back to article Brit MPs vote down bid to delay IR35 reforms, press ahead with new tax rules for private-sector contractors

MPs have voted against an amendment to the Finance Bill which set out to delay changes to IR35 legislation for off-payroll working, a subject close to the heart of many IT contractors. Speaking for an amendment he tabled, David Davis, backbench MP for Haltemprice and Howden, said delaying the introduction of the legislation …

  1. Chris G Silver badge

    It seems fairly clear that Boris and his chums along with HMRC are quite keen on the notion of zero rights employees.

    Too many workers automatically expect a candle on their desk in the winter without even considering the cost to the employer who has kindly provided them with a job.

    1. General Purpose

      Candles? Luxury! I'm just glad this mushroom glows sometimes.

    2. Sir Runcible Spoon Silver badge
      Trollface

      "the employer who has kindly provided them with a job"

      Obvious troll is obvious.

      1. Chris G Silver badge

        "Obvious troll is obvious."

        That would be why I didn't bother with an icon, given the rest of the post it should be clear enough.

        1. Sir Runcible Spoon Silver badge

          "it should be clear enough."

          Some people might not have realised, hence my helpful reminder :P

    3. Strahd Ivarius Bronze badge

      As one of my neighbor put it down some time ago :

      "why do they ask for a salary? isn't the satisfaction of a job well done enough for them?"

      (and no it was not a joke, she was deadly serious)

  2. Hubert Cumberdale

    And...

    ...cue the usual polarised stream of comments from those who feel aggrieved at how it will affect them and those who think contractors have it too easy and they had it coming...

    1. Smooth Newt Silver badge
      Trollface

      Re: And...

      ...cue the usual polarised stream of comments from those who feel aggrieved at how it will affect them and those who think contractors have it too easy and they had it coming...

      I am sure it will seem like all their Christmases have come at once when their employer threatens them with redundancy unless they change their employment status to "contractor".

      Employers will be increasingly enthusiastic to do this because contractor now means "staff member with no employment rights".

      1. Hubert Cumberdale

        Re: And...

        I wasn't expressing an opinion either way... just noting that whenever IR35 is mentioned, people seem to fall into one of two (apparently rather angry and/or resentful) camps. As a self-employed sole trader (not directly in IT, I might add) I have no skin in the game, so I don't feel it's my place to comment.

        However, on a slight tangent, I will say that whatever the morality of tax avoidance schemes (and I'm not implying that people are working as contractors to avoid tax – that's a minefield that could cause an argument in itself (and probably will)), it seems a little harsh to back-date things quite so much as HMRC seem to be inclined (although not with IR35, apparently). If something was technically legal at the time (and especially if people were pushed onto tax avoidance schemes without really understanding them or having any real choice about it), then I don't see how they can go back 20 years to claw back vast sums of money that have probably already been spent, bankrupting people in the process. Perhaps they should have closed the loophole sooner if it was upsetting them that much.

        1. Graham Dawson Silver badge

          Re: And...

          It's a minefield because you're falling into the trap of conflating avoidance and evasion. Avoidance is not paying what you don't owe. Evasion is not paying what you do owe.

          Avoidance is when you change lanes to not be caught up in a queue. Evasion is when you change lanes to escape the police.

          1. Hubert Cumberdale

            Re: And...

            Yes, yes, very amusing, very clever, etc., but I was quite clear that I was talking about avoidance, and I am quite clear about the difference. However, HMRC decided retrospectively that something was evasion when they had previously categorised it as avoidance, which is a case of going back in time and moving the goalposts. Which I consider to be just plain rude. And quite against the inter-temporally agreed laws of time travel.

  3. Mike 137 Silver badge

    In the foreseeable future ...

    I anticipate a near future where the majority if not all of new hires are contracts under IR35. As this absolves the employer from paying for pensions, holiday and sickness benefits and permits dismissal at a moment's notice it's likely to catch on quickly. The "employee" is still likely to be expected to provide professional indemnity and public liability insurance and to travel on the employer's business at their own expense.

    This could well be the future for all of us not just the much maligned "contractor".

    1. tip pc Silver badge

      Re: In the foreseeable future ...

