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100 BBC stars face HMRC probe after taxman lands 'self employed' TV actor Robert Glenister with a £147,547 bill for 10 years of National Insurance contributions

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Seems to have had a break down on stage:

http://www.telegraph.co.uk/news/2017/11/10/actor-robert-glenister-freezes-stage-west-end-production-postponed/
 

Has the£150k tipped him over the edge financially?

Yet another outwardly successful person who is one pay cheque away from the metaphorical poor house?

Edited by reddog

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How many times have we heard the same thing . Actors, Pop Stars, Sports Stars, High flying business types going belly up due to a tax bill that they cannot pay ? The list is endless , 

 

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1 hour ago, reddog said:

Seems to have had a break down on stage:

http://www.telegraph.co.uk/news/2017/11/10/actor-robert-glenister-freezes-stage-west-end-production-postponed/
 

Has the£150k tipped him over the edge financially?

Yet another outwardly successful person who is one pay cheque away from the metaphorical poor house?

and only a paltry 150k tax bill. about as successful as a council tenant that got a right to buy discount.

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Ive had this conversation with a few guys on the verge of falling within ir35, particularly if the current public sector rules are rolled out to the private sector.

- Tax is 45% (these guys earn circa 130k)

- Inland revenue penalty is up to 100% of the tax due (ie up to another 45% of your gross for that year)

- Interest due on the underpayment

Oversimplifying for taxbands etc but that leaves you with virtually nothing from that years income if HMRC nail you.

The Irish hpc sank a lot of Irish celebs who couldnt pay tax bills, could be a perfect storm for a lot of the 'talent' at the bbc if they fall into ir35 and their property portfolio crashes in the same year! :lol:

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I was an it contractor in the UK between 2006-10, even though I hate tax, due to by cautious nature I always used a payroll company (Umbrella company) and therefore paid more tax that I could have got away with.

 

Most of my colleagues took the exact opposite approach, and probably saw me as a wuss for being cautious.  

 

Some of the old school ones would still try to put absolutely everything possible through their ltd.  Many talked of (and one acted on) a scheme in the isle of man where you give your income to an offshore company, and they give it back as a loan.

If HMRC catch up with some of these people, they will be totally screwed.  As the money has been spent in them and their families living "the lifestyle"

 

Agree with the point that contracting in the UK is becoming less and less worth it.

 

Edited by reddog

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1 hour ago, reddog said:

I was an it contractor in the UK between 2006-10, even though I hate tax, due to by cautious nature I always used a payroll company (Umbrella company) and therefore paid more tax that I could have got away with.

 

Most of my colleagues took the exact opposite approach, and probably saw me as a wuss for being cautious.  

 

Some of the old school ones would still try to put absolutely everything possible through their ltd.  Many talked of (and one acted on) a scheme in the isle of man where you give your income to an offshore company, and they give it back as a loan.

If HMRC catch up with some of these people, they will be totally screwed.  As the money has been spent in them and their families living "the lifestyle"

 

Agree with the point that contracting in the UK is becoming less and less worth it.

 

Contracting to basically do an employed position and scam tax - yes.

If you are working multiple clients and/or billing for a product /delivery rather than time i.e. behaving like a comoany, then no.

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1 hour ago, spyguy said:

Contracting to basically do an employed position and scam tax - yes.

If you are working multiple clients and/or billing for a product /delivery rather than time i.e. behaving like a comoany, then no.

Well I recon contractors should have a tax advantage because of the precarious nature of their work.  I was just pointing out, a lot of people could be totally screwed if HMRC came after them.

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6 minutes ago, reddog said:

Well I recon contractors should have a tax advantage because of the precarious nature of their work.  I was just pointing out, a lot of people could be totally screwed if HMRC came after them.

Thats like saying 'chainsaw jugglers should be paid more than surgeons as they risk dying'

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2 minutes ago, spyguy said:

Thats like saying 'chainsaw jugglers should be paid more than surgeons as they risk dying'

Well my idea would be that they save more in a "war chest" when out of contract.  So they don't have to run up debt or do equity withdrawal in bad times.  Sadly some seem to be more interested in "owning" a BMW M3 or Range Rover Sport.  Then when the bad times come it is a case of oh sh**.

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46 minutes ago, reddog said:

Well my idea would be that they save more in a "war chest" when out of contract.  So they don't have to run up debt or do equity withdrawal in bad times.  Sadly some seem to be more interested in "owning" a BMW M3 or Range Rover Sport.  Then when the bad times come it is a case of oh sh**.

100% agree with you. Having to move my work from home day this week because a contractor needs a day to pick up his new Range Rover Velar.

