Contractor association blasts UK.gov guidance on hated IR35 tax law's arrival in private sector The Association of Independent Professionals and the Self-Employed has said UK government guidance on private sector changes to off-payroll working falls "woefully short". From 6 April 2020, it will be the responsibility of all medium and large-sized private sector bodies to determine whether contractors fall within the IR35 …
"Make sure you keep detailed records of your employment status determinations, including the reasons for the determination and fees paid"
So, the engagement switches from being a company to company one, to an "employee" to a company. Once that relationship finishes, under GDPR that personal information the company "employing" the individual holds would need to be deleted surely?
I do hope that Mr Hector isnt suggesting its kept on a just in case basis?!
(Ignored the futility of the rest of whats going on with this daft ruling)
All the data protection laws have said that you can keep information, but the information & the duration you keep it for has to be appropriate. If a government department is saying you need to keep some financial records for X years, then your keeping of those records is lawful under GDPR (and its predecessors)
Hell, some school and medical information has to be held for 25-30 years. I'm not kidding you.
GDPR does not impose a time limit. It imposes a control of information and a reasonableness for your retention. If you must retain it for tax purposes, then you must retain it. If you must retain it for legal purposes, then you must retain it.
GDPR does not contain, nor has any case law yet fully established, an upper time limit on data retention. It just says to do so for a reasonable time to fulfil a reasonable aim.
It's not unreasonable to retain business determinations of taxation status for at least the period of tax information retention. It would be unreasonable to retain it for 100 years. Similarly, it's not within your rights to use that information to spam your suppliers or to keep everything else around for the taxation period "just because" you don't want to have to deal with different dates for different information.
There's no conflict with GDPR. It says that information that can personally identify somebody should be kept for no longer than absolutely necessary - it acknowledges that what is necessary may be defined by statutory requirments within a countries legal framework - e.g. keeping company records for 6 years, personal tax records for 22 months, etc.
Andy Chamberlain, deputy director of policy at the Association of Independent Professionals and the Self-Employed (IPSE), whined: "The government's insistence that our members pay their fair share of tax is really confusing. The lack of guidance about whether the moral imperative to pay for schools and hospitals applies to IT consultants makes an accurate determination difficult. Public sector consultants got so confused that they were forced to take private sector positions with lower taxes. I mean less confusion. We urge the government to delay these reforms until all this pesky confusion has gone away."
Contractors do pay tax - IR35 or not. Contrary to popular belief, working through a limited company isn't some kind of "lifestyle choice", but often the only way you can actually get public liability insurance for your work - which if it all goes wrong, you're going to need when your employer sues you.
Plus, of course, we pay corporation tax before we ever get hold of the money. And income tax and national insurance. And tax on any dividends as well, by the way. So yeah, we do actually pay quite a bit already thanks.
But the difference in salary? Permanent people get it in the form of paid holidays, paid sick leave, training courses paid for by work, employers pension contributions (we have to sort out our own pensions, if we want one)... so yeah, realistically as a contractor I wasn't much better off then I was as a permanent employee. Although my accountant was happy...
re: "Plus, of course, we pay corporation tax before we ever get hold of the money."
That's utter bullshit. Your salary is a cost to the business, reducing its profit and thus any corporate tax that you pay. Your salary is also paid at the time, not in arrears (as corporation tax is).
What's that? You're not paying yourself a salary? It's all coming in dividends? Well done, you're the very reason HMRC need IR35, to crack down on people trying to game the system.
So put some money aside in a slush fund for holidays. Take out some sickness insurance, or again simple put money aside on a sickness pot.
You generally get paid far more than permies for doing the same work - you know equivalence like bin men/dinner ladies or supermarket workers and warehouse) so can afford to do that.
... What do you mean you have blown it on a Porsche Macan or a disproportionally grandiose (to an equivalent permies income) house ??
As a contractor, I can pretty much guarantee I have paid more tax than any permanently employed person of similar grade that I have sat next to at any time in the last twenty years. I offer utility to companies that need (a) workers at short notice or to bridge a change in work load, (b) workers to bring in knowledge about external systems and practises that the company itself does not have, (c) workers that can be let go with little or no notice if a project has to be stopped (d) workers that self-train where there is a company culture of expensive external accreditation and so on and so forth.
And as a consequence, I pay more tax than the permanent employees who take full advantage of sick days and holidays, training and wellbeing days, maternity/paternity leave, company pensions, health plans, car pools, car parking, mentorship and counselling, fitness clubs, company retreats and the financial stability that long term permanent employment offers.
