The All Things IR35 Related Thread

I spent many years as an IT contractor and let's face it, the main reason people are contractors is that the tax avoidance methods were well worth the gamble of not getting sick pay if something went wrong, or the lack paid annual leave. I took a week off for glandular fever, but apart from that I'd be in every day even if I was coughing up a lung. It was good while it lasted, and I'm surprised the ladder wasn't pulled up earlier.
 
Been a contractor for almost 10 years, always made sure I’ve been outside IR35 just in case HMRC came calling. Contract reviews and so on to make sure everything is kosher.

Now that the liabilities are changing to the clients it’s funny to see the total shambles they’ve made of it.

My current client has gotten independent assessments done and everything has come back fine (well yeah, because us contractors were keeping them right over the years).

Some right horror stories coming out though, people being told they’re in when they’re should clearly be out, blanket assessments and the like.

Contractors and clients both sticking their heads in the sand over this, total Pandora’s box could be opened over historical abuse of IR35, when people are seen to be going PAYE with nothing else changing. Yes HMRC have said they won’t investigate previous engagements, but the same engagement with that change won’t be off their radar.

And it’s all at a time when UK plc least needs it, but you can be sure everyone blames Brexit when everything goes Pete Tong in the next couple of years due to projects across industry failing spectacularly, jobs being outsourced to India etc.

Will cost HMRC billions.
 
The problem with the way it has been done, though, is that companies can still take on 'contractors' but inside IR35. However they don't offer holiday, sickness and other legal protections which permies enjoy. It's all of the downsides of being a contractor (lack of stability, no holiday pay, no sickness pay, no employment protection) but none of the upsides (lower tax). I'm not an expert on this and have never contracted so please correct me if I am wrong.
 
Hades said:
The problem with the way it has been done, though, is that companies can still take on 'contractors' but inside IR35. However they don't offer holiday, sickness and other legal protections which permies enjoy. It's all of the downsides of being a contractor (lack of stability, no holiday pay, no sickness pay, no employment protection) but none of the upsides (lower tax). I'm not an expert on this and have never contracted so please correct me if I am wrong.
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You can expect court cases in the coming years over people not getting employment rights as a result of this.
 
Jokester said:
Contractors and clients both sticking their heads in the sand over this, total Pandora’s box could be opened over historical abuse of IR35, when people are seen to be going PAYE with nothing else changing. Yes HMRC have said they won’t investigate previous engagements, but the same engagement with that change would be off their radar.

And it’s all at a time when UK plc least needs it, but you can be sure everyone blames Brexit when everything goes Pete Tong in the next couple of years due to projects across industry failing spectacularly, jobs being outsourced to India etc.

Will cost HMRC billions.
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The advice I have seen is to leave the client before April to avoid your contract converting from outside to inside IR35 for this very reason.

With Brexit we should be encouraging sectors like IT, not trying to wipe them out. This just leaves the door open for more offshoring to complete projects. It's a very bad move in my opinion.
 
Hades said:
The advice I have seen is to leave the client before April to avoid your contractor converting from outside to inside IR35 for this very reason.
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Yes, the legal advice I’ve seen from tax specialists is to leave a client that does this. If you don’t at least be prepared for the possibility of an HMRC investigation.
 
Good.

To go against the grain of the thread here, but in my job, in the last place I worked specifically I used to look at these applying for mortgages.

Amazing how much money they earn when they need to prove it that way, then amazing how little they earn when they are talking to HMRC.

I apologise for those in this thread that do behave.
 
I did contracting a decade a go for many years. My house bought and paid in full off the proceeds. I stopped because I knew this was going to happen and I never liked the boxes on the tax returns.

To be honest at my level of experience and skill I command pretty much what a healthy day rate is. Plus I get the benefits of being a permie. So there was no point taking the risk any longer.

Many contractors earn much more than they would permie, additional money I believe is fair for the obvious reasons, but I believe the extra money is due to flexibility. Even paying tax like a permie you would be getting more than the permie equivalent. Unless your in a very senior position. Or getting a woeful day rate.

Be worried. Go permie. Maybe stuff will change and you can go back to being the cockroaches we love to hate.
 
I guess you never saw my polite IR35 thread in Careers.

I was contracting to santander for 10 years straight, then come my contract expiry end of October I was told they would not be renewing any further contracts.

Come the end of november and those whose contracts finished a month after mine were told the same, then the week before they expired they were then informed the could continue via an employment agency (!)

I have since found a nice permie job close to home (which I've never had before) and am going to ride it for a couple years then reevaluate.

I've also been getting calls from Santander to rejoin via this agency. They can suck it.


In short: **** IR35, and **** disloyal businesses.
 
BUDFORCE said:
Good.

To go against the grain of the thread here, but in my job, in the last place I worked specifically I used to look at these applying for mortgages.

Amazing how much money they earn when they need to prove it that way, then amazing how little they earn when they are talking to HMRC.

I apologise for those in this thread that do behave.
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contractors do pay quite a lot of taxt in terms of the corporation tax and anything they take over 43k in dividends gets taxed at 40% anyway.

Its when you do the entrapanour relief that you can reap the rewards really by taking everything out and paying just 10%

Anyways its a high risk high reward game but the new changes would simply be a high risk, normal/low rewards game now .

Honestly lets be bonest, the real tax dodgers are the big corporations like amazon etc that pay naff all taxes here and the HMRC/Gov should be going for those guys really.

Question: Does germany and amsterdam etc have such a thing called an IR35?
 
Hades said:
The problem with the way it has been done, though, is that companies can still take on 'contractors' but inside IR35. However they don't offer holiday, sickness and other legal protections which permies enjoy. It's all of the downsides of being a contractor (lack of stability, no holiday pay, no sickness pay, no employment protection) but none of the upsides (lower tax). I'm not an expert on this and have never contracted so please correct me if I am wrong.
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I see this link too much. The upside isn't lower tax to make up for lack of holidays. They are two different levers.

That makes it sound legally wrong and hence the problem.

Edit. And again. @jonneymendoza just linked contractors paying Corp tax. No. The limited company you are an employee of has to pay that.
We need a flexible IT job market, with incentive to be flexible being financially more rewarding. But the current form is a gravy train which has stopped. And to be honest I think it's fair to stop, I just hope they work out how to create that flexible market again.
 
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I’m yet to hear my determination but the CEST tool says I’m outside and I believe myself to be outside, that aside I’ve handed my notice in to finish in March and am going to take a few months off. Be glad I won’t have to travel to the other end of the country for work.
 
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