Hammond plans tax crackdown on 'synthetic self-employed'

[spyguy]

1 hour ago, onlooker said:

I have no idea. My accountant didn't regard them as ambiguous, and he insisted on keeping me on the straight and narrow.

Accountants are not tax or employment lawyers.

 

[hurlerontheditch]

2 minutes ago, spyguy said:

As a one man band you are very exposed. And so is the customer.

Consider this line of argument:

Company A has a 3 year project, involving a critical products, to be delivered with in a tight schedule.

Would you question their sanity to rely on a one man band IT self employed contractor?

It would be laughed  out of the court.

The compnay should be seekind to employ a consultancy, consiting of a lot more than person.

Its fine to use a one man band for short term contracts. I have. The person I used had 2-3 clients on the go. Thats OK.

 

Its not OK to have someone sat in your office, using your kit, to do their job - thats a FT employee.

 

 

you are focussing on IT. I am talking about a project where you deliver a scope of work. a lot of major energy companies do this. the only staff they have are finance and corporate. when they run a new project they hire in contractors to deliver a set scope of work then leave. I have been in the industry for 19 years and have met a lot of people, no one I know as ever been deemed inside IR35 by HMRC. I do however know many who really pushed the system with EBTs and are under investigation

[pathfinder]

heres a Gov article Feb 2018 looking into this.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07

[spyguy]

10 minutes ago, hurlerontheditch said:

you are focussing on IT. I am talking about a project where you deliver a scope of work. a lot of major energy companies do this. the only staff they have are finance and corporate. when they run a new project they hire in contractors to deliver a set scope of work then leave. I have been in the industry for 19 years and have met a lot of people, no one I know as ever been deemed inside IR35 by HMRC. I do however know many who really pushed the system with EBTs and are under investigation

IT is just an ovsious/common example.

I know people who are doing not IT jobs, effectively as FT employees but avoiding FT taxes.

The area of cotrnacting murky.

Having aFT employee - fine.

Having a contractor - large or small (>1 person) - fine.

Having a one man band working for a short period - fine.

Being a one man band, wroking for several clients in a tax year -fine.

Being a one mand band working for the same and one customer for 6+ months - Hmm.

 

[hurlerontheditch]

3 minutes ago, spyguy said:

IT is just an ovsious/common example.

I know people who are doing not IT jobs, effectively as FT employees but avoiding FT taxes.

The area of cotrnacting murky.

Having aFT employee - fine.

Having a contractor - large or small (>1 person) - fine.

Having a one man band working for a short period - fine.

Being a one man band, wroking for several clients in a tax year -fine.

Being a one mand band working for the same and one customer for 6+ months - Hmm.

 

what project do you know takes less than 6 months?!

 

[spyguy]

2 minutes ago, hurlerontheditch said:

what project do you know takes less than 6 months?!

 

A single project is composed of many different tasks, performed by many people.

I my case, we needed a HW designed for a period of ~3 months.

 

 

[cashinmattress]

12 minutes ago, hurlerontheditch said:

no one I know as ever been deemed inside IR35 by HMRC

Just because they haven't been knicked... doesn't mean they won't be.

Tax liabilities to HMRC can't be struck off either if you roll over into bankruptcy.

There's a great deal of unpredictability in how the grey areas of the legislation can be interpreted.

[hurlerontheditch]

7 minutes ago, spyguy said:

A single project is composed of many different tasks, performed by many people.

I my case, we needed a HW designed for a period of ~3 months.

 

 

major projects , circa $ 5bn that I work on take 24-36 months

[No One]

15 hours ago, Ah-so said:

Does this effect you?  I have a feeling it does. 

 

No shit Sherlock

[No One]

20 hours ago, cashinmattress said:

Contractors, or perhaps a good proportion of them are walking piggy banks... and HMRC knows this.

Watch the documentary on youtube called "the spiders web: britains second empire". If they don't fix that as opposed to IR35 penny pinching, then Hammond is full of shit

[spyguy]

Just now, hurlerontheditch said:

major projects , circa $ 5bn that I work on take 24-36 months

But not for a single person FFS.
 

Ive not run a a multi billion project. However, if I did, Id not be relying on one man bands for any significant, critical part.

