Contractors: IR35 & general discussion
Discussion
Clockwork Cupcake said:
Lord Marylebone said:
How else are HMRC expecting us all to exist if they now have a vendetta against ‘one man band’ Ltd Co’s?
They don't. They want us to be nice salaried employees of an end client or a large bodyshop. The latter being the ones who have been lobbying hard for it ever since the 90's in the lead-up to IR35 becoming law in 1999.
This is a systematic attack on independents, and always has been.
Edited by Clockwork Cupcake on Thursday 20th February 13:44
As an aside there is likely to be significant changes over the next five years designed to turbo charge the macro economy by improving productivity and consequently driving up salaries. We are already seeing this with the loosening of the purse strings, the reduction in cheap imported labour form 2021 etc. I expect in the short term there is going to be a world of pain but long term it might just work. I imagine the vision is some sort of Singapore or Switzerland type scenario.
On the plus side, we might all find a beer in Spain is cheap once again.
worsy said:
We are already seeing this with the loosening of the purse strings, the reduction in cheap imported labour form 2021 etc. I expect in the short term there is going to be a world of pain but long term it might just work.
Disagree totally. Businesses will simply outsource to their cheapest base; India.I’ve already left my client a couple of weeks ago. I asked “so...what’s your plan going forward to get the work done?”
The chap who really wanted to me to stay but wasn’t allowed to keep me simply said “right, well I can tell you now because your about to walk out the door. The rest of my team don’t know but they won’t allow contractors in any more as you know, so senior management want us to bring over some Indians and train them up for a few months before sending them back again so they can continue to do the work over there. You and I know this’ll never work (you can’t give someone 3 months training and be the same as someone with 20 years experience). Its such a shame I’m having to let you go, but unfortunately I don’t have any say in these matters; it’s dealt with higher up so here we are...I’d of loved to have kept you on”
So yes...I’ve heard this time and again from others. The only winners are Indians.
Edited by Anubis on Thursday 20th February 14:44
Anubis said:
worsy said:
We are already seeing this with the loosening of the purse strings, the reduction in cheap imported labour form 2021 etc. I expect in the short term there is going to be a world of pain but long term it might just work.
Disagree totally. Businesses will simply outsource to their cheapest base; India.I’ve already left my client a couple of weeks ago. I asked “so...what’s your plan going forward to get the work done?”
The chap who really wanted to me to stay but wasn’t allowed to keep me simply said “right, well I can tell you now because your about to walk out the door. The rest of my team don’t know but they won’t allow contractors in any more as you know, so senior management want us to bring over some Indians and train them up for a few months before sending them back again so they can continue to do the work over there. You and I know this’ll never work (you can’t give someone 3 months training and be the same as someone with 20 years experience). Its such a shame I’m having to let you go, but unfortunately I don’t have any say in these matters; it’s dealt with higher up so here we are...I’d of loved to have kept you on”
So yes...I’ve heard this time and again from others. The only winners are Indians.
The client I'm with for another few weeks have already put this into place a couple of years ago.....the bosses trot out the official line that all is great, but the guys having to deal with the s
t end product get silenced.They also sacked off 95% of their internal IT dept 18 months ago and outsourced the whole lot to an IT outsourcing company based in India & Poland.........that's gone very well indeed
In 40 years of working in an engineering tech industry, its without doubt the worst IT support I've ever come across.Especially so, when our site based project team hard a server hard drive failure and it turned out there was no remote backups being done since the IT had been outsourced.......oh dear.
Anubis said:
Disagree totally. Businesses will simply outsource to their cheapest base; India.
I’ve already left my client a couple of weeks ago. I asked “so...what’s your plan going forward to get the work done?”
The chap who really wanted to me to stay but wasn’t allowed to keep me simply said “right, well I can tell you now because your about to walk out the door. The rest of my team don’t know but they won’t allow contractors in any more as you know, so senior management want us to bring over some Indians and train them up for a few months before sending them back again so they can continue to do the work over there. You and I know this’ll never work (you can’t give someone 3 months training and be the same as someone with 20 years experience). Its such a shame I’m having to let you go, but unfortunately I don’t have any say in these matters; it’s dealt with higher up so here we are...I’d of loved to have kept you on”
So yes...I’ve heard this time and again from others. The only winners are Indians.
[cynic]I’ve already left my client a couple of weeks ago. I asked “so...what’s your plan going forward to get the work done?”
The chap who really wanted to me to stay but wasn’t allowed to keep me simply said “right, well I can tell you now because your about to walk out the door. The rest of my team don’t know but they won’t allow contractors in any more as you know, so senior management want us to bring over some Indians and train them up for a few months before sending them back again so they can continue to do the work over there. You and I know this’ll never work (you can’t give someone 3 months training and be the same as someone with 20 years experience). Its such a shame I’m having to let you go, but unfortunately I don’t have any say in these matters; it’s dealt with higher up so here we are...I’d of loved to have kept you on”
So yes...I’ve heard this time and again from others. The only winners are Indians.