On the whole, this is a fair deal, and I try to deliver the value the client needs, to integrate with their team and help implement change and improvement in practices. Only very occasionally do I meet sanctimonious, angry, self harming idiots who think that companies are special social clubs run for their sole benefit, and who get mightily offended that someone might be seen as more valuable to the company than they personally deem reasonable.
You can pretty much guarantee that one of those moral guardians will crop up on each of these news items, clearly misunderstanding how taxation and employment work.
That's a losing bet. Contractors charge higher rates for their work to cover the lack of benefits etc.
Higher earnings is higher tax.
Since you've decided to go with the stereotype of self employed people. I'm going to stereotype you.
I bet you go to the pub once a week with your other weak chinned and thin skinned permie "friends" and whinge about how much of a dick your boss is and how everyone deserves a pay rise. I'll bet you've moaned about your bosses pay on at least a dozen occasions and how you suspect his wife is on the payroll etc etc.
You probably actively steal pens and notebooks and you smuggle bog rolls home from the gents.
Fucking Permies. You really are cancerous.
You're the same dumbfuck people that would turn up to watch a hanging in the town square, or invite a witch hunter into town.
Sick days, holidays, training and wellbeing days, health plans, car pools, car parking, mentorship and counselling, fitness clubs, and company retreats are either not relevant for tax purposes, or taxable benefits.
Your limited company could have its own company pension if it wanted to. Employees can opt-out of the company pension scheme if they don't want it.
While an employee might pay less tax, depending on how the numbers work out, they, and particularly their employer will pay a lot more in National Insurance. That is where the real saving is.
As a contractor, you can get all the benefits of a full contribution record by paying yourself £1 over the NI threshold, and paying a few pennies in NI.
You are I'll informed - the vast majority of us are significant net contributors.
On 750 a day I will CONTRIBUTE around 80 - 90k in a year to HMRC when VAT is factored in and about 50 - 60k without it.
Believe me the government already get more than they should given the risk we have to shoulder.
Meanwhile someone in a permanent job earning that amount would be paying over £80k/year to HMRC not including VAT.
So you're around £20-30k/year post-tax better off. In other words, you're getting the UK national average salary tax free on top of a normal salary.
I think that's probably enough to cover the level of risk you're incurring, professional liability insurance, sickness cover and a few weeks' holiday. You're certainly not being hard done by, especially since someone permanent in the same role will be earning less gross than you're taking home.
It just about covers it (look up how much it costs to have professional indemnity insurance if you are working on development of medical, process control, or oil and gas industry components). Then there is the cost of certifications that have to be renewed every three years, and cost thousands and require taking a week off billable time work to attend the update certification course, which if you are permanent you would get paid for at no cost to you if particularly relevant to your work.
In addition to having none of those cost overheads, permanent staff get paid holidays, sick pay, and employer's pension contributions, all of which add up to about 20% - which roughly covers the difference. So yes, contractors are being scapegoated with what is purely a tax on competence.
If contracting was such a win-win, everybody would be doing it. And before somebody suggests that they do permanent work because they like to "contribute more to society" through higher taxes, there is nothing stopping you from going contracting and then writing a cheque for the difference in tax to your preferred charity. But I have yet to see anybody partaking in such a whinge actually doing that.
Therefore, the bitching can only be a result of the politics of jealousy.
I'd love to know what HMRC really want. Will there come a day when I have to pay employment taxes when I hire my usual painter and decorator for a week? After all, I might tell them which paint to use, which hours they can work in my house and insist that only this (very trusted) person does the work.
It's obvious - they want more money without the hassle of chasing big players who can defend by throwing money and lawyers at it.
And, the people who told them to do it want less competition for their mates running Indian body shops and the likes of Capita. The result - more bodies brought in from offshore and the ability to charge a grand a day for recent graduates without pesky local contractors getting in the way.
How many companies have you worked at that are full of work visas, where local talent can't get a look in? It will just get worse, now BAs, PMs, Architects flown in will become the norm.
but having to effectively pay the end-client's *employer* NI contributions as well is beyond parody
This is why, for myself, I've told agents:
- I'm unlikely to accept a contract with an "inside" status
- If I do, it will only be as a temporary employee, on the company payroll and with all the rights etc which come with that.
"Inside" roles are employee roles. There should be no such thing as an "inside IR35 contact".