 

[onlooker]

2 minutes ago, hurlerontheditch said:

major projects , circa $ 5bn that I work on take 24-36 months

Personally the projects I worked on were of much shorter duration. But there is no reason why contractors should not work on long projects, if they have other clients as well at the same time, and be able to take some/all of the work off site, and mainly use their own tools.

It must be difficult to argue that they are contractors if they are part of the employing company's management structure or framework organigram.

[hurlerontheditch]

23 minutes ago, spyguy said:

But not for a single person FFS.
 

Ive not run a a multi billion project. However, if I did, Id not be relying on one man bands for any significant, critical part.

 

a project I was on a few years ago, there was 35 people on the project, the only staff people were the project director, the engineering manager, head of finance and the project secretary. the rest were one man bands. that was a large value project too. when you went to the subcontractor companies doing the manufacturing, most of their team were one man bands too

 

I have been on long projects but when there were delays we were told not to come in for a month while we awaited data to arrive. this is the flexibility that using one man bands brings. it allowed me to do some sub work for someone else and time off

 

next thing you will be telling me is that Entrepreneurs relief should be banned too

[Houdini]

1 hour ago, hurlerontheditch said:

you are focussing on IT. I am talking about a project where you deliver a scope of work. a lot of major energy companies do this. the only staff they have are finance and corporate. when they run a new project they hire in contractors to deliver a set scope of work then leave. I have been in the industry for 19 years and have met a lot of people, no one I know as ever been deemed inside IR35 by HMRC. I do however know many who really pushed the system with EBTs and are under investigation

The only reason for using an EBT in the early days was because you felt that you were likely to be inside IR35..

 

57 minutes ago, spyguy said:

But not for a single person FFS.
 

Ive not run a a multi billion project. However, if I did, Id not be relying on one man bands for any significant, critical part.

Consultancies aren't much better. They will often use contract staff to make up any shortfalls in skill sets (I used to get a lot of work that way)..

[Quicken]

13 hours ago, Tulip_mania said:

Pensioners with income above £45,000 aren't relying on the state pension, they're getting income from assets which have likely been accumulated using tax free saving such as a pension.

I don't suggest means-testing the pension, even if your income is £100k you get your pension but pay 42% tax on it. Only progressive taxation, with an adjustment to thresholds so no-one with income of <£20k loses in current cash terms. It's always worth remembering that there is no 20% tax bracket for those in employment, there are 12, 32 and 42% tax brackets.

It's much worse than that. You haven't counted employer NI rates. Add another 13.8%.

[spyguy]

9 minutes ago, Houdini said:

The only reason for using an EBT in the early days was because you felt that you were likely to be inside IR35..

 

Consultancies aren't much better. They will often use contract staff to make up any shortfalls in skill sets (I used to get a lot of work that way)..

Im not saying a consutlant or, more likely, a contract labour provider, is better.

Just that they operate in a legal and tax framework more acceptable to HMRC.

For example, Im BigCo2000.

I have a project out in the sticks. I need to get ~100 people, on site for 5 years.

I dont want to deal with 100 one ma band operators for 5 years, a nightmare.

I ring DodgyDave job agency and say 'I want 100 people in sh1tsville' And they sort it out.

There's not comeback that Ive been helping individual contractors evade NIC.

Ive used an gency. The agency is repsonsbiel for getting people on site. I dont are if its the same or diffrrent people; they deal with that,thats how they earn their 15%.

 

Play it the other way, I winkwink pretend employ 100 oneman band 'contractors' who I know will be on site for 5 years. HMRC old ave  case that BigCo2000 has been directly involved with helping those contractors evade tax.

 

 

 

[Ah-so]

6 hours ago, No One said:

 

No shit Sherlock

When you switch from a paying dividend tax to a 40% income tax, perhaps you can simply jack up your day rate. This is effectively what landlords claim they will do in response to  S24.

[dpg50000]

41 minutes ago, Ah-so said:

When you switch from a paying dividend tax to a 40% income tax, perhaps you can simply jack up your day rate. This is effectively what landlords claim they will do in response to  S24.

That is actually what happened in the vast majority of cases when HMRC tried this s**t for public sector I.T. contractors.  Most of the public sector departments they work for have little or no permanent staff (certainly not enough to cover any projects bigger than replacing a desktop PC - exaggeration, but you get the point).