No coincidence that half of the 'Great Offices of State' are occupied by Indians. UK.gov is keen as mustard to get a hot deal with India and off-shored talent - which pays its taxes and spends its income in India - will be a strong incentive.
[/cynic]
This is something I will discuss with my accountant when I see him, but as there are a lot of knowledgable people in this thread, I may as well ask:
As I mentioned in passing earlier in the thread, I work as a consultant in the housing/property sector, and my projects with clients last anywhere from one days work to a few months. I am usually working on projects or reports for 2 or 3 clients at any one time.
I operate as a Ltd Co and have a 50:50 share with my wife.
She has a full time job elsewhere, but also does my accountancy/invoices for me, so she receives a monthly salary from our Ltd Co which is taxed monthly as it is additional to her full time salary.
I pay myself a salary and take dividends.
Is there any advantage to me ending my ‘one man band’ Ltd Co and joining my dad’s Ltd Co as an employee, and then invoicing through his business?
His Ltd Co is a property development business which actually has employees and significant cash flow, purchases, income etc.
I’m seeing this as a way of going under an umbrella company but actually having a say in what happens and how I’m paid. I could join as an employee or as a director/shareholder.
Perhaps this is pointless?
And, maybe I don’t need to do this as I may well be considered outside IR35 for 90% of what I do, but when a housing association tells me they need me to work on a project for them for 6 months, that probably carries a risk of them declaring me ‘inside’.
Just thinking out loud.
As I mentioned in passing earlier in the thread, I work as a consultant in the housing/property sector, and my projects with clients last anywhere from one days work to a few months. I am usually working on projects or reports for 2 or 3 clients at any one time.
I operate as a Ltd Co and have a 50:50 share with my wife.
She has a full time job elsewhere, but also does my accountancy/invoices for me, so she receives a monthly salary from our Ltd Co which is taxed monthly as it is additional to her full time salary.
I pay myself a salary and take dividends.
Is there any advantage to me ending my ‘one man band’ Ltd Co and joining my dad’s Ltd Co as an employee, and then invoicing through his business?
His Ltd Co is a property development business which actually has employees and significant cash flow, purchases, income etc.
I’m seeing this as a way of going under an umbrella company but actually having a say in what happens and how I’m paid. I could join as an employee or as a director/shareholder.
Perhaps this is pointless?
And, maybe I don’t need to do this as I may well be considered outside IR35 for 90% of what I do, but when a housing association tells me they need me to work on a project for them for 6 months, that probably carries a risk of them declaring me ‘inside’.
Just thinking out loud.
Lord Marylebone said:
This is something I will discuss with my accountant when I see him, but as there are a lot of knowledgable people in this thread, I may as well ask:
As I mentioned in passing earlier in the thread, I work as a consultant in the housing/property sector, and my projects with clients last anywhere from one days work to a few months. I am usually working on projects or reports for 2 or 3 clients at any one time.
I operate as a Ltd Co and have a 50:50 share with my wife.
She has a full time job elsewhere, but also does my accountancy/invoices for me, so she receives a monthly salary from our Ltd Co which is taxed monthly as it is additional to her full time salary.
I pay myself a salary and take dividends.
Is there any advantage to me ending my ‘one man band’ Ltd Co and joining my dad’s Ltd Co as an employee, and then invoicing through his business?
His Ltd Co is a property development business which actually has employees and significant cash flow, purchases, income etc.
I’m seeing this as a way of going under an umbrella company but actually having a say in what happens and how I’m paid. I could join as an employee or as a director/shareholder.
Perhaps this is pointless?
And, maybe I don’t need to do this as I may well be considered outside IR35 for 90% of what I do, but when a housing association tells me they need me to work on a project for them for 6 months, that probably carries a risk of them declaring me ‘inside’.
Just thinking out loud.
Not really, if your role is assessed as inside then you will be on paye with a brolly. The size of the intermediary and/or its business is not the deciding factor.As I mentioned in passing earlier in the thread, I work as a consultant in the housing/property sector, and my projects with clients last anywhere from one days work to a few months. I am usually working on projects or reports for 2 or 3 clients at any one time.
I operate as a Ltd Co and have a 50:50 share with my wife.
She has a full time job elsewhere, but also does my accountancy/invoices for me, so she receives a monthly salary from our Ltd Co which is taxed monthly as it is additional to her full time salary.
I pay myself a salary and take dividends.
Is there any advantage to me ending my ‘one man band’ Ltd Co and joining my dad’s Ltd Co as an employee, and then invoicing through his business?
His Ltd Co is a property development business which actually has employees and significant cash flow, purchases, income etc.
I’m seeing this as a way of going under an umbrella company but actually having a say in what happens and how I’m paid. I could join as an employee or as a director/shareholder.
Perhaps this is pointless?
And, maybe I don’t need to do this as I may well be considered outside IR35 for 90% of what I do, but when a housing association tells me they need me to work on a project for them for 6 months, that probably carries a risk of them declaring me ‘inside’.
Just thinking out loud.
