IR35 draft update - The Book-keepers Forum (UK)

Cheshire · Master Book-keeper

IR35 draft update

Leger · Master Book-keeper

Thanks Joanne

I was aware of the rule change but this bit from the link caught my eye.

This meant that certain contracts would have required IR35 determinations, even though the work itself would have been performed before the reforms had taken effect.

Now correct me if I'm wrong but IR35 has been around for 20 years and the only thing that's changed is that it is now down to the end client to determine IR35 status, not the provider. So the determination should have already been there.

The main problem with the change in emphasis is that the end client is running scared and putting people into IR35 when they shouldn't be, although vice versa some people should already have been in IR35 but aren't.

My opinion: Scrap the bloody thing altogether and have simple, understandable rules that determine employment status, especially for those in the gig economy.

Shamus · Forum Moderator & Expert

Cheshire wrote:
https://www.icaew.com/insights/viewpoints-on-the-news/2020/feb-2020/hmrc-announces-changes-to-off-payroll-working-rules

More changes to follow

Thanks for the update Joanne,

A lot of contracts out there are being terminated on the last payment run before the 6th of April.

I'm ending before that date but its a natural end of contract that coincides with the change rather than it being cut short. I have been informed that I would have fallen outside IR35 had I been able to remain with the client.

This unfortunately seems to be another case as with continuity of employment rules where HMRC staff need training on what the rules actually are. The suggestion is not as some out there seem to believe that HMRC can go back through older contracts changing the status restrospectively but for a while it looked as though the current contract if it crossed the line could be rejudged in its entirety. That explains why come April there will be a lot of work going to India.

Now, I'm conservative, but is it really a good idea that the new Chancellor of the exchequers wife is the daughter of an Indian tech billionaire set to profit from the wholesale destruction of a flexible UK workforce.

At a time when we should be embracing growth to get the country moving and become a serious player again on the world stage now that we are rid of the EU anchor thats been holding us back the goevernment seems to be hell bent on destroying flexibility in attempt to appease the left leaning thinktanks that imagine tax revenues that will never materialise. Rather they risk several hundred thousand people becoming unemployed and becoming net recipients than appreciate that contract staff with no perquisits, no sickay, no holidays, paying for their own training, buying compulsory insurance, and with no contribution towards their pensions pay a lot of money in tax but attempt to limit the unfair 25% National Insurance.

When the media and government bandy lines such as "pay their fair share" thats just twisted demonisation of people attempting to pay only the same as those in permanent employment against a system geared towards making them pay proportionally more.

We were promised by Cammeron before they got back into power that IR35 was to be repealed... Now look at it. There must be gold statues being errected to the conservative party in Mumbai for continueing the destructive anti capitalist work started by the Blair Government in creating a tax regime that is bringing a once lucrative industry to its knees.

As with business rates, one true fact of taxation is that the more you try to take, the lower your yield will be. Local councils have completely destroyed the high street with business rates whilst blaming the internet. and since 1997, successive governments have destroyed the service sector whilst at the same time villifying the service sector in the process.

The fault it seems is always someone elses but the common factor is that it wasn't broken until they started messing with it

Grrrrr....

Leger · Master Book-keeper

Hi Shaun.

I can't say I wholly disagree with you, and you make some good points. I don't think we can blame the present chancellor, as IR35 clampdown has been in the offing for at least two years. But yes, it doesn't bode well if there's a potential commercial interest with daddy in law.

(As an aside, I was sorry to see Sajid Javid go, but know nowt about the current Chancellor)

As with business rates, one true fact of taxation is that the more you try to take, the lower your yield will be. Local councils have completely destroyed the high street with business rates whilst blaming the internet

I thought it was the valuation office, ie the Government that sets business rates? I don't think we can blame the Councils, who will also be affected by empty shops.

Time for a complete overhaul methinks, and introduce a new tax that covers both internet and B & M businesses.

Have you got anything else lined up work wise?

Shamus · Forum Moderator & Expert

Leger wrote:
Hi Shaun.
I can't say I wholly disagree with you, and you make some good points. I don't think we can blame the present chancellor, as IR35 clampdown has been in the offing for at least two years. But yes, it doesn't bode well if there's a potential commercial interest with daddy in law.
(As an aside, I was sorry to see Sajid Javid go, but know nowt about the current Chancellor)

As with business rates, one true fact of taxation is that the more you try to take, the lower your yield will be. Local councils have completely destroyed the high street with business rates whilst blaming the internet
I thought it was the valuation office, ie the Government that sets business rates? I don't think we can blame the Councils, who will also be affected by empty shops.
Time for a complete overhaul methinks, and introduce a new tax that covers both internet and B & M businesses.

Have you got anything else lined up work wise?

Hiya matey,

fair nuff on the business rates, my bad, they keep half of it but they don't set the rates so we'll blame Westmister for that as well. The sentiment however remains true that the higher the tax on property the less business will use it.

If the Government introduced a tax on internet based companies they would just move to a different country where they would not be taxed. I'm actually thinking that the government is looking to go the other way and create a country where companies currently residing in Ireland and the Netherlands yet doing all of their business in the UK are encouraged to move their bases of operations here and we basically do a Southern Ireland on Europe.