      Some say that future is already here, so called zero hours contracts are very close to what you describe. I’ve also heard that some care workers operate that way including paying their own transport costs.

      1. This post has been deleted by its author

      2. Smooth Newt Silver badge
        Unhappy

        Re: In the foreseeable future ...

        Not quite. Dreadful that zero hours contracts are, the employees are at least entitled to pensions, holiday pay, and sick pay.

        Zero-hours employees also have rights, that contractors do not, under the National Minimum Wage Act, Working Time Regulations, Equal Pay Act, Sex Discrimination Act, Race Relations Act, Disability Discrimination Act, and regulations prohibiting discrimination on grounds of religion or belief, sexual orientation and age, Part Time Workers (Prevention of Less Favourable Treatment) Regulations, and the whistleblowing and other provisions in the Employment Rights Act.

        As a simple example of how this works, a client company can perfectly legally contract black- or female-owned service provider companies, or any other group it wants to discriminate against, at half the rate of others they hire. They don't even have to pay minimum wage.

        And harassment is OK too. Unless it is covered by a specific termination clause in the contract between the service provider company and client company (or agency), the service provider company is in breach of contract if the service provider walks out because she is sick of comments about the size of her tits. Unlike the zero-hours worker situation, she isn't employed by the client company so she can't take it to any employment tribunal.

    2. Smooth Newt Silver badge
      Unhappy

      Re: In the foreseeable future ...

      I anticipate a near future where the majority if not all of new hires are contracts under IR35. As this absolves the employer from paying for pensions, holiday and sickness benefits and permits dismissal at a moment's notice it's likely to catch on quickly.

      This might fit well with the Government's "buccaneering" Brexit strategy of having cheap employees without rights, since it would allow them to guarantee on paper to the EU/electorate that workers rights will be maintained by virtue of the various employee rights legislation. But it won't actually apply to most of the serfs, as we will be a different class of worker to which the legislation doesn't actually apply.

  4. Anonymous Coward
    Anonymous Coward

    The only reason this was delayed was the effect on the NHS. Nothing will change under this corrupt two party system.

    https://petition.parliament.uk/petitions/300458

  5. dak

    Worse than that bloody virus

    My MP assured me several times that he understood the issues and would support any measures to halt it. Then he voted against the amendment last night.

    This will have a worse and longer-lasting effect on the economy than SARS Cov-2. At least that is going away now and the panic reaction by the Government was just that - panic. But IR35 is a definite course of action put in place by a 20th century socialist government and will be hindering business for a very long time.

    1. Nick Ryan Silver badge

      Re: Worse than that bloody virus

      This is because party politics are the opposite of democracy. Rather than vote for what his principles are, vote for what is best for his constituents, he has to vote following the party line and nothing else is acceptable.

    2. Intractable Potsherd Silver badge

      Re: Worse than that bloody virus

      There has been a socialist government in the UK for decades. IR35 is not, by any description, a socialist policy. However, no matter how you class it, the combination of IR35, leaving the EU, and Covid-19 combine to create a perfect storm. Changing any one of those would make a huge difference to the future health of Britain's economy. IR35 was the easiest to change, but our glorious representatives failed epically (again). Who do they work for? Well, not you or me, that's for certain.

      1. elsergiovolador

        Re: Worse than that bloody virus

        An engineer caught by IR35 making current market rate will pay over 50% of tax. How is this not socialist?

      2. Intractable Potsherd Silver badge

        Re: Worse than that bloody virus

        Just noticed an error in my earlier post - it should be "... hasn't been a socialist government..."

      3. dak

        Re: Worse than that bloody virus

        Hmmm...

        IR35 was promulgated by a Labour Chancellor whose doctorate was in the history of the early Labour Party. It was introduced by "Red" Dawn Primarolo.

        Its stated aim is to enforce fairness in the labour market. It has taken 22 years to implement, has been disastrous where it has already been implemented, doesn't work, can't work and will seriously distort and damage small businesses to no advantage whatsoever. It has been hammered through Parliament with no regard to warnings from multiple agencies.

        Seems Socialist enough to me.

  6. Ashto5

    Offshore Goldmine

    What client in their right mind is going to hire a freelancer !!!