Olivera said:
What? Being inside IR35 (via a LTD company) has nothing at all to do with working via an Umbrella.
True. However, one could decide to keep inside IR35 engagements away from one's company though, I guess. Or the client could mandate that you work through a brolly on their Approved 
It will be interesting to see what the recommendations are with respect to this.
Olivera said:
worsy said:
Not really, if your role is assessed as inside then you will be on paye with a brolly.
What? Being inside IR35 (via a LTD company) has nothing at all to do with working via an Umbrella.For the case in point it is unlikely the client would let/trust/allow the posters ltd to perform the PAYE calcs and deductions as the risk could be passed back, in the event the limited failed to pay correctly, and HMRC would then go after the rest of the chain.
worsy said:
That’s been done to death here. Chances are it will be via a brolly as dictated by the client. No point in covering all options in every single reply.
For the case in point it is unlikely the client would let/trust/allow the posters ltd to perform the PAYE calcs and deductions as the risk could be passed back, in the event the limited failed to pay correctly, and HMRC would then go after the rest of the chain.
If you work via an Umbrella Company then you are an employee of that Umbrella and are subject to PAYE as normal. You're *not* inside IR35 as the entirety of that legislation only applies to individuals that are providing services through a LTD company of which they are a shareholder.For the case in point it is unlikely the client would let/trust/allow the posters ltd to perform the PAYE calcs and deductions as the risk could be passed back, in the event the limited failed to pay correctly, and HMRC would then go after the rest of the chain.
I only understand your point here if you mean some companies are making IR35 assessments, judging inside, then refusing to engage on this basis, leaving PAYE Umbrella as one of the few remaining options.
Regarding your second paragraph. If you are assessed as inside IR35 the fee payer (agency or end client) *must* make PAYE deductions. There are never any circumstances where the inside IR35 company must make PAYE deductions.
Edited by Olivera on Thursday 20th February 22:37
Olivera said:
If you work via an Umbrella Company then you are an employee of that Umbrella and are subject to PAYE as normal. You're *not* inside IR35 as the entirety of that legislation only applies to individuals that are providing services through a LTD company of which they are a shareholder.
I only understand your point here if you mean some companies are making IR35 assessments, judging inside, then refusing to engage on this basis, leaving PAYE Umbrella as one of the few remaining options.
Regarding your second paragraph. If you are assessed as inside IR35 the fee payer (agency or end client) *must* make PAYE deductions. There are never any circumstances where the inside IR35 company must make PAYE deductions.
I have an offer of an inside contract and it’s with one of the countries largest co’s and they have asked if I want to do it via my psc. I am not sure why I would. I only understand your point here if you mean some companies are making IR35 assessments, judging inside, then refusing to engage on this basis, leaving PAYE Umbrella as one of the few remaining options.
Regarding your second paragraph. If you are assessed as inside IR35 the fee payer (agency or end client) *must* make PAYE deductions. There are never any circumstances where the inside IR35 company must make PAYE deductions.
Edited by Olivera on Thursday 20th February 22:37
Gazzab said:
I have an offer of an inside contract and it’s with one of the countries largest co’s and they have asked if I want to do it via my psc. I am not sure why I would.
I haven't done a lot (ie. any) research on this, but I tend to agree. If personal taxation (ie. PAYE & NI) has been applied to the money then you don't want to put it through your PSC as it would surely incur Corporation Tax if you did. Or am I missing something here? You can put it through your PSC. Client makes payment to agency, agency deducts PAYE and pays the net into your company. You take this money out of your company with no further taxes to pay including corporation tax etc. You record this as a deemed payment in your company accounts and that's it. However there isn't any real benefit to running it through your company except perhaps avoiding paying the umbrella fee which is why most people say it's not worth it UNLESS you have multiple inside\outside clients or think you may be switching back and forth from inside to outside fairly frequently.
Olivera said:
aeropilot said:
but for me the impact of that on the pension is my biggest gripe, especially with max 5 years left of working.....no way to recover unless I can find outside only roles.
Can you explain? Higher rate pension tax relief is still available as an employee.Countdown said:
Olivera said:
aeropilot said:
but for me the impact of that on the pension is my biggest gripe, especially with max 5 years left of working.....no way to recover unless I can find outside only roles.
Can you explain? Higher rate pension tax relief is still available as an employee.CaptainSlow said:
An umbrella can still make salary sacrifice pension contributions
Some will but the issue some contractors are facing is that if the client issues a blanket psc ban some are forcing contractors to use their preferred Umbrella company (or leave of course). If you then make a personal contribution you only save the tax, not both sets of NI. CaptainSlow said:
Countdown said:
Olivera said:
aeropilot said:
but for me the impact of that on the pension is my biggest gripe, especially with max 5 years left of working.....no way to recover unless I can find outside only roles.
Can you explain? Higher rate pension tax relief is still available as an employee.That 10-20% sum just isn't there to do that via a brolly as that surplus has already gone with rate reduction and other deductions, nor is the flexibility there.
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