Contractors: IR35 & general discussion
Discussion
Clockwork Cupcake said:
98elise said:
Also true in IT. Lots of people enjoy their work, but don't like management roles (me included). My strengths are in getting stuff done, not budgeting and planning.
Totally. One of my (many) reasons for going freelance was so I couldn't be promoted out of what I am good at and enjoy.
I have met far to many managers who have wistfully told me "I was a programmer once, until I took an arrow to the knee".
Companies are recognising that people don't necessarily want to move into management just to get on the promotion ladder for the sake of money. They're adjusting paybands to reward those that stay in 'technical' roles but who maybe expand their skills or are just basically good at what they do.
It's a pretty slow process though.
Bluedot said:
Companies are recognising that people don't necessarily want to move into management just to get on the promotion ladder for the sake of money. They're adjusting paybands to reward those that stay in 'technical' roles but who maybe expand their skills or are just basically good at what they do.
It's a pretty slow process though.
Indeed. One client I worked at had two career progression streams for programmers and engineers. I forget the actual job titles they used, but one was a "staying technical" stream and the other was a "moving into management" stream. It's a pretty slow process though.
But, as you say, it's still exceptionally rare. And even the "staying technical" senior people found themselves pulled into loads of meetings and ended up away from the coalface anyway.
markyb_lcy said:
Good news from my client (a very large global corporate player in the entertainment industry) for what it's worth ...
They are aiming to keep contractors outside of IR35. Part of their plan to do this involves moving away from the model of day/hourly rates and more towards a fixed price for project/service delivery within agreed timescales.
The process will be them stating what they want my company to achieve for them, me working out a schedule of the work and giving approximate timeline for delivery, pricing the work (where I will of course consider my previous "day rate") and then agreeing the fee.
Personally, I'm hoping we see more of this.They are aiming to keep contractors outside of IR35. Part of their plan to do this involves moving away from the model of day/hourly rates and more towards a fixed price for project/service delivery within agreed timescales.
The process will be them stating what they want my company to achieve for them, me working out a schedule of the work and giving approximate timeline for delivery, pricing the work (where I will of course consider my previous "day rate") and then agreeing the fee.
I'm massively more productive than even most of the contractors around me, but I've got no incentive to really crank out the work on a day rate and growing from 1 is difficult on a T&M basis without just becoming an agency. The current client (not the end client) aren't bothered about anything other than hours booked. Clients seem nervous about fixed price work not panning out they way they want it to, maybe over potential disputes because they'll be terrible at specifying the work, but I'm happy to carry the risk.
768 said:
markyb_lcy said:
Good news from my client (a very large global corporate player in the entertainment industry) for what it's worth ...
They are aiming to keep contractors outside of IR35. Part of their plan to do this involves moving away from the model of day/hourly rates and more towards a fixed price for project/service delivery within agreed timescales.
The process will be them stating what they want my company to achieve for them, me working out a schedule of the work and giving approximate timeline for delivery, pricing the work (where I will of course consider my previous "day rate") and then agreeing the fee.
Personally, I'm hoping we see more of this.They are aiming to keep contractors outside of IR35. Part of their plan to do this involves moving away from the model of day/hourly rates and more towards a fixed price for project/service delivery within agreed timescales.
The process will be them stating what they want my company to achieve for them, me working out a schedule of the work and giving approximate timeline for delivery, pricing the work (where I will of course consider my previous "day rate") and then agreeing the fee.
I'm massively more productive than even most of the contractors around me, but I've got no incentive to really crank out the work on a day rate and growing from 1 is difficult on a T&M basis without just becoming an agency. The current client (not the end client) aren't bothered about anything other than hours booked. Clients seem nervous about fixed price work not panning out they way they want it to, maybe over potential disputes because they'll be terrible at specifying the work, but I'm happy to carry the risk.
filski666 said:
Never thought I'd ever admit that I'm actually fascinated watching these reviews 
Bluedot said:
filski666 said:
Never thought I'd ever admit that I'm actually fascinated watching these reviews Does this review have the power to force the government to change its mind or will they simply ignore any recommendation by the Lords?