    HMRC do not agree with assessments made by its own tool CEST.

    Hire a contractor face a court date with HMRC.

    Freelancing in the UK is now dead, but in a positive note there will be lots of jobs created offshore

    HMRC tax take £0.00

    HMRC DECLARE VICTORY

  7. tip pc Silver badge

    If you keep poking the pig with a stick

    It will eventually get annoyed and might bite you.

    A whole industry built itself up around helping contractors pay as little tax as possible.

    However you look at it, contractors where often going the same job as permanent staff, earning far more & paying far less tax while expensing things Against their business taxes that permanent staff couldn’t like transport costs, phone contracts, phones, it equipment, portion of household utility bills etc etc etc.

    High paid contractors claiming they are hard done by are really taking the piss.

    Lower paid contractors are the ones currently being hard done by those that employ their services yet non of these high paid contractors are even batting an eye at their situation.

    1. Def Silver badge

      Re: If you keep poking the pig with a stick

      Is there such a thing as a low paid contractor?

      In my experience contractors are usually paid way more than regular employees. The reason being you're not covered for sick leave, insurance, pension, etc., and don't have guaranteed employment.

      If you contract yourself out at the same rate as an employee, you're a fool.

      1. katrinab Silver badge
        Unhappy

        Re: If you keep poking the pig with a stick

        "Is there such a thing as a low paid contractor?"

        Yes, very much so. All those contractors who work for Deliveroo, Über, Care Home agencies, and so on. Contractors on average, earn a lot less than employees.

        1. Graham Dawson Silver badge

          Re: If you keep poking the pig with a stick

          They aren't being targeted by this legislation.

      2. Nifty Bronze badge

        Re: If you keep poking the pig with a stick

        Post-Covid economy: There soon will be lots

    2. Sir Runcible Spoon Silver badge
      Holmes

      Re: If you keep poking the pig with a stick

      Full disclosure: I'm a well paid contractor.

      The main issue for me with ir35 isn't the additional tax burden or even lack of employee rights, it's a combination of that change in the client->contractor relationship and the effect it has on my business.

      For example, I don't like being told how to work. I'm good at what I do for a reason, and that reason isn't that I do exactly what some clueless middle management tool tells me to do. They give me work, and I do it, I even help others do their bit (especially if it supports me completing my work).

      Converting to an umbrella company and pseudo-employee status appears to be giving the managers of my clients the impression that I suddenly work for them as a regular employee. Sure I still have the right to bugger off as I always did, but this has really confused the relationship.

      I also had plans for my business, to grow it and branch out into other areas, mainly funded by the contract income from my clients. By forcing me to take all that income as PAYE into my personal account immediately starves my company of funds and effectively shuts it down.

      I'm left with the option of either a) trying to find another role that is outside ir35 or b) close my business and throw all my plans in the bin.

      It *is* poorly thought out and implemented - there are many 'blanket' appraisals going around under the guise of individual assessments as well, which is against HMRC policy - but clients don't seem to mind breaking *that* rule.

      1. Anonymous Coward
        Anonymous Coward

        Re: If you keep poking the pig with a stick

        Many don't want to be seen making blanket assessments because there's a risk. On the other hand they can't be arsed to do detailed ones because it's a faff and the legislation is as clear as mud.

        Therefore they will just say no contractors except through umbrella, avoiding IR35 altogether.

        And make greater use of offshore.

        There will be remarkably few roles that end up with the government's desired outcome of 'inside IR35.'

        1. elsergiovolador

          Re: If you keep poking the pig with a stick

          There is no risk. If you create a role that has certain features e.g. you won't agree to accept a substitute and few other tweaks then the role by definition will be inside. No personal situation of the contractor will change that. Such blanket determinations have already been contested and as long this is a role based, then it is fine by HMRC.

  8. osakajin Bronze badge

    "The government has accidentally created that class of zero-rights employees: "

    That's no accident. Next up... No one is getting full time perm positions with benefits after the measures to halt Corona have finished and the 42% of private sector employees who are screwed by all the nonsense restart work.

    I totally admire the way the government has destroyed all the hard won rights for employees.

