* Posts by Andys1342

6 posts • joined 14 Nov 2019

UK government review of IR35 tax reforms? Like a broken pencil, say contractors groups – it'll be utterly pointless

Andys1342

Re: I am a genuine business, yet I'm now getting hassled by my clients!!

There are three reasons that organisations should recognise blanket decisions as being dangerous, that are contained within the legislation itself:

They do not constitute ‘reasonable care’ – and if they are found to have breached section 61T(6)(c), then the tax risk passes back up to that organisation.

Insurance underwriters will not cover the tax risk unless an individual assessment has been conducted, and agencies do not wish to take on uninsured risk.

If investigated by HMRC, an inadequate role-based blanket assessment could trigger a 2 year extension of the IR35 enquiry window to six years due to ‘carelessness’ under Section S36(1) TMA 1970. If the error was deliberate this could extend to 20 years (S36(1A)).

Andys1342

Re: It's over....

As a result of these changes I am looking at going permanent. Yes my take home will drop overall, but the tax I pay will also drop 29%... As a contractor I have a lot more risk and have to do everything myself, I only get paid for the days I work, so holiday and sick pay, plus anything else has to be covered by me.

I think permie's need to understand that contractors do not just pay PAYE, they also have to pay corporate tax, VAT, etc. and work all this out, plus pay insurance, accountant, IT costs, etc. The difference between permie take home and contractor take home is not as much as you might think, especially if you take 25 days holiday, plus the 8 days national holidays (not working on a contract) into account.

Andys1342

Result = huge damage and less tax income

This is not just short sighted its seriously damaging. HMRC really do not get what they are doing. Most contractors with Limited companies actually pay significantly MORE tax than HMRC claim as HMRC fail to take into account Corporate tax and tax on dividends. Yes contractors pay less NI, but once you take into account standard rate tax is 20%, corporate tax is 19% which offsets and you pay tax on dividends AFTER corporate tax, the top rate of tax is actually 19% + 32.5% = 51.5% not 40%.

I can also see a lot of small Limited companies going to the wall, so HMRC will also suffer losses from all these companies not paying 19/20 tax year or in many cases 18/19 tax year corporate tax, not to mention the cost of managing all of these companies closing down.

I am now looking at full time positions. Given one offer, yes my take home will drop 37% - BUT the tax I pay will also drop 29%..... go figure.

Its not that HMRC are shooting themselves in the foot that amazes me, it's how fast they can re-load!

Andy

Tory chancellor pledges to review IR35 rollout in UK private sector – just like all the other parties

Andys1342

Well there are 5 million votes up for grabs, including mine. If the conservatives actually say they will postpone the introduction of the changes until after a review I will vote for them, otherwise its LibDem. This has a massive impact on me as if I cannot get more contracts I will have to go full time and I like the flexibility I have. The really silly thing is that if I did go full time, based on a job I have been offered, I would effectively pay 29% LESS tax overall. HMRC need to get their facts straight about how much tax they really get because of the changes. I bet for the public sector they included the PAYE tax in their claims but conveniently ignored the loss of corporate tax from all the little service companies that got closed down. I bet the net effect was they lost tax income due to the changes not increased it.

This will have a massive negative impact on the economy, right at the same time as Brexit. The conservatives only have a few days to clarify their position, I am obviously not going to vote for comrad Corbin and the communist party.

20% of UK businesses would rather axe their contractors than deal with IR35 – survey

Andys1342

They will soon learn

The fact is that all of the skilled workers will go elsewhere and those that are willing to put in place a process to handle contractors outside IR35 (such as insisting they get a contract review and certificate) will have the very best contractors to choose from for projects. Those that put in a blanked PAYE or nothing will get the ones that are too stupid or unskilled to find another contract and so have no choice but to convert to PAYE. I think the banks will just end up with a bunch of mindless droids with all the real thinkers moving on.

I think they will soon wise up when projects start failing and they lose millions in income as they cannot keep up with the competition.

Next year will be interesting.

Andy

Any promises to extend rights of self-employed might win an election, hint Brit freelancer orgs

Andys1342

5 Million Votes

I agree, I will vote for the party that says it will scrap bringing in the changes to IR35 at the least and preferably replace IR35 with something that does not treat limited companies differently depending on their size or the fact they may have contract staff.

What makes me laugh is I have been offered a full time role from April. While it would mean 37% less take home pay, it would also mean I pay 29% LESS tax than I do today. The muppets at HMRC seem to have failed to take corporation tax (or VAT) into account while thinking this will net them more tax. IT will also mean I have to lay off two staff that do odd contract work for me. These changes are an absolute failure to understand the contract market, how important it is to the economy and the fact I am not voting tory or labour unless one of them scraps IR35.

Andy

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