Contracting is endemic in my area  (finance), in some departments thre are ten times as many contractors as permanent staff. Many of whom have worked continuously for many years for 1 employer, i know several people with 10+ years. The current Uber witchhunt, the (hopefully) forthcoming ir35 tax changes and , i assume, backdated tax bill and subsequent contractor migration to paye is going to hit a large number of the currently affluent. One of the minority groups currently propping up the housing market. 

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1 hour ago, reddog said:

Well I recon contractors should have a tax advantage because of the precarious nature of their work.  I was just pointing out, a lot of people could be totally screwed if HMRC came after them.

I don't.  They use the same services as the employed person next to them, so should pay the same rate of tax.  The precarious nature of their work, is to suit the changing needs of the employer - so I think they should get a higher rate of remuneration than the employed guy - but still pay their fair share. 

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18 minutes ago, Bricks n' mortar said:

I don't.  They use the same services as the employed person next to them, so should pay the same rate of tax.  The precarious nature of their work, is to suit the changing needs of the employer - so I think they should get a higher rate of remuneration than the employed guy - but still pay their fair share. 

spot on

I don't get how these people can be so hurt by a tax bill. Surely if they earn so much they can get a loan to pay the tax and pay that out of income. Sure, they'll have to tighten the belt, but welcome back to the real world!

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Out in the real world away from the BBC and public sector, contracting exists because it is more efficient than employing people permanently for certain kinds of work. You often hear how business needs a mobile workforce that will go where it's needed when it's needed - contracting provides that. I am one. I can be released in a week. I will be off in 4 months time with no severance. I pay my own holidays, sick pay, pension... yet I was given a choice when I took the contract to tick a box and have employers NI deducted from my rate - at which point I would have guaranteed that I would be released on week 51 to avoid accruing any other employment rights. Fair? 

Yes, there will be some who appear to be pseudo-permies "taking advantage" - so change the rules? IR35 is a horrible piece of legislation that it's very hard to understand HOW to comply with in good faith - HMRC will never have the resources to investigate everybody, so they simply fight test cases in order to scare people not into compliance, but into being treated as employees without actually enjoying the benefits of being one, simply to avoid the risk of being a test case judged to have been so - that's grossly unfair IMO. If this chap now has to pay a load of NI, what sanction is the BBC facing? If he was in effect a full time employee in the eyes of HMRC, shouldn't THEY be landed with employer contributions and forced to pay him 10 years statutory holiday?

It's a bit of a paradox that when it comes to "gig" companies like Uber & Deliveroo treating workers as self employed, the corporations are the bad guys - yet when it comes to contractors (who in the private sector are simply the better paid end of the "gig" economy) surrendering any claim on employment rights themselves, they are the ones under attack?

Some of the big consulting companies are behind the government attack on contracting - they are being paid to provide advice. A white paper was written a while ago suggested contractors outside IR35 via their own company should be unable to claim expenses. What these corporate consultancies want is for us to be forced to work for them - our mere existance undermines their rates. A brilliant independent contractor Programme Manager with 20 years experience and a credible gold plated CV costs the same as a big consultancy resource only a few years out of uni, and half what the consultancy would charge for the Programme Manager - and where does the difference go? In the case of Accenture, their registered office was in Bermuda last time I checked.

The right approach to this is simple - just scrap NI and claw it back through increased income & corporation tax instead, and then send your supersleuths after the people avoiding that via dodgy schemes. That puts contractors and permies on a more even footing +/- corporation tax and dividend relief. It makes the rules clear. Then the choice is simply, do you want the increased security of employment, or would you rather be a mobile independent resource paid more without it.

Where it may end up heading instead is that genuine independent contractors will have to either band together to form their own mini-consultancies, or take fixed term contracts as employees. When it comes to the former, when that white paper came out I sat down with 2 friends and we worked out a plan in a couple of hours to form an LLP - but it all just feels so unnecessary and politically / VI motivated.

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33 minutes ago, disenfranchised said:

If this chap now has to pay a load of NI, what sanction is the BBC facing? If he was in effect a full time employee in the eyes of HMRC, shouldn't THEY be landed with employer contributions and forced to pay him 10 years statutory holiday?

No, they paid a higher rate to him so they didn't have to pay employers NI and holiday. If they have to go back and give the benefits of a permanent employee, they should get a refund of the higher pay he received as contractor.

39 minutes ago, disenfranchised said:

It's a bit of a paradox that when it comes to "gig" companies like Uber & Deliveroo treating workers as self employed, the corporations are the bad guys - yet when it comes to contractors (who in the private sector are simply the better paid end of the "gig" economy) surrendering any claim on employment rights themselves, they are the ones under attack?

It's not a paradox. Uber and Deliveroo workers don't have a choice to be permanent employees. Contractors voluntarily surrender claim to employment rights in return for higher pay.

48 minutes ago, disenfranchised said:

Some of the big consulting companies are behind the government attack on contracting... In the case of Accenture, their registered office was in Bermuda last time I checked.