    1. Intractable Potsherd Silver badge

      Now, those hard-won rights... there is an organisation that oversees the protection of rights - something like the Erpian Onion. It's a shame we never joined - once in we'd never want to leave - oh, wait :-(

      1. elsergiovolador

        The Euclidean Onion has not reacted to no rights employment in public sector, so I am don't know how that would have helped.

        1. Strahd Ivarius Bronze badge

          They are waiting for the Mesan Alignment to get involved perhaps

  9. CliveS

    "The government has accidentally created that class of zero-rights employees: no holidays, no sick pay, no pension, no redundancy, no employment rights, whatsoever. We must stop that happening, either accidentally or deliberately."

    Nothing accidental about it. It's the future of employment, where big companies off-shore or out-source, and smaller companies are relieved of the burden of providing employee benefits. A win-win for Tory backers. I'd like to be able to say that this is an unintended consequence - and based on typical Government competence that could be considered likely - but for once I suspect the only element of incompetence has been the delay in implementation.

  10. Giles C Bronze badge

    As someone who has worked as a contractor I think the following would be acceptable to most.

    75% of your daily rate is taxed as an employee (as long you as you are above the threshold) the remaining 25% can then be put aside to cover sick, holiday, company fees etc. The corporation tax is only charged on that 25% as that is your profit margin.

    I.e. contractor earns £1000 week

    Pays tax on £750

    £250 goes into the company and gives you the buffer for equipment, training, holiday, sickness etc

    Seems sensible as an employee you have 10% of your working year as holiday, training included, sick pay included etc.

    1. Anonymous Coward
      Anonymous Coward

      Company costs for employees are normally salary as 50% and the rest cover for pension/sick/holidays provision.

    2. Zippy´s Sausage Factory

      It's interesting to note that the scheme for the self-employed in Portugal is pretty much that. You send out your invoices through the IRS (equivalent of HMRC) portal and you only pay tax on 80% of the income.

      OK, I'm simplifying a bit, but it's an interesting contrast to the UK version.

    3. Nifty Bronze badge

      FAR too sensible

    4. The Onymous Coward

      I'd advocate a simple rule that a company director may not take a dividend larger than their salary.

      Tax take would increase, there's no ambiguity and no need to change working relationships.

      But, one man band contractors would still be able to undercut the big boys providing Apprentice contestants for two grand a day. Hence the IR35 sh*tshow.

    5. elsergiovolador

      I think this is a bad idea because not everyone uses company solely for contracting. Some people live off their savings and leave all the money they make in the company to use it to develop their business. Your idea takes most of it away and suggests you probably should be an employee.

      I think better idea is to raise dividend tax and make NI payable on dividends. This will of course upset people living off their investments, but I think they should be called out for avoiding taxes, not hard working people.

  11. BenDwire Silver badge
    Stop

    The big consultancy firms want IR35

    Someone on these hallowed forums pointed out that the big consultancies want to get rid of freelancers as they pose a cheaper, more competent, threat to their excessive fees. I’m sure they are lobbying as hard as they possibly can ...

    1. Jan 0 Silver badge

      Re: The big consultancy firms want IR35

      Errm, most of the "consultants" that I've met from these large firms turned out to be contractors rather than employees! Is that unusual?

      1. Sir Runcible Spoon Silver badge

        Re: The big consultancy firms want IR35

        It's not unusual, but you can bet that a big IT-Con. firm will put in an employee wherever possible as they charge the client the same amount either way,and of course an employee costs far less to them.

        Putting in contractors only usually happens when they can't find the required skill-set in their permanent staff.

      2. czechitout

        Re: The big consultancy firms want IR35

        No. Not unusual at all. Same as subcontracting out work to other (often more experienced) consultancies and badging them up as their own.

  12. Anonymous Coward
    Anonymous Coward

    Contractors already pay more tax

    As a long in the tooth contractor I can guarantee I’ve paid and continue to pay far more tax than I would as an employee. Those who comment that contractors get paid too much obviously can’t count and they’ll be crying soon when they’re hit with this same legislation and find themselves working without any rights at all.