Except this "temporary employee" idea seems to be an oxymoron - once you've employed someone you're stuck with them. I've never seen a UK tech role advertised offering fixed-term employment and I don't really understand why. All businesses experience peaks and troughs and without some flexibility in the workforce they will struggle during the peaks and may not survive the troughs.
"I've never seen a UK tech role advertised offering fixed-term employment"
At the local authority I work for we offer technical fixed term appointments quite a lot, we need specialist developers to help us and work with the permies to get their skills up. Anything from 6 months to 22 months at a range of levels :)
Does the painter and decorator have other customers, or in that time are they solely working for you and have no other customers on their books?
IR35 isn't about what you tell them to do. It's about whether they are just working only for you by proxy and thus not getting the benefits of employment and paying the taxes of employment.
A painter and decorator isn't going to be considered a "proxy employee" if they have other customers, go to other sites, book other work, and do other things.
They will if, for example, you just hired the guy to paint for you for a year but he didn't at any point ever work for anyone else but you.
The scope is much more about "what ELSE does he do" rather than "what's he actually doing".
The determination really is "Should you have just made him an employee and put him on the books?"
Quite true - and this is why it is unlawful to pre-emptively or blanket assess the role as inside IR35 without assessing what else somebody is doing, since it cannot be determined without assessing the individual contractor.
The problem is that HMRC have publicly on many occasions given advice that this blanket assessing is OK despite the fact that it is outright unlawful by the letter of the legislation that HMRC are expected to not only understand but actually enforce.
Will there come a day when I have to pay employment taxes when I hire my usual painter and decorator for a week?
That's how it works in France. I have a cleaning lady, comes in for half a day a week. I am legally required to treat her as an employee, give her holidays, pay the equivalent of employers NI contributions (which I can claim back off my own tax). If I want to dispense with her services I have to formally lay her off.
No wonder most such people want to be paid under the table, cash in hand.
This mess might not exist were it not such a royal pain to employ people directly. It's like fly-tipping: if you could get easy pickup of your old stuff and rubbish, why would you resort to using cowboys, or to driving yourself out into the sticks to tip it into a ditch?
One thing is certain: once IR35 takes over, there will be some new shenanigans to reduce the cost and bother of hiring people. And the Revenoo will plot new depredations.
Ah Mr Client you wish to engage my skills on your big new project? Okay, you do realise I’ll be working from my home office. I’ll be working on other client projects at the same time, so if you need optional expedited services, that will be an additional fee.
When necessary I’ll schedule meetings with your representatives to discuss their requirements, of course any change in timescale or requirements will generate a variation docket and will need to be signed off prior to variations work commencing.
When it comes to testing, if you prefer on-site testing, you will need to make test facilities available to our engineers, but our fees already include rental of services to test on our own site.
While the idea of a high-speed backbone is sound and essential for an ambitious country seeking to rebalance and grow the economy away from an overheated London, HS2 will take too long to deliver any tangible benefits.
It must therefore be paused to first deliver an upgrade to the existing intercity network (140mph using in-cab signalling and 16 car platforms) plus deliver on HS3 to cement the Northern Powerhouse in place.
This upgrade would yield a much needed capacity and performance boost across the whole of the UK far more quickly and for far less money than HS2.
Once the economic map of the UK has been redrawn then additional high-speed services can be added.
Just building HS2 on its own today will do nothing more than add Birmingham to the London commuter belt, to the detriment of everyone else.
I remember hearing about IR35 'coming soon' in the late 90s, was concerned about the consequences, and decided to take a contract in mainland Europe at the time to sidestep that problem.
Roll forward 20+ years, is it only now coming to bite? Was I worried a couple of decades too early?
It came in in 2000, but the onus for deciding in or out, and liability for getting it wrong, was on the contractor. Since it became too easy to construct contract and working practices that were outside, it quickly became an irrelevance to savvy contractors with cooperative clients and agencies. Other contractors went into the arms of umbrella companies to avoid the issue altogether, considering the extra tax to be worth the lack of risk. Yet others went into dodgy schemes - that's coming home to roost with the Loan Charge.
A year or so ago, for the public sector the liability was changed to be with the client. Now the government wants to role it out to the private sector.
The government failed to enforce and audit the existing rules. Some people blatantly cheated and abused them in ways they would clearly have been found to be non-compliant if anyone checked.
So the solution is to dramatically tighten the rules. This penalises the contractors who weren't abusing the system a lot more than those who were.
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