So far as I can tell, contractors wouldn't be facing any attack if they played by the rules. Accenture's corporate structure may be morally wrong, but that's conflating another issue.

50 minutes ago, disenfranchised said:

The right approach to this is simple - just scrap NI and claw it back through increased income & corporation tax instead, and then send your supersleuths after the people avoiding that via dodgy schemes. That puts contractors and permies on a more even footing +/- corporation tax and dividend relief. It makes the rules clear. Then the choice is simply, do you want the increased security of employment, or would you rather be a mobile independent resource paid more without it.

Sounds like a good idea!

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Whether you consider something unfair depends on the comparison you make - cap gemini can retain cash across financial year boundaries in the company to pay someone "on the bench" , a contractor operating within IR35 cannot do so (well they can but the retained cash is taxes as paye so there is no point). Lone contractors and consultancies like CG are often in direct competition with each other and IR35 gives larger consultancies a tax advantage over lone wolf consultants.

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I'm in IT but never done any contracting. I do understand my employment rights though and it seems to me that contractors don't have any. It can't be right that you have HMRC being like "you're not a proper contractor you're an employee so pay like one" at the same time as the employer saying "you're not an employee so forget about any employee benefits."

I am employed by a large multinational. We have people who just sit and predict the future and they think the "gig economy" will become the norm with "individuals" (I am being careful not to say employees, workers, or even people or humans)  contributing to the enterprise as independent nano-entities. Sounds exactly like when people used to queue early morning at the factory gates, fighting with everyone else in the hope of securing a day's work.

Edited by Funn3r

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My days as an Inland Revenue employee were decades ago but as I recall there were special rules covering the acting profession that allowed actors to be treated as employees for NIC but self employed for tax purposes. The regulations had actually been framed to help those working on the stage since it was designed to allow actors to draw the dole when 'resting' 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/251925/National_insurance_and_self_employed_entertainers_-_response_document.pdf

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4 hours ago, dgul said:

Well, I'm ltd, and pay myself largely (75% plus) as paye.

I'm obviously a mug, but I find it easier to sleep.

When I was a contractor most people paid themselves minimum wage, then took at regular dividends which are taxed at a lower rate.  If you told anyone you weren't doing that you would be branded a mug.

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4 hours ago, Bricks n' mortar said:

I don't.  They use the same services as the employed person next to them, so should pay the same rate of tax.  The precarious nature of their work, is to suit the changing needs of the employer - so I think they should get a higher rate of remuneration than the employed guy - but still pay their fair share. 

Most permanent employees have precarious job security now

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3 hours ago, nayth said:

No, they paid a higher rate to him so they didn't have to pay employers NI and holiday. If they have to go back and give the benefits of a permanent employee, they should get a refund of the higher pay he received as contractor.

It's not a paradox. Uber and Deliveroo workers don't have a choice to be permanent employees. Contractors voluntarily surrender claim to employment rights in return for higher pay.

So far as I can tell, contractors wouldn't be facing any attack if they played by the rules. Accenture's corporate structure may be morally wrong, but that's conflating another issue.

Sounds like a good idea!

I can't work out how to multi quote on android so I'll just have to answer the points in order...

The judgement of HMRC isn't that the nature of employment between him and his personal services company is misrepresented, it's that the nature of his employment with the BBC is misrepresented. Therefore they are complicit in that. Pay level is irrelevant. That's why the banks make those of us who contract on their projects go via another company as well, which they change frequently. 

As a Contractor I can say it is not as simple as surrendering rights in exchange for pay. Firstly, I wouldn't be doing the same job at the same place  - I am a mobile short to medium term resource brought in to do a specific task on a specific programme. Unlike an actor doing a decade at the beeb, I neither want or need to do the same thing year in / year out at the same place. It is not the case that I am being paid a different way to do exactly what a permy does, which is what IR35 was supposed to prevent. Nobody reports to me. Nobody manages me. Nobody authorises my choice of working hours, holidays or location. I have the choice to take a role as a perm requiring the same skills but with a wholly different way of working.

The Uber / Deliveroo argument is that their workers control their own hours of work and can basically do what they like, so are free agents. That's very economically effective for Deliveroo and Uber. Where it doesn't work is allowing them to sidestep stuff like minimum wage. Piece workers are protected from that and these guys should be too - the government should be looking at how to adapt to these new models and make them work for society, not how to crush them underfoot because the unions said so. I was a self employed courier 17 years ago. I supplied the van and insurance, subcontracting companies or agents called me with jobs. That's Uber and Deliveroo in a nutshell. Nobody gave a shit about it then, now it's on an app, they are losing their minds!? Like uber drivers, I had a choice to get a permy driving job instead back then!

As for playing by the rules - just make the rules unambiguous and 95% of contractors will play by them. Osborne took a chainsaw to dividend tax relief so the numbers stack up like this...