    1. MatthewSt Bronze badge

      Re: Contractors already pay more tax

      If you're paying more tax as a contractor than you would as en employee then you're obviously doing this whole contracting thing wrong and should get a new accountant.

      On a 50k salary, you cost the company £55,687.26 and take home £37,641.80. If I was a 50k contractor, I'd be costing the company £50,000, paying myself a salary of £8,784 (no tax or NI required) and the rest (after corporation tax) in dividends. 19% corporation tax takes off £7831.04. First £5,716 of dividends is tax free (£2,000 allowance plus remainder of tax free allowance), remaining £30,996.24 at 7.5%. So my take home pay after all that would be £43,143.77.

      So I would be paying £5,501.97 less tax, and the company I'm working for would be paying £5,687.26 less tax.

      1. Ashto5

        Re: Contractors already pay more tax

        You forget that there is a 20% VAT charge that goes to HMRC

        So that no longer gets generated so HMRC lose 20% straight off.

        Contractors generally come in when it has gone pear shaped and help to clean up, they then leave.

        The rate reflects this, you cannot compare permanent staff and contract staff.

        So a better example maybe

        Contract fees of £75k + £15k (20% vat) = £90k

        £15k direct to HMRC and then the other taxes

        Roughly HMRC get £35k from the freelancer

        Same role permanent will be for around £40k

        Roughy HMRC get £16k from this employment

        A LOSS of £19k

        Now the jobs go offshore as its cheaper now and less risky of battling HMRC

        HMRC get £0.00 nil nothing nada

        So please tell me again how this makes sense.

        Contracting WAS open to anyone who wished to do it, the people complaining never tried it or failed at it they just believed the lies peddled out.

        Try reapplying for YOUR job every 3 months lets see how you get on.

        1. MatthewSt Bronze badge

          Re: Contractors already pay more tax

          Glad you asked :)

          Even though as a contractor you now owe the VAT man £15k more than you did before, the company that is paying you now owes £15k less VAT than before, as each VAT registered company only pays the difference between the VAT it charges and the VAT it gets charged. In summary, HMRC isn't any worse off now that you're no longer charging VAT (In fact, they're probably better off, because you as an employee are no longer claiming VAT back on things you buy "for work")

          I agree about your point about contractors not being long term roles, and I do believe that they should be compensated accordingly. In theory (different from reality I know) IR35 isn't meant to affect those roles.

          The offshoring comment doesn't make sense. Surely offshoring is already "cheaper" than contractors?

      2. fix

        Re: Contractors already pay more tax

        You've conveniently forgotten to allow for contractor expenses such as accountancy and insurance, and also an allowance for those between contract gaps etc. Apart from that nicely detailed maths, shame you've not included all the numbers.

        1. MatthewSt Bronze badge

          Re: Contractors already pay more tax

          They weren't forgotten, they were out of scope of the claim which was "I pay more tax than if I was an employee".

          That being said, if you reckon that your additional costs (insurance, gaps in work etc) minus your additional benefits (all the expenses you can claim) mean you are better off being an employee then I stand by my original point that you need a better accountant. If it's not a better deal for you then why are you defending it?

          1. elsergiovolador

            Re: Contractors already pay more tax

            Contractor "inside IR35" will pay more than employee, because he or she will have to pay employers NI as well, without having any benefit of an employer. For example when employer buys any equipment for his or hers employee, they can offset all that money against tax, contractor however, needs to pay this out of PAYE taxed money. This is just wrong.

  13. DaemonProcess

    Right to (not) work

    This is being pushed in by the Conservatives as a prelude to US right-to-work legislation. Unfortunately I don't believe the UK version will grant employees the same rights as in the USA. It will be totally one-sided in favour of the US corporate sponsors, gerrymandered into trade deals as a precondition.

    I also suspect that Brexit will force an acceleration of these changes as a means to creating cheaper employment in the UK than in the rest of Europe. Sorry for bringing up the B word.

  14. Jim 59

    I think companies will divide into two camps. Some, like BAE and HSBC, will take fright and create blanket rulings to avoid non-compliance in the short term. Banks in particular are terrified of non-compliance ever since the credit crunch, and their first reaction is to jump under a stone. The second set of businesses will pause, look more closely at the rules and build an effective IR35 assessment infrastructure, perhaps stealing a march their more timid competitors. Which camp will win? Not sure. Hopefully the second.