I personally know several who walked when the new rules came in, only for the departments in question to come back a few weeks later with a much higher day rate for them. Basically, the departments relied they couldn't possibly run the large projects they have ongoing without them, due to lack of in-house staff numbers and skills.

The hilarious thing is, as the departments are all government funded anyway, it meant the governments spend on contractors increased significantly.

[regprentice]

9 hours ago, onlooker said:

I have no idea. My accountant didn't regard them as ambiguous, and he insisted on keeping me on the straight and narrow.

Interestingly the contractors I know tell me their accountants made them write a statement confirming that they had satisfied themselves that their contracts did not put them in IR35. I know one guy with an 'old school's accountant who hasn't asked for this, that accountant told him that contractors time was up and he should look to convert to permanent.

On the IR35 classification tests I can pass some of them as a permanent employee. I don't have set hours (I need to be in in daytime but can roll in at 10am and leave at 4 is without requiring permission), I can choose my place of work through remote working, and I use my own equipment (pc, phone etc) when working from home..

[onlooker]

12 minutes ago, regprentice said:

Interestingly the contractors I know tell me their accountants made them write a statement confirming that they had satisfied themselves that their contracts did not put them in IR35. I know one guy with an 'old school's accountant who hasn't asked for this, that accountant told him that contractors time was up and he should look to convert to permanent.

On the IR35 classification tests I can pass some of them as a permanent employee. I don't have set hours (I need to be in in daytime but can roll in at 10am and leave at 4 is without requiring permission), I can choose my place of work through remote working, and I use my own equipment (pc, phone etc) when working from home..

My accountant was 'old school' (well he was certainly old, and retired from regular work). His main concern to avoid IR35 complications was that I should have more than one client during the course of a year. In the end I had 3 regular clients, but the work was always spasmodic.

As I said, the abolition of dividend tax credits make the whole issue much less significant for better paid consultants. The present big problems seem to revolve around Deliveroo, Uber and the like.

[dugsbody]

6 hours ago, Houdini said:

 

Consultancies aren't much better. They will often use contract staff to make up any shortfalls in skill sets (I used to get a lot of work that way)..

The only positive about consultancies is contract for deliverables and staying power. But the quality of their consultants is lower than one man bands.

[spyguy]

1 hour ago, dpg50000 said:

That is actually what happened in the vast majority of cases when HMRC tried this s**t for public sector I.T. contractors.  Most of the public sector departments they work for have little or no permanent staff (certainly not enough to cover any projects bigger than replacing a desktop PC - exaggeration, but you get the point).

I personally know several who walked when the new rules came in, only for the departments in question to come back a few weeks later with a much higher day rate for them. Basically, the departments relied they couldn't possibly run the large projects they have ongoing without them, due to lack of in-house staff numbers and skills.

The hilarious thing is, as the departments are all government funded anyway, it meant the governments spend on contractors increased significantly.

Ah but ...

Theyve triallled this in the public sector.

Now theyll roll it out in the private sector.

The uk taxation and skills base is a mess.

Uk comoanies are going to have to pay like americabs one for in demand skills. Theres no other way.

DB pensions have been scrapped do theres no hold on employees. Structural shift in skills demand.

[Will!]

11 hours ago, hurlerontheditch said:

what about projects that last 24 to 30 months?

Fixed-term contracts for PAYE employees.

[BalancedBear]

This entire issue has been caused by governments trying to squeeze more tax from people they think are doing well. The entire IR35 situation was caused by politicians portraying self-employed people as not paying their "fair share" of tax. However they never state that such people will be unlikely to claim many benefits. I don't see why the decision to be self employed or not should be decided by anyone other than the person carrying out the work and the client. Not everyone wants to be an employee, many employers don't want employees either. Even people working for the same employer all the time, should be able to be decide they want to be self employed. If they are self employed they will forgo all perks of being a permanent employee and the security which goes with it.

I was an IT contractor many years ago, but once IR35 was introduced I started another business which could never fall into that category. If IR35 is made even more draconian, more contractors will leave the industry and do something else, or work in another country. Likewise companies will not suddenly employ lots of permie staff, they will pay a consultancy company instead, many of which bring in huge numbers of people from India because there is a "skills shortage". It has nothing to do with skills though, just the government trying to force people to work in a way they don't want to.

 

[hurlerontheditch]

10 hours ago, Will! said:

Fixed-term contracts for PAYE employees.

That costs more to the client