I've watched a couple of these webcasts and while a lot of what is being discussed seems positive, I just question what power the House of Lords has over all this.
All the advisers are making the same points we've been making on this thread and surprisingly the Lords committee seems to understand a lot of the issues but do they actually have the power to put these issues to HMRC or the Chancellor and make some much needed changes? I very much doubt it.
The elephant in the room is also brought up, namely the employers tax, both the companies and contractors have been avoiding paying this through the use of PSC's and it's this that HMRC are so upset about and are trying to stop. In a normal PAYE engagement, the company should be paying this but they've had it good for years of not paying so they will be extremely reluctant to do so now so it looks like in the brave new IR35 world, it's the contractor that will foot that bill. HMRC don't really care who pays it as longs as it's paid.
All the advisers are making the same points we've been making on this thread and surprisingly the Lords committee seems to understand a lot of the issues but do they actually have the power to put these issues to HMRC or the Chancellor and make some much needed changes? I very much doubt it.
The elephant in the room is also brought up, namely the employers tax, both the companies and contractors have been avoiding paying this through the use of PSC's and it's this that HMRC are so upset about and are trying to stop. In a normal PAYE engagement, the company should be paying this but they've had it good for years of not paying so they will be extremely reluctant to do so now so it looks like in the brave new IR35 world, it's the contractor that will foot that bill. HMRC don't really care who pays it as longs as it's paid.
Guvernator said:
I've watched a couple of these webcasts and while a lot of what is being discussed seems positive, I just question what power the House of Lords has over all this.
All the advisers are making the same points we've been making on this thread and surprisingly the Lords committee seems to understand a lot of the issues but do they actually have the power to put these issues to HMRC or the Chancellor and make some much needed changes? I very much doubt it.
Yes, I share your concerns and similarly have the same questions. All the advisers are making the same points we've been making on this thread and surprisingly the Lords committee seems to understand a lot of the issues but do they actually have the power to put these issues to HMRC or the Chancellor and make some much needed changes? I very much doubt it.
Guvernator said:
I've watched a couple of these webcasts and while a lot of what is being discussed seems positive, I just question what power the House of Lords has over all this.
All the advisers are making the same points we've been making on this thread and surprisingly the Lords committee seems to understand a lot of the issues but do they actually have the power to put these issues to HMRC or the Chancellor and make some much needed changes? I very much doubt it.
The elephant in the room is also brought up, namely the employers tax, both the companies and contractors have been avoiding paying this through the use of PSC's and it's this that HMRC are so upset about and are trying to stop. In a normal PAYE engagement, the company should be paying this but they've had it good for years of not paying so they will be extremely reluctant to do so now so it looks like in the brave new IR35 world, it's the contractor that will foot that bill. HMRC don't really care who pays it as longs as it's paid.
The chap who was representing the TV and media industries had an interesting idea (if I understood it correctly) about keeping things as they are but changing the client company a contractor levy if they wish to use contractors - All the advisers are making the same points we've been making on this thread and surprisingly the Lords committee seems to understand a lot of the issues but do they actually have the power to put these issues to HMRC or the Chancellor and make some much needed changes? I very much doubt it.
The elephant in the room is also brought up, namely the employers tax, both the companies and contractors have been avoiding paying this through the use of PSC's and it's this that HMRC are so upset about and are trying to stop. In a normal PAYE engagement, the company should be paying this but they've had it good for years of not paying so they will be extremely reluctant to do so now so it looks like in the brave new IR35 world, it's the contractor that will foot that bill. HMRC don't really care who pays it as longs as it's paid.
g7orge said:
The chap who was representing the TV and media industries had an interesting idea (if I understood it correctly) about keeping things as they are but changing the client company a contractor levy if they wish to use contractors -
The IPSE representative made a similar, related, proposal that there could be an Engagement Tax. He also suggested, when pressed by the Chair for suggestions on alternatives, that HMRC could formalise the legal entity of a PSC distinct from a "proper" (my words, not his) company, should they insist on doing so.