    Another factor is increased working from home after the virus, which might provide yet more "unforeseen consequences". Not only can a client have you as a zero-rights "employee", but he can ask you to provide your own equipment and office too, something genuine contractors will be quite happy with.

    1. Anonymous Coward
      Anonymous Coward

      Banks

      Financial services pay VAT out but cannot claim it back so this legislation saves them an immediate 20%.

      Now they look at HMRC and its rudderless madness, and go offshore.

      HMRC will get nothing from now on, 1,000's of freelancers removed from high fee paying clients and the money is sent to offshore companies.

      Who will pay the debt for the COVID furlough, well it won't be the unemployed contractor

      IT WILL BE THE EMPLOYEES - Yes YOU

      Careful what you wish for, YOU permies will not be smiling when the bill needs to be paid.

      I have gone from a NET contributor to a NET taker Universal Credit will be my next client, then YOU bitter permies can pay for me.

      Pension raid on the horizon methinks.

      1. vishal vashisht

        Re: Banks

        to be fair, I stopped using HSBC when they started enabling drug dealers to move money in to the US..which I can legally say because they got caught TWICE! so screw them.

        The problem is this has been coming for years. If people like Jesse Norman, Cummings et al want their neo liberal utopia; the country STILL has to pay for stuff. Tax payer money to be shovelled to arms companies, the roads need to be paid for, the proles annoyingly need water, rail, etc.

        As the upper rates of tax have been cut again and again and again and again, corporate tax "avoidance" allowed by the giants like google, facebook, vodafone etc, SOMEONE has to pay for keeping the basics of the country moving..and thats the plebs.

        We can't give the plebs too many rights or too much control otherwise the corporate overlords won't be able to pay themselves their multi million bonuses and buy their 3 yachts, so yuo cut services, call them too expensive, while at the same time DOUBLING national debt in 6 years as you shovel your money and tax cuts to the wealthy. You blame the poor for this even as you go off and take up your Editors job after you've screwed the country.

        Now you have a bunch of loons who don't even pretend to care while they shovel private contracts to companies that don't even pretend to have the expertise. Ferry firms wiht no ferries, PPE firms from pest control companies with £5 in the bank, £5 billions for COVID testing to firms that don't have to share their results with the NHS (who are also banned frmo bidding) and you see a massive shift of money upwards and a shift of expertise to countries where there are so many people that even security guards need to have MBA's.

  15. Dave 15 Silver badge

    Then just wait

    By the end of the year there will be no contractors left, yet another rise in unemployment and companies bleating they can't get engineers and moving abroad. The civil service that runs the country seem incapable of choosing to do anything other than deliberately and with malice against the UK damage us. MPs are pointless and backpacker filling lackeys giving this whole charade a so thin it's transparent pretence at democracy. It is no better under Labour or Conservative because it is the civil service at fault

  16. Anonymous Coward
    Anonymous Coward

    NHS Public Sector Roll Out

    The NHS is still battling after 3 years with HMRC over the assessment tool.

    HMRC claim this as vindication as to why this should be rolled to the private sector.

    Freelancing is dead in the UK.

    500,000 net contributors to HMRC have now become net takers.

    These people are in charge of money, I would NOT let them look after my piggy bank.

    Still it's not their money and no one at HMRC ever gets the sack, the more you mess up the higher up you climb.

    1. elsergiovolador

      Re: NHS Public Sector Roll Out

      Most appalling cover up is the loan charge. HMRC messed up big time. Instead of swallowing what they cooked up and sacking anyone responsible for this (and investigating why this could run for so long), they pushed for retrospective taxation. They have opened the Pandora's box and there is not way back.

      1. MatthewSt Bronze badge

        Re: NHS Public Sector Roll Out

        I'm not sure where I stand on the loan charge (don't know enough about it to have an informed opinion) but it sets an interesting precedent to reduce the amount of whack-a-mole that HMRC have to play.

