back to article HMRC's IR35 tweaks have 90% of UK's IT contractors up in arms

Around 90 per cent of UK government IT contractors will rebel against proposals by HMRC to clamp down on self-employed workers not paying the correct employment taxes. The taxman is currently consulting on whether to shift responsibility for compliance with the intermediaries legislation, known as IR35, from the individual …

Anonymous Coward

Re: Allow permie IT staff some of the perks?

"maybe even it up a bit and allow permie IT staff some of the perks like being able to offset stuff against taxes like travel, cars, equipment, training, lunch. No, thought not"

How about this.. I'll stop claiming expenses when you start paying for insurance, payroll, accountancy fees then give up your employers pension contributions... And tell your employer that you no longer require them to honour any redundancy pay or give you notice.

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The difference with amazon, google, etc. is that me, a lowly contractor, paid more tax than some of them last year (or was it the year before). That year when they paid 0. Remember that?

The clusterf**k that are these messages shows that many people don't understand how contracting works and get jealous and think they're ripping the country off or something.

Most peeps have a nice job and a family and 2 kids and a permie job and they get a bit annoyed thinking about how joe contractor is ripping everyone off. I say, give him a bit of extra money, then fire him on the spot with no redundancy pension etc. and ask him to find another job whilst continuing to pay his mortgage and feeding his family. Things won't seem so unfair.

Then say just kidding we're taking the extra money back... oh but you don't get your job back, and your redundancy, and your sick pay, etc. We're keeping those. Enjoy your new life as a contractor earning the same as before but jobless and peniless.

Cos that's what they're trying to do with this legislation.

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Bronze badge

cry me a river.

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Headmaster

Weird Kafkaesque stuff.

"...self-employed workers not paying the correct employment taxes..." - surely this is an oxymoron? Why would somebody who is not an employee be paying "employment taxes"?

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revenue estimates

The government believes that it can pull an average of 20 thousand pounds per individual contractor? That sounds like one hell of a tax bite. Is there that much money to be had, or will the contractors simply be run out of business?

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Anonymous Coward

Isn't this fixable?

Just an idea.. But rather than piss around with this SDC nonsense, why not just set a six month rule. More than six months ** per tax year ** with the same end client (regardless of intermediary or desk location) and IR35 applies (after six months). Less than six months and it does not. Obviously projects run longer than this, but what better way to demonstrate substitutability than by substitution. If someone is so indispensable that they cannot be substituted at this time, then pay them more so they do not lose out when IR35 is applied, or make them a permie offer they cannot refuse. This would remove all the FUD, promote and reward a genuinely flexible workforce and weed out the true disguised employees who want to stay with one end client for ever whilst paying less tax than other people doing the exact same job on a daily basis. Of course, the law of unintended consequences no doubt applies..

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Anonymous Coward

Re: Isn't this fixable?

To be clear.. if you do a seven month gig then IR35 applies only to the final month. If the gig crosses a tax year you could do up to 12 contiguous months without paying IR35. You could do one month off, one month on for the entire year. You could do six months with one client, six months with another then go back to the first six months later. Or 2.5 days a week with two clients indefinitely. All of these are flexible working behaviours but clearly not employment in any sensible sense.

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Anonymous Coward

Re: Isn't this fixable?

Im sure to someone who doesnt understand the contract market that this sounds like a brilliant idea.

Ill tell you what, Im not going to point out all of the ridiculous flaws in your plan... how about you just go off and figure out who bears the cost of training the replacement and let me know.

Under regular substitution clauses this would be the contractors LTD company as it would be their decision to invoke the clause and it would be to their benefit, however they will not be likely to want to bear this cost and neither will the client.

So what you are proposing is that the the client allows the contractor to bring in a substitute and spend a few weeks* training them during which time presumably the client is still being billed but the contractor is only spending a fraction of their time working as they have to hand over. You are also asking that the client is either billed twice for the same time/work or that the contractor bears the cost themselves...

I'd be very interested to hear what problem exactly it is that you are trying to resolve here?

Is it that you think that contractors dont pay enough tax? Because I assure you, we pay substantially more than you may have been lead to believe.

We could spend hours listing the pros and cons of contracting V's the pros and cons of being a permie... but thats been done, Instead Ill point out to you that while contractors have a few legal ways to avoid taxes such as paying dividends rather than just salary... permies have a significantly larger number of options available to avoid taxes, a quick google found me these PRE TAX benefits which allow you to avoid paying full whack PAYE (these are often given to employees who are close to crossing into the higher (45% tax band) to keep their tax contributions in the lower rate:

Pensions contributions (Matched by your employer)

Private health care (for you and your family)

Private dental insurance (for you and your family)

Critical illness insurance

Life insurance

Interest free travel loans

Car Allowance

Share Schemes (Bonus they might match your purchase) - Double bonus you become a shareholder and get dividends with tax paid at the same rate that contractors get theirs.

Childcare vouchers

Free eye tests (And a % towards your glasses or contacts if you need them)

Student loan payments.

Work Phones

Discount cards for shops and restaurants

My previous employer also offered a scheme where you could buy supermarket vouchers out of your pre tax pay basically making your weekly shop reduce your PAYE bill.

Then we get onto the obvious:

Training,

Travel expenses (Your employer will pay you to travel to different sites and pay your accommodation and meals while you are away).

Holiday pay

Sick Pay,

Payment for public holidays

Notice period of at least four weeks

Redundancy pay

This list goes on...

Not to mention the strong employment laws that you have on your side should an employer decide to be a dick, have a look at the contractorUK forum for examples of contractors being told that their project has been canceled less than a week into a gig, or better a few weeks ago the guy that got the phone call as he pulled into the clients car park on day one telling him they no longer needed him...

Finally and this in my opinion is one of the biggies... Pay, you as a permanent member of staff are guaranteed to receive your salary on a set date each month, it might vary a bit and there might be occasional issues where you dont get paid on time, but these will be few and far between.

Compare that with my recent experience where an issue with supplier payments meant that over the course of 6 months I only had two invoices paid... not that bad until you factor in that I bill WEEKLY How would a permie deal with only receiving 10% of their pay for six months with very little come back?

Ive said it before to others and Im sure Ill have to say it again.. if you honestly believe that contractors have it so good, give it a go, Ill be happy to give advice on what you need to do to get started, Ill point you in the direction of a few good agencies and recruiters and you too can join this massive tax scam that you seem to think we are all in on.

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This is for contractors to public sector emplyees

so basically any tax paid by the contractor is a refund on what the taxpayer pays them. It really doesn't matter how you figure out the intermediate numbers the only thing is the take home pay of the contractor comes from the taxpayer. If this forces the contractors to raise rates to maintain their take home pay then the whole thing is for nothing.

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