposal be accepted.
Not to mention the public sector - plenty of contractors work in the public sector, especially since gov depts have successfully de-skilled in the name of "cost saving".
mad4amanda said:
This may be relevant to the conversation I was having at work the other day. 2 of us sat doing the same hours and job for the same money I am an employee and get a holiday pay supplement , my colleague is self employed so does not get holiday pay . I pay the same amount per month in NI as he pays every 6 months, he gets all sorts of tax allowances for cars fuel food at work that mean he hasn`t paid actual tax for years.
He doesn`t employ anyone or create any wealth beyond his own. Yet even taking into account the fact that I get holiday pay he earns more than I do because he takes more of his pay home.
Yet apparently he gets the same state pension and access to relevant benefits as I do despite not paying anywhere near the same amount in how can that be right?
What about the risk factor? Where you have 3-6 months notice period he can be fired within 24 hours - have you factored that in? And if it was so easy why don't you do what he does and join in to earn as much as him? Easier said than done IMHO. He doesn`t employ anyone or create any wealth beyond his own. Yet even taking into account the fact that I get holiday pay he earns more than I do because he takes more of his pay home.
Yet apparently he gets the same state pension and access to relevant benefits as I do despite not paying anywhere near the same amount in how can that be right?
Can someone explain something to me please?
A contractor pays less NI contributions than a perm employee of the end client. However the contractor is raising invoices with VAT added. The VAT element ends up with the HMRC anyway so how are they loosing out? If they don't get the NI they get the VAT?
Am I going mad? What's the issue they get their money don't they?
A contractor pays less NI contributions than a perm employee of the end client. However the contractor is raising invoices with VAT added. The VAT element ends up with the HMRC anyway so how are they loosing out? If they don't get the NI they get the VAT?
Am I going mad? What's the issue they get their money don't they?
mad4amanda said:
This may be relevant to the conversation I was having at work the other day. 2 of us sat doing the same hours and job for the same money I am an employee and get a holiday pay supplement , my colleague is self employed so does not get holiday pay . I pay the same amount per month in NI as he pays every 6 months, he gets all sorts of tax allowances for cars fuel food at work that mean he hasn`t paid actual tax for years.
He doesn`t employ anyone or create any wealth beyond his own. Yet even taking into account the fact that I get holiday pay he earns more than I do because he takes more of his pay home.
Yet apparently he gets the same state pension and access to relevant benefits as I do despite not paying anywhere near the same amount in how can that be right?
You have job security. He doesn't.He doesn`t employ anyone or create any wealth beyond his own. Yet even taking into account the fact that I get holiday pay he earns more than I do because he takes more of his pay home.
Yet apparently he gets the same state pension and access to relevant benefits as I do despite not paying anywhere near the same amount in how can that be right?
You'd have to work out exactly what that is worth to you before knowing who has the better deal.
W4NTED said:
Can someone explain something to me please?
A contractor pays less NI contributions than a perm employee of the end client. However the contractor is raising invoices with VAT added. The VAT element ends up with the HMRC anyway so how are they loosing out? If they don't get the NI they get the VAT?
Am I going mad? What's the issue they get their money don't they?
Firstly, it's "losing".A contractor pays less NI contributions than a perm employee of the end client. However the contractor is raising invoices with VAT added. The VAT element ends up with the HMRC anyway so how are they loosing out? If they don't get the NI they get the VAT?
Am I going mad? What's the issue they get their money don't they?
Secondly, depending on the nature of the client's own VAT status they are likely to be able to recover (i.e. claim back) the amount of VAT they pay on the contractor's invoices.
W4NTED said:
Can someone explain something to me please?
A contractor pays less NI contributions than a perm employee of the end client. However the contractor is raising invoices with VAT added. The VAT element ends up with the HMRC anyway so how are they loosing out? If they don't get the NI they get the VAT?
Am I going mad? What's the issue they get their money don't they?
VAT also gets reclaimed by VAT registered business. So the VAT charged by the contractor will almost definitely be reclaimed in full by his "employer". Of course, the "employer" goes on to charge his VAT on the sales he makes - which he would have done whether the person he hired was an employee or some other status individual.A contractor pays less NI contributions than a perm employee of the end client. However the contractor is raising invoices with VAT added. The VAT element ends up with the HMRC anyway so how are they loosing out? If they don't get the NI they get the VAT?
Am I going mad? What's the issue they get their money don't they?
In other words, the VAT charged by the individual is not a cost to his "employer".
Mean while the government diverts all the attention from the large multi-national not paying much tax.
Starbucks, Google, Vodafone must be loving this.
Also to an earlier point, and general point - very few "one man band ltd companies" are tax dodgers.
I pay full corporation tax, I pay tax on every thing I withdraw from my company and I work my nuts off to ensure I keep getting contracts.
If I don't work, I don't get paid, and there are times when I deliver my project, the team I worked within gets closed down - hence the need for contractors.
Anyway, I am off to expense my lunch.
Starbucks, Google, Vodafone must be loving this.
Also to an earlier point, and general point - very few "one man band ltd companies" are tax dodgers.
I pay full corporation tax, I pay tax on every thing I withdraw from my company and I work my nuts off to ensure I keep getting contracts.
If I don't work, I don't get paid, and there are times when I deliver my project, the team I worked within gets closed down - hence the need for contractors.
Anyway, I am off to expense my lunch.
Eric Mc said:
VAT also gets reclaimed by VAT registered business. So the VAT charged by the contractor will almost definitely be reclaimed in full by his "employer". Of course, the "employer" goes on to charge his VAT on the sales he makes - which he would have done whether the person he hired was an employee or some other status individual.
