Employed? Then why not PAYE?
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Discussion

shed driver

Original Poster:

3,098 posts

191 months

Thursday 16th February 2012
quotequote all
I've looked and can't see a topic - apologies if the vagaries of the search function are beyond me!

Should senior public servants working in a single job be subject to PAYE or is it the right thing to do to be paid via your company.
http://www.bbc.co.uk/news/uk-politics-17055574

I can see how (in the short term) it has benefits, but should there be a limit of say six months before you are then a substantive employee? Should this also apply to the private sector?

SD

ewenm

28,506 posts

276 months

Thursday 16th February 2012
quotequote all
Look up IR35 legislation - it is supposed to cover this.

Mojooo

13,291 posts

211 months

Thursday 16th February 2012
quotequote all
It sounds like it saves the public sector money overall as they pay the people less raw money - but as the bloke in the article says, its probably a moral issue and they should be on PAYE.


Buzz word

2,028 posts

240 months

Thursday 16th February 2012
quotequote all
IR 35 acid test...
Do you work set hours, or a given number of hours a week or a month?
Do you have to do the work yourself rather than hire someone else to do the work for you?
Can someone tell you at any time what to do, when to work or how to do the work?
Are you paid by the hour, week or month?
Can you get overtime pay?
Do you work at the premises of the person you work for, or at a place or places he or she decides?
Do you generally work for one client at a time, rather than having a number of contracts?
Do you have the final say in how you do the work for the client?
Can you make a loss on the contract?
Do you have to provide the main items of equipment you need to do the job for the client, not just the small tools many employees provide for themselves?
Are you free to hire other people on your own terms to do the work you have taken on?
If you are free to hire other people on your own terms, do you pay them out of your own pocket?
Do you have to correct unsatisfactory work in your own time and at your own expense?
Do you have a number of clients at the same time?


My guess Is he answers 'no' to most. As do I which Is why I am PAYE despite my co workers all arguing the opposite. It's just my industry most people I know are contractors. The addition of AWR will only destroy this argument even more unless you are earning mega bucks and opt out. They keep dangling the sword of tax avoidance over your heard I find it reprehensible the government are in on It too. I suppose this explains why there is a massive conviction rate on IR35. It would seem hypocritical

Edited by Buzz word on Thursday 16th February 09:50

Piersman2

6,676 posts

230 months

Thursday 16th February 2012
quotequote all
Buzz word said:
IR 35 acid test...
Do you work set hours, or a given number of hours a week or a month?
Do you have to do the work yourself rather than hire someone else to do the work for you?
Can someone tell you at any time what to do, when to work or how to do the work?
Are you paid by the hour, week or month?
Can you get overtime pay?
Do you work at the premises of the person you work for, or at a place or places he or she decides?
Do you generally work for one client at a time, rather than having a number of contracts?
Do you have the final say in how you do the work for the client?
Can you make a loss on the contract?
Do you have to provide the main items of equipment you need to do the job for the client, not just the small tools many employees provide for themselves?
Are you free to hire other people on your own terms to do the work you have taken on?
If you are free to hire other people on your own terms, do you pay them out of your own pocket?
Do you have to correct unsatisfactory work in your own time and at your own expense?
Do you have a number of clients at the same time?


My guess Is he answers 'no' to most. As do I which Is why I am PAYE despite my co workers all arguing the opposite. It's just my industry most people I know are contractors. The addition of AWR will only destroy this argument even more unless you are earning mega bucks and opt out. They keep dangling the sword of tax avoidance over your heard I find it reprehensible the government are in on It too. I suppose this explains why there is a massive conviction rate on IR35. It would seem hypocritical

Edited by Buzz word on Thursday 16th February 09:50
Well you've quoted all the things that the tax man would use to indicate you ARE IR35, and none of the others pointers which can indicate you ARE NOT IR35.


And did you mean it explains why there is NOT a massive conviction rate for IR35 or were you being ironic? Maybe there is an applied eye rolling smiley there I'm missing? smile



Buzz word

2,028 posts

240 months

Thursday 16th February 2012
quotequote all
Piersman2 said:
Well you've quoted all the things that the tax man would use to indicate you ARE IR35, and none of the others pointers which can indicate you ARE NOT IR35.


And did you mean it explains why there is NOT a massive conviction rate for IR35 or were you being ironic? Maybe there is an applied eye rolling smiley there I'm missing? smile

I got my wording round the wrong way. I would guess he works a pretty normal job like everyone else. Set hours, same place of work, can't substitute, one client at a time, does not provide his own equipment. That would all make him In IR35 and liable to pay full tax.

Oh yes there should have been a smiliey there really. I mean if the governemnet are in on it it expains why it is not ruthlessly followed up on at all.

Eric Mc

125,862 posts

296 months

Thursday 16th February 2012
quotequote all
It was cocvered previously when the news broke a couple of weeks ago.

At the moment there is no confirmation as to whether IR35 was applied or not. If IR35 WAS applied, then the overall tax and NI collected by HMRC would not have been very much different to what they would have collected under the normal PAYE system.

If IR35 WAS NOT applied, then he could have been making massive tax savings.

This is not just a tax status issue. I do not think that the CEO of an organisation (government funded or otherwise) shoild NEVER be paid under these typea of "contractor" arrangements. He is NOT a "contractor". He is the HEAD of the organisation and therefore its "captain". He is in charge, steering the boat, defining and implementing policy, hiring and firing etc etc etc.

He is a definite INSIDER, not an outsider. For that reason alone he should be properly engaged as an employee or director of the organisation and not paid as an "outside contractor".

Murph7355

42,043 posts

287 months

Thursday 16th February 2012
quotequote all
Eric Mc said:
...He is NOT a "contractor". He is the HEAD of the organisation and therefore its "captain". He is in charge, steering the boat, defining and implementing policy, hiring and firing etc etc etc.

He is a definite INSIDER, not an outsider. For that reason alone he should be properly engaged as an employee or director of the organisation and not paid as an "outside contractor".
I agree with this. I'm pretty certain in the evil banking sector that the regulators insist upon this for key roles.

s1962a

7,696 posts

193 months

Thursday 16th February 2012
quotequote all
Murph7355 said:
Eric Mc said:
...He is NOT a "contractor". He is the HEAD of the organisation and therefore its "captain". He is in charge, steering the boat, defining and implementing policy, hiring and firing etc etc etc.

He is a definite INSIDER, not an outsider. For that reason alone he should be properly engaged as an employee or director of the organisation and not paid as an "outside contractor".
I agree with this. I'm pretty certain in the evil banking sector that the regulators insist upon this for key roles.
Unless you are explicitly a contractor, most in the banking industry are PAYE

Eric Mc

125,862 posts

296 months

Thursday 16th February 2012
quotequote all
The "boss" should NEVER be a contractor - in ANY sector.

supersingle

3,205 posts

250 months

Thursday 16th February 2012
quotequote all
According to Private Eye, four senior executives at HMRC are being paid through limited companies.

CEO of student loans company, multiple executives in the NHS.

This story will run. Still, at least they are really going after the cash in hand tradesman. laugh

Tax deals

0a

24,160 posts

225 months

Thursday 16th February 2012
quotequote all
Eric answered this very well in a topic I made on the Head of Student loans over in the 'Finance' section

http://www.pistonheads.com/gassing/topic.asp?t=110...