IR35 to be scrapped!

[sixspeed]

As part of the released "Coalition" document issued today by the Con-Lib government, the section covering business and includes a plan to:

Coalition Document said:

...review IR 35, as part of a wholesale review of all small business taxation, and seek to replace it with simpler measures that prevent tax avoidance but do not place undue administrative burdens or uncertainty on the self-employed, or restrict labour market flexibility.

Good news for a lot of people I suspect! The whole grey-area and uncertainty surrounding IR35 is on of the biggest worries for a lot of contractors I imagine...


Full coalition document here:

http://www1.sky.com/news/coalition-programme.pdf

Edited by sixspeed on Thursday 20th May 12:37

[amir_j]

Don't get too excited... Their aim is to make you pay more tax as opposed to less so a clarification of what is in and out whilst good depends on which side of the fence you fall.

IR35 hasn't worked- conviction rates have been less than HMRC care to boast about (govenment refused to disclose as believed to be very low).

[cs02rm0]

I think someone on here said they'd taken three (IIRC, maybe four) cases to court and won all of those.

[amir_j]

They don't always win:

A very recent case from a few weeks ago for example- a guy goes to HMRC to make sure his contract is ok, they then turnaround and demand money backdated. He defends himself and eventually wins

http://www.networkworld.com/news/2010/051410-self-...

[bigandclever]

cs02rm0 said:

I think someone on here said they'd taken three (IIRC, maybe four) cases to court and won all of those.

They were slightly mistaken then - HMRC have won 4 from 4 at the High Court. They've also won twice as many Special Commissioners cases (HMRC 10; taxpayer 5). They won the Judicial Review. We also don't know (because there are no figures) how many contractors have bent over, without going to court, following an IR35 investigation. Still

[bigandclever]

amir_j said:

They don't always win:

A very recent case from a few weeks ago for example- a guy goes to HMRC to make sure his contract is ok, they then turnaround and demand money backdated. He defends himself and eventually wins

http://www.networkworld.com/news/2010/051410-self-...

And you reckon HMRC won't appeal? Not a chance, sadly. The judge left it wide open for an appeal to be made.

[TvrJohn]

Quote " Review " not scrap

[rhinochopig]

Can't see it benefiting anyone TBH - well perhaps the taxman.

[plasticpig]

bigandclever said:

cs02rm0 said:

I think someone on here said they'd taken three (IIRC, maybe four) cases to court and won all of those.

They were slightly mistaken then - HMRC have won 4 from 4 at the High Court. They've also won twice as many Special Commissioners cases (HMRC 10; taxpayer 5). They won the Judicial Review. We also don't know (because there are no figures) how many contractors have bent over, without going to court, following an IR35 investigation. Still

IR35 only brings in an extra £1.5 million a year in tax income. I wouldn't be surprised if HMRC actually lose overall because of the costs involved in administration.

[lestag]

Slighty off topic.. in the UK (i'm in NZ) to you *have* to comple a tax return each year? (assuming a salaried or waged person no major investment income etc)

[zippy3x]

I hope no one has missed the irony of a post on IR35 in the Jobs & Employment section

I suppose any clarification is better than at present, but I'll be suprised if I'm not paying more tax after this "review"

edited to add:

Didn't I read that small companies will be expemt from employers NIC for the first ten employees?
If true that would close the gap between being inside or outside IR35

Edited by zippy3x on Thursday 20th May 14:09

[plasticpig]

zippy3x said:

I hope no one has missed the irony of a post on IR35 in the Jobs & Employment section

Nope. It matches the mindset of the vast majority of contractors I have met.

[Custard Test]

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

[amir_j]

Custard Test said:

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

Nah, just appreciative that you were making your percentage on top

[zippy3x]

Custard Test said:

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

I sincerely doubt any of them were asking you to feel sorry for them. It's also a bit rich listening to a pimp complaining about taking a daily rate for doing next to feck all.

[Lickasaurus Rex]

zippy3x said:

Custard Test said:

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

I sincerely doubt any of them were asking you to feel sorry for them. It's also a bit rich listening to a pimp complaining about taking a daily rate for doing next to feck all.

fking oath.

I used to supply teach and I'd prefer to use the word tapeworm.

I do a days graft and get £90, they answer a phone and tick a box and get £90.

Parasites are not conducive to economic success.

[aka_kerrly]

It has always been a odd system to me, having dealt with clients who use the system to their advantage when it comes to pay, they pay the price when it comes to getting loans/mortgages. Even dealing with lenders who also didn't understand what IR35 is and how it works makes things difficult so clarification is definately needed. Far too many IR35 clients believe they are employed as they are the director of a limited company when they overlook the fact they are the 1 and only person employed by the firm and thus are self employed.

[bigandclever]

Custard Test said:

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

If you'd put in some proper clauses in the first place, you wouldn't have been "negotiating" anything You must've known that how a contractor operates their company was none of your business.

[plasticpig]

zippy3x said:

Custard Test said:

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

I sincerely doubt any of them were asking you to feel sorry for them. It's also a bit rich listening to a pimp complaining about taking a daily rate for doing next to feck all.

You have the option of selling directly to your potential clients; like most service based B to B LTD companies do.....

[zippy3x]

plasticpig said:

zippy3x said:

Custard Test said:

Aaaaaggggh, I worked in recruitment (contracts side) of IT Contractors on and around 2000 to 2005. IR35 was the bain of my life in contract negotiations! Arguing over really silly moot points from what I remember, guys demanding (and getting) fees of over £1k a day for a 6 hour day, and then paying themselves 2p a week to avoid tax. I was supposed to feel sorry for them.

I sincerely doubt any of them were asking you to feel sorry for them. It's also a bit rich listening to a pimp complaining about taking a daily rate for doing next to feck all.

You have the option of selling directly to your potential clients; like most service based B to B LTD companies do.....

Realistically - No.

I do keep in contact with past client and I'm trying to network using LinkedIn and such. But the bottom line is I don't have time to do it and charge for a full week. I could spend all my time finding work and then subcontracting, but that's simply not what I do.

Hence my comment "next to feck all"

The bottom line is that there is a need for agents, the problem is that it's very one sided, and to hear an agent moaning is, as I said, a bit rich.