I'm reminded here of starbucks. Almost no presence in the Netherlands. hundreds of shops in the UK. Where do you think that they set up head office. Yep, you guessed it. Every Starbucks in the UK has to pay an extortionate management charge to the head office ensuring that every branch makes a loss in the UK (or at least minimal profit). The profits in the Netherlands are then charged to corporation tax in the the Netherlands (on income derived from the UK) at 4% (A special arrangement which Europe is not happy with).

Thats all completely legal and the way that Ireland and the Holland have built fantastic economies. I believe that the intention is to get all of these companies back to the UK rather than scare them away with internet taxes which are, by and large, something bandied in the media rather than parlaiment. But, as so often happens the media drives populist ideas that politicians, many of whome have absolutely no clue about economics, run with.

Got a few weeks yet before the current gig is up. Shame as I liked this one even with the getting up of 04:00 in the morning in order to miss the M6 parking lot and being sat stationary in the fast lane for a couple of hours on the way home. Agents have started sniffing around early so fingers crossed will drop on another good one within a reasonable timeframe.

All the best,

Shaun.

Cheshire · Master Book-keeper

Leger wrote:
if there's a potential commercial interest with daddy in law.

You are welcome boys.

Isnt there always a commercial interest when MPs are involved!

Greed is everywhere.

I put a lot of it down to the keeping up with the Jones' attitude that started in about 1970s, the Jones' being local councils as well as individuals, everyone just NEEDS ( for that I mean WANTS) to have the latest thing that everyone else seems to have. The whole world has their 'needs' skewed eg those who go to a foodbank when you have a massive gas guzzelling car on the drive and humungous TV on the wall. Folk need to get their priorities straight. (Not that I am saying everyone who goes to a foodbank is like that, obviously!!)

Sorry not got time to add more, too busy dealing with bloody snowflakes, but largely agree with you both.

Leger · Master Book-keeper

Hi Shaun, when I mentioned Internet taxes, I wasn't so much thinking of the big boys but ecommerce in general. A reasonable tax spread across the business spectrum to replace business rates.

But since you mention the big boys I found your comments interesting. You say Ireland and Holland are thriving due to low tax rates. That's understandable if, as you describe, foreign firms take advantage of the loophole that exists for them to do it, but it only works because of that loophole., so it creates an unfair playing field. Would Holland and Ireland still thrive if they were only charging 4% tax to their domestic businesses?

Personally I'd like the Chancellor to turn round and sway, if you've created your wealth in this country so this is were you pay your tax. We couldn't really do that whilst we were in the EU, but I'm pretty sure we can do it now.

Shamus · Forum Moderator & Expert

Leger wrote:
Hi Shaun, when I mentioned Internet taxes, I wasn't so much thinking of the big boys but ecommerce in general. A reasonable tax spread across the business spectrum to replace business rates.
But since you mention the big boys I found your comments interesting. You say Ireland and Holland are thriving due to low tax rates. That's understandable if, as you describe, foreign firms take advantage of the loophole that exists for them to do it, but it only works because of that loophole., so it creates an unfair playing field. Would Holland and Ireland still thrive if they were only charging 4% tax to their domestic businesses?
Personally I'd like the Chancellor to turn round and sway, if you've created your wealth in this country so this is were you pay your tax. We couldn't really do that whilst we were in the EU, but I'm pretty sure we can do it now.

Oh, it's true. But maybe slightly unfair to single out just starbucks when could also go for Apple, Google, Fiat, Amazon... it would be a long list. The Uni's now teach this under business ethics as the only hope of getting money from the global corporates is through public perception of them.

You can threaten as much as you like but Governments have no real power where the consumer moving brands does as we have seen with clothing and shoe companies using child labour predominantly in India.

But Governments need to get away from treating these companies as if they are doing something illegal because they use legitimate flaws in the global system.

The real issue is that Governments think locally but business thinks globally.

The chancellor may as well be king Canute telling the sea to stop as trying to tell the giants of business what they must pay. But, Companies are answerable to their shareholdrers and corporate heads have rolled on the back of poor ethical stances so as with politicians caring only about votes four years hence, so CEO's worry for their own positions.

And just to add another element to the rubics cube of corporate taxation. If the UK Government did attempt to sue (say) Apple in Ireland and won then America would have first dibs on repatriating the money in taxes as they are an American company avoiding American taxes.

They are very murky waters out there. The only thing certain is that without being shamed into giving over the money freely the Government stands pretty much zero chance of getting their hands on a brass farthing... Or should that be cent? lol.

Its the same with loans. you don't repay a thousand pounds and you are in trouble with the bank. You don't repay a billion pounds and the bank is in trouble with you. Tax is an extension of that idea in that at a certain size its pretty much you decide if you want to pay taxes in order to appear socially responsible... I am sure that many corporates actually regard payment of taxation as a charritable donation.

All the best matey,

Shaun.

Cheshire · Master Book-keeper

Apparently a soft landing has been agreed for IR35 - private sector.