        Effectively what they've done is indicated that if you are using any tax avoidance scheme you won't get any time to tidy up your affairs or warnings to stop using it. It'll hopefully make people think twice before going for any kind of loophole.

        1. elsergiovolador

          Re: NHS Public Sector Roll Out

          That was definitely a loophole, but HMRC should have plugged it promptly. Instead, they knew about it and let it run for ages. I think this is a negligence on their part and instead of taking action against their own staff they decided to milk people who used those schemes in a way that is resembles some lawless dictatorship. Currently anything you do now that you think is legal in the future could be decided it was not legal and you would have to pay for it.

          I'll give you an example what could happen - imagine you have a shop on a high street and you think that you cannot afford to run it any longer because of high taxes, so you close it and open the shop online. You will pay less tax as a result. Is this a tax avoidance? After 20 years HMRC could think it is and punish you.

          You don't know what kind of government or who will run HMRC in the future and they have just got extremely powerful instrument.

          1. MatthewSt Bronze badge

            Re: NHS Public Sector Roll Out

            "Think is legal" is the bit that people seem to get confused with though. It's more a case of "think they can get away with".

            What you've described is most definitely tax avoidance, but it's perfectly legal (unlike the loan charge, which is tax evasion). You're changing your business (and how you serve customers) in response to the climate that you're in. You're not making a change that _only_ affects the amount of tax you pay, and you're not using some a scheme involving an elaborate set up of different companies and issuing loans which are designed never to be paid back. Sure the government could introduce a tax on online purchases, but it wouldn't be applied retrospectively, because selling stuff online is not a loophole that you're exploiting. You'll need to come up with an example that doesn't involve a change of business strategy, but I doubt there are any that don't look like scams or loopholes (because anything they could change, such as what mileage is permitted to claim back or company vehicles, other expenses etc is all explicitly permitted rather than "try it and see").

            I can't accept the argument that people who subscribed to these schemes did so in the belief that it was a perfectly legitimate way of avoiding paying tax.

            1. elsergiovolador

              Re: NHS Public Sector Roll Out

              I think what they did was wrong but it was legal. I agree with your counterargument about the shop, but the thing is (as we see with IR35), the taxman may not share this view and it is perfectly possible to argue that changing the way you sell things that results in lower tax take is actually a tax avoidance. Just like has been argued that there is no such thing as no rights employment, because contractor can always take their own company to employment tribunal to establish their rights. This is some twisted and dishonest logic as it misses the fact that by design the company doesn't get any funds to provide such protections. They can use the same twisted logic to do other nasty things and government just created a smorgasbord of tools.

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  18. vishal vashisht

    Blatently set up by the big 4 consultancies

    We already know there is a revolving door of assholes going between the big 4 accountancies and HMRC. What news that very soon Jessie "we're not directly responsible for the suicides of 7 people because of the loan charge" Norman gets a nice big far directorship with one of them?

    So now instead of contractors, companies will force them through Umbrella companies, or more likely hire the consultancy services of those same companies that "advise" HMRC.

    Couple that with Sunak being married to the daughter of billionaire owner of Infosys and we'll see all the IT expertise being sucked out of the UK to the lowest bidder.

    I contract because I can't be arsed to deal with any of this happy clappy HR shit of "team building", useless team meetings. Being forced to listen to CEO "town hall" meetings where the C Suite come out and lie to your face about no redundancies 2 weeks before they pick up their bonuses and make 1/2 the company redundant. I can tell managers to piss off if they expect me to cancel plans to meet THEIR targets and I Can just walk if someone starts taking the mickey without the fear of losing a pension.

    What people have to realise is that THEY may be OK NOW; but where will their kids be in 20 years time or 30 years time, when every job is a 0 hours contract, when their daughters can be abused in the office by managers with no come back and the idea of paid sick leave or paid holiday is a far off dream. Add to that the £50,000 debt from having to go to university and you literally will have a slave nation, indebted.

    1. elsergiovolador

      Re: Blatently set up by the big 4 consultancies

      Party donors over people, it is what's going on.

  19. Anonymous Coward
    Anonymous Coward

    Chickens Home To Roost

    A lot of freelancers are older white males.

    They are FUBAR’d big time.

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