In other words, the VAT charged by the individual is not a cost to his "employer".
But the contractor's LTD company will have to pay (most of) the VAT to HMRC - so HMRC gets a slice of cash they wouldn't get via that route if the contractor was an employee.In other words, the VAT charged by the individual is not a cost to his "employer".
ewenm said:
Eric Mc said:
VAT also gets reclaimed by VAT registered business. So the VAT charged by the contractor will almost definitely be reclaimed in full by his "employer". Of course, the "employer" goes on to charge his VAT on the sales he makes - which he would have done whether the person he hired was an employee or some other status individual.
In other words, the VAT charged by the individual is not a cost to his "employer".
But the contractor's LTD company will have to pay (most of) the VAT to HMRC - so HMRC gets a slice of cash they wouldn't get via that route if the contractor was an employee.In other words, the VAT charged by the individual is not a cost to his "employer".
Longer Thread here: http://www.pistonheads.com/gassing/topic.asp?h=0&a...
Can't see the CBI lifting a finger on this.
Can't see the CBI lifting a finger on this.
ewenm said:
Eric Mc said:
VAT also gets reclaimed by VAT registered business. So the VAT charged by the contractor will almost definitely be reclaimed in full by his "employer". Of course, the "employer" goes on to charge his VAT on the sales he makes - which he would have done whether the person he hired was an employee or some other status individual.
In other words, the VAT charged by the individual is not a cost to his "employer".
But the contractor's LTD company will have to pay (most of) the VAT to HMRC - so HMRC gets a slice of cash they wouldn't get via that route if the contractor was an employee.In other words, the VAT charged by the individual is not a cost to his "employer".
The sub-contractor should NEVER look on the VAT collected and paid over to HMRC as "his" income. He has merely acted as a tax collection agent on behalf of HMRC and the VAT amount he had in his bank account was merely "resting" there (shades of Father Ted) until it was time to pay it over.
AMDB9 said:
What about the risk factor? Where you have 3-6 months notice period he can be fired within 24 hours - have you factored that in? And if it was so easy why don't you do what he does and join in to earn as much as him? Easier said than done IMHO.
There's also sick pay, maternity / paternity leave, death in service benefits, pensions, training costs, accountancy costs, invoicing terms, stricter lending criteria for mortgages / loans, professional membership fees etc.It's never as clear cut as it seems.
CRB14 said:
AMDB9 said:
What about the risk factor? Where you have 3-6 months notice period he can be fired within 24 hours - have you factored that in? And if it was so easy why don't you do what he does and join in to earn as much as him? Easier said than done IMHO.
There's also sick pay, maternity / paternity leave, death in service benefits, pensions, training costs, accountancy costs, invoicing terms, stricter lending criteria for mortgages / loans, professional membership fees etc.Worth a read over (assuming the link works), landed in my emails this morning:
http://www.contractoruk.com/news/0012293osborne_wa...
Clearly it's from a contractor viewpoint, being a contractor website, but interesting none the less.
I doubt the CBI will say much, I also doubt very much they'd put something this daft through. To complicate it further is well within their capabilities however, so I fully expect that - my accountant remains calm however, and that's a better measure of the situation (I hope..!).
http://www.contractoruk.com/news/0012293osborne_wa...
Clearly it's from a contractor viewpoint, being a contractor website, but interesting none the less.
I doubt the CBI will say much, I also doubt very much they'd put something this daft through. To complicate it further is well within their capabilities however, so I fully expect that - my accountant remains calm however, and that's a better measure of the situation (I hope..!).
SWH said:
Worth a read over (assuming the link works), landed in my emails this morning:
http://www.contractoruk.com/news/0012293osborne_wa...
Clearly it's from a contractor viewpoint, being a contractor website, but interesting none the less.
I doubt the CBI will say much, I also doubt very much they'd put something this daft through. To complicate it further is well within their capabilities however, so I fully expect that - my accountant remains calm however, and that's a better measure of the situation (I hope..!).
Speaking of accountants I'll have to let mine know she'll be a permanent employee of mine one dayhttp://www.contractoruk.com/news/0012293osborne_wa...
Clearly it's from a contractor viewpoint, being a contractor website, but interesting none the less.
I doubt the CBI will say much, I also doubt very much they'd put something this daft through. To complicate it further is well within their capabilities however, so I fully expect that - my accountant remains calm however, and that's a better measure of the situation (I hope..!).
CRB14 said:
SWH said:
Worth a read over (assuming the link works), landed in my emails this morning:
http://www.contractoruk.com/news/0012293osborne_wa...
Clearly it's from a contractor viewpoint, being a contractor website, but interesting none the less.
I doubt the CBI will say much, I also doubt very much they'd put something this daft through. To complicate it further is well within their capabilities however, so I fully expect that - my accountant remains calm however, and that's a better measure of the situation (I hope..!).
Speaking of accountants I'll have to let mine know she'll be a permanent employee of mine one dayhttp://www.contractoruk.com/news/0012293osborne_wa...
Clearly it's from a contractor viewpoint, being a contractor website, but interesting none the less.
I doubt the CBI will say much, I also doubt very much they'd put something this daft through. To complicate it further is well within their capabilities however, so I fully expect that - my accountant remains calm however, and that's a better measure of the situation (I hope..!).
If the government did find a way to enforce this it would have a huge impact on business in the UK, could potentially lead to massive brain drain as people move to other countries and IT projects would all but dry up. It could in turn have a catastrophic impact on the ecomomy as buinesses that can't change their systems would loose competative edge, particularly in finance sector we rely on so much.
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