Clockwork Cupcake said:
The IPSE representative made a similar, related, proposal that there could be an Engagement Tax.
He also suggested, when pressed by the Chair for suggestions on alternatives, that HMRC could formalise the legal entity of a PSC distinct from a "proper" (my words, not his) company, should they insist on doing so.
I actually think the formalising of a PSC is actually a good idea, in theory as it could help to eliminate a lot of uncertainty if executed properly. HOWEVER we all know HMRC aren't interested in being fair, they just want their tax take so I'd be afraid they'd take what is a good idea an turn it into a way to brow beat contractors into paying ever more tax.He also suggested, when pressed by the Chair for suggestions on alternatives, that HMRC could formalise the legal entity of a PSC distinct from a "proper" (my words, not his) company, should they insist on doing so.
Clockwork Cupcake said:
The IPSE representative made a similar, related, proposal that there could be an Engagement Tax.
He also suggested, when pressed by the Chair for suggestions on alternatives, that HMRC could formalise the legal entity of a PSC distinct from a "proper" (my words, not his) company, should they insist on doing so.
I would say both of those are very badly thought out proposals.He also suggested, when pressed by the Chair for suggestions on alternatives, that HMRC could formalise the legal entity of a PSC distinct from a "proper" (my words, not his) company, should they insist on doing so.
Engagement tax - so that's an additional tax due for (or paid by) small LTD company contractors, but not similarly due for consultants provided by a large company. Great.
PSC legal entity - another very bad idea. This would very quickly become just another 'inside IR35' categorisation. Expect full PAYE to be applied on all monies minus perhaps a token 5% expenses gesture.
Olivera said:
I would say both of those are very badly thought out proposals.
Engagement tax - so that's an additional tax due for (or paid by) small LTD company contractors, but not similarly due for consultants provided by a large company. Great.
PSC legal entity - another very bad idea. This would very quickly become just another 'inside IR35' categorisation. Expect full PAYE to be applied on all monies minus perhaps a token 5% expenses gesture.
In fairness, he was put on the spot and thinking on his feet (albeit sat down). Engagement tax - so that's an additional tax due for (or paid by) small LTD company contractors, but not similarly due for consultants provided by a large company. Great.
PSC legal entity - another very bad idea. This would very quickly become just another 'inside IR35' categorisation. Expect full PAYE to be applied on all monies minus perhaps a token 5% expenses gesture.
With regards to the PSC entity, we're most of the way there already has you have to tick a box each year on your return to say you are a PSC. So far HMRC haven't taken action on this, but it has been there for several years now.
I saw it more as giving a mollifying answer to the Chair to a direct question posed. The question being "do you have any alternative suggestions that might satisfy HMRC?" (or words to that effect).
The alternative would have been to mumble that he didn't have any suggestions, which would have undermined his credibility. I thought he came across well for it.
Edited by Clockwork Cupcake on Monday 24th February 17:31
Olivera said:
I've never ticked that box. There is no statutory or legal requirement to answer that question, and it makes no difference whatsoever to your tax calculation.
What you do is up to you, but I was strongly advised by my accountants that I should tick it if it applies to me, which it does, and does to all PSCs unless they are going to outright lie about it, due to the way it is worded. Not making a false declaration *is* a legal requirement.
Clockwork Cupcake said:
What you do is up to you, but I was strongly advised by my accountants that I should tick it if it applies to me, which it does, and does to all PSCs unless they are going to outright lie about it, due to the way it is worded.
Not making a false declaration *is* a legal requirement.
Well QDOS (IR35 insurance experts) state: "The question however has no statutory backing and you cannot be penalised for failing or refusing to answer it".Not making a false declaration *is* a legal requirement.
Just watched the whole committee video. Fantastic responses and nice to hear everyone pretty much in agreement when giving evidence. Especially about the whole picture is not being looked at in terms of what individuals contribute using ltd companies...some will dodge tax; most are playing by the rules. The rules need to change, not the players.
In short - do not let HMRC go through with this as it’s a disaster.
In short - do not let HMRC go through with this as it’s a disaster.
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