A permy earning £100k takes home £65.8k. They pay £28.7k in tax and £5.5k in NI. 

A contractor billing £100k and taking the lot through their own LTD needs payroll and accounting services to do so - call it £2k. They pay themselves £10k on PAYE, they pay 19% tax on £88k profit remaining and take the rest in dividends.

They end up with £67.1k after the recent corporation tax cut - they've paid more tax ( £30.5k) and less NI (0.5k), but they arent exactly creaming the exchequer and taking everyone for a ride?

The employee costs more on top of course - bonus, pension, sick, payroll - and the end user of their services has to pay more NI. Then consider inefficiency - permies are generally on average lazier as they are more secure (I was when I was one, and I was one of the harder working perms). Every company is carrying underperformers. Employees cost you money even when you don't need them, and if that lack of need becomes permanent, you have to pay them to bugger off. That is all costed into their salary... so they get £60k instead of £100k and actually, THEN the net tax take their endeavours produce is lower.

Edit to say - agree 100% with Goldbug. That favouring of large consultancies only seems more ridiculous when you look at their own tax affairs.

Regarding the other posters point on increasing casualisation of the whole work force - agree. It's the inevitable response to globalisation and automation. The way to make that work for society in my view is clamp down on offshore tax avoidance, make immigration dependent on economic demand, and introduce a universal citizens income.

Edited by disenfranchised

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Thousands are now living from day to day....hand to mouth......doubt the lenders will like that when signing up for a commitment of 25 years plus.....a secure long-hold tenancy.....anything can happen.;)

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22 minutes ago, disenfranchised said:

I can't work out how to multi quote on android so I'll just have to answer the points in order...

The judgement of HMRC isn't that the nature of employment between him and his personal services company is misrepresented, it's that the nature of his employment with the BBC is misrepresented. Therefore they are complicit in that. Pay level is irrelevant. That's why the banks make those of us who contract on their projects go via another company as well, which they change frequently. 

As a Contractor I can say it is not as simple as surrendering rights in exchange for pay. Firstly, I wouldn't be doing the same job at the same place  - I am a mobile short to medium term resource brought in to do a specific task on a specific programme. Unlike an actor doing a decade at the beeb, I neither want or need to do the same thing year in / year out at the same place. It is not the case that I am being paid a different way to do exactly what a permy does, which is what IR35 was supposed to prevent. Nobody reports to me. Nobody manages me. Nobody authorises my choice of working hours, holidays or location. I have the choice to take a role as a perm requiring the same skills but with a wholly different way of working.

The Uber / Deliveroo argument is that their workers control their own hours of work and can basically do what they like, so are free agents. That's very economically effective for Deliveroo and Uber. Where it doesn't work is allowing them to sidestep stuff like minimum wage. Piece workers are protected from that and these guys should be too - the government should be looking at how to adapt to these new models and make them work for society, not how to crush them underfoot because the unions said so. I was a self employed courier 17 years ago. I supplied the van and insurance, subcontracting companies or agents called me with jobs. That's Uber and Deliveroo in a nutshell. Nobody gave a shit about it then, now it's on an app, they are losing their minds!? Like uber drivers, I had a choice to get a permy driving job instead back then!

As for playing by the rules - just make the rules unambiguous and 95% of contractors will play by them. Osborne took a chainsaw to dividend tax relief so the numbers stack up like this...

A permy earning £100k takes home £65.8k. They pay £28.7k in tax and £5.5k in NI. 

A contractor billing £100k and taking the lot through their own LTD needs payroll and accounting services to do so - call it £2k. They pay themselves £10k on PAYE, they pay 19% tax on £88k profit remaining and take the rest in dividends.

They end up with £67.1k after the recent corporation tax cut - they've paid more tax ( £30.5k) and less NI (0.5k), but they arent exactly creaming the exchequer and taking everyone for a ride?

The employee costs more on top of course - bonus, pension, sick, payroll - and the end user of their services has to pay more NI. Then consider inefficiency - permies are generally on average lazier as they are more secure (I was when I was one, and I was one of the harder working perms). Every company is carrying underperformers. They cost you money even when you don't need them, and if that lack of need becomes permanent, you have to pay them to bugger off. That is all costed into their salary... so they get £60k instead of £100k and actually, THEN the net tax take their endeavours produce is lower.

 

Anecdotally, I know of IT contractors working through ltd companies who only pay basic rate of tax on 6 figure earnings. One could argue such cases are unrepresentative but they have been doing it for many years and from what I've been told, this is certainly the norm in their industry.

Meanwhile it seems Hammond is preparing a tax raid on contractors in the coming budget

https://www.thetimes.co.uk/article/philip-hammond-eyes-1bn-budget-raid-on-freelancers-9bm6lsjs6

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  • 292 Brexit, House prices and Summer 2020

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