UK taxman updates its employment-checking calculator for IR35: Still crap, say contractors With the deadline for IR35 assessment fast approaching, the latest update to HMRC's Check Employment Status for Tax tool (CEST) is still not fit for purpose. That's the verdict of early testing from contractor insurers Qdos and the Association of Independent Professionals and the Self-Employed (IPSE). The tool has just been …
This makes me laugh. HMRC keep saying they stand by cests results. However in court it is a different matter. Almost without exception if cest says the contractor is outside of IR35 they try to get cest removed from the evidence! If it says they are inside IR35 they claim it should the the primary evidence... HMRC are a joke and so are the government for allowing this to happen and to back HMRC even when it is proven that they are lying! But then what would you expect from a government that tries to convince people they are an official fact checking service?
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Being a self employed person, I find this entire practice has had an impact on people running real companies with more than one client.
If you are going to work for a single client on any length of contract, get employed by them, enjoy the perks of employment, holiday, sick pay and so on. If you're going to be self employed enjoy the perks, ie a very slight tax advantage but also enjoy the negatives, no holiday, no sick pay and if you don't find yourself work, no money at all.
Worse still running a company, taking the risk of not finding enough work to pay the bills used to have a small advantage that dividends were slightly more tax efficient, now even that has been eroded because of this modern practice. Equally someone running a real company goes on to employ people as they expand.
These sole director, single client companies just take and give very little and now they're all crying over IR35 tests as well as employers looking for a no strings attached skilled person.
If you'd looked into it you'd know that the number of clients and length of the contract don't factor into IR35.
If you're running a "Real Business" and they decide that you are a "Personal Service Company" (Which lets remember isn't actually a real thing outside the imaginations of HMRC) then you too can be caught by IR35...
So.. Have you actually had any of your contracts reviewed for IR35 compliance? - Running a "Real Business" I'm sure you've done your due diligence and not just assumed that because you have multiple clients you're safe?
Be interested to see El Reg's take on this article of recent news
https://www.contractoruk.com/news/0014347labour_surprise_pledge_scrap_ir35_reform_april_2020.html
Lib Dems said something similar. Time for the Nasty Party to match it?
The simple reality is HMRC are not resourced to enforce it anyway. How many staff are qualified to legally and reliably interpret every single contract and SOW without risk of being oberwholmed by appeals?
So, now the "Party for Business" is pretty much the only party who will continue with this demonisation of the smallest businesses and destruction of an important sector (and the tax revenue it provides).
I think this proves once and for all that the Tories are now just right-wing populists.
Ive just emailed that to them as a suggestion too.
Im a bit skeptical of the wording :
"We absolutely can’t see it rolled out into the private sector the way things are at the moment"
Suggests that it might be rolled out with amendments in future.
"It should never have been implemented in one go"
Suggesting that they may still implement in a phased approach.
But then
"Pressed whether that means a Jeremy Corbyn-led government would axe the April 2020 proposals, Mr Esterson said it did, confirming their removal to now be official Labour policy"
Seems to clarify the position... I'd be happy to live with the corp tax increases (to 21% based on my companies turn over) if we didn't need to worry about IR35.
And to be fair - a 4% increase in CT works out at a little less than the additional Income tax would have been inside IR35 - Perhaps its a more acceptable middle ground.
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