Seems that the market functions like the Internet
It routes around obstructions.
Contractors able to continue working outside the IR35 regulations are gaining leverage in the market and succeeding in punting their scarce skills, according to a survey. Responses from 491 self-employed freelancers, contractors and consultants in March and April showed 55 per cent of contractors outside IR35 say a shortage of …
Sometimes! What I have noticed is salary offers of permie jobs have jumped 20-30k to 90-100, which is nice, but shows that IR35 is costing businesses to get talent (as opposed to using contractors and the virtually non-existent risk of getting caught in HMRCs web).
I do know of some places that blanketed contractors and then offered poor salaries. Unsurprisingly they aren't filling their vacancies...
It sounds like a bit of a Mexican standoff right now.
Businesses don't want to take on IR35 burdens but neither do they want to pay the required salary rate for specialisms they previously contracted for.
Contractors are unwilling to take poor salaries as full time employees.
So as businesses wait for contractors to starve and give in, they don't get their required work done. Who will blink first?
I've read both sides of the argument and it seems that although there may have been a requirement to reform tax arrangments for contractors, IR35 seems to have been a cackhanded way to do it which in the end suits no one, not even the treasury.
What I have noticed is salary offers of permie jobs have jumped 20-30k to 90-100, which is nice, but shows that IR35 is costing businesses to get talent
The business was probably already paying the contractor that £20-30k, most of which was going to HMRC as corporate tax. Now it will be going to HMRC labelled as National Insurance contributions.
The biggest change here is that instead of having a person that a business can terminate with no notice the business has to deal with an employee who has holiday pay, probably pension contributions and cannot be dismissed with zero notice.
With ir35 working inside it provides all the costs and none of the benefit of freelancing so only a mug, a stupid blithering idiot of a mug would take on the job. This means either companies are happy to scratch and find people so hopeless they can't get a real job or they will have to take a contractor from a foreign source. This means skills are lost, opportunities for growth missed and the demise of the whole industry. Ir 35 is a Thatcher scale fuck up
And the geniuses who stuck to their guns with this didn't factor in that COVID's change to working attitudes of most businesses, aka remote working, now means that head hunters are considering candidates who are not in the same country as the job.
Those working in IT are typically the easiest to work remotely. I know I'm getting recruiters pushing roles outside the UK. I've got to assume that I am not unique on that front.
I don't know Jake or any of his stories. But to be fair, on this side of the pond, we have had far longer experience with our IRS and its contractor vs employee rules.
There's the letter of the law. And then the actual practice of the auditor threatening to examine every aspect of both your and your customer's finances should you attempt to avail yourself of the deductions. Meanwhile, the attorney down the road is a partner in his firm and writes off the cost of his yacht and private jet because he entertained a client there once.
One way or the other, the tax situation is rife with abuse. I want either less corruption or more opportunity to participate in it.
Two tales of IR35 working......
1) Feb 2020 - Went inside IR35 with a bank client, told like it or lump it - attitude of client was pretty crap to be fair, many disgruntled contractors but given circumstances of start of last year it wasn't a great time to jump ship. Many disgruntled contractors, not just at IR35 but client and agency's attitude too. Agency had brass-neck to tell us that being inside IR35, even with less money at end of the day was a blessing in disguise and we'd actually be better off and happier - yet despite many folks asking them how, they never ever answered
2) Feb 2021 - Went inside with new client after working with them as an outside IR35 contractor from August 2020 - This time things were very different, we all got a 33% raise on our day rate to cover employers NI, holiday pay and a pension contribution - I work directly for agency now with no need to touch an umbrella company
To be honest I'd still rather be outside IR35 but the current role is good with another years worth of work at least, so happy to stay for now
"paid employees without the employment benefits"
No, its pay in lieu of benefits. How you spend the money (holiday, health cover, pension, critical illness, gym membership, etc) is entirely up to the employee, and you are an employee whether that's as a direct employee of the end client, an agency employee, or an employee of a Limited Company who pimp your services to the client and pay you minimum wage.
I don't agree with the way HMRC has written and implemented IR35 to capture the different structures of employment, but lets be accurate about what those structures of employment are.
"or an employee of a Limited Company who pimp your services to the client"
How often does HMRC find a bunch of people working as 'employees' in a firm, but effectively partners? Where they distribute the firm's revenue based on who brought it in. And 'the boss' is actually a filing cabinet in the Cayman Islands law office?
Accounting software colossus Intuit has decided to pull its QuickBooks product from India.
The decision comes into effect on January 31 2023, after which QuickBooks products and service offerings for accountancy and small business customers will no longer be available in the world's second most populous country.
"After careful consideration, the decision was made that we can no longer continue to deliver and support QuickBooks products that serve the needs of small businesses and accounting professionals across India," reads a notice posted yesterday.
The government of the Philippines has welcomed the decision by giant business process outsourcer Concentrix Corporation to forgo tax incentives and instead allow its staff to continue working from home for the foreseeable future. The nation feels that subsidising outsourcers' bottom lines does nothing to boost the local economy.
The Philippines imposed lengthy and strict COVID-19 lockdowns that saw its substantial business process outsourcing sector quickly adapt to working from home. The nation's government supported that move by continuing to offer the pre-COVID subsidies it offered to outsourcers that run offices located in certain special economic zones.
Those subsidies have subsequently been removed, and the requirement to operate from special economic zones restored.
Government departments are guilty of high levels of non-compliance with the UK's off-payroll tax regime, according to a report by MPs.
Difficulties meeting the IR35 rules, which apply to many IT contractors, in central government reflect poor implementation by Her Majesty's Revenue & Customs (HMRC) and other government bodies, the Public Accounts Committee (PAC) said.
"Central government is spending hundreds of millions of pounds to cover tax owed for individuals wrongly assessed as self-employed. Government departments and agencies owed, or expected to owe, HMRC £263 million in 2020–21 due to incorrect administration of the rules," the report said.
Infosys celebrated the first anniversary of the e-filing portal it built for India's tax authorities fixing another prominent glitch – this time a search functionality error.
Complaints about the error streamed in to India's Income Tax Department, which tweeted about the error on Tuesday.
Services giant Infosys has had a difficult week, with one of its flagship projects wobbling and India's government continuing to pressure it over labor practices.
The troublesome project is India's portal for filing Goods and Services Tax returns. According to India's Central Board of Indirect Taxes and Customs (CBIC), the IT services giant reported a "technical glitch" that meant auto-populated forms weren't ready for taxpayers. The company was directed to fix it and CBIC was faced with extending due dates for tax payments.
UK IT contractors have been given no guidance on how to claw back tax erroneously taken by employers under IR35 rules, which already cost central government bodies £263m when they failed to correctly adhere to the guidelines.
According to a report from public spending watchdog the National Audit Office (NAO), the UK's tax collector has failed to clarify the controversial new rules which govern contractor's tax status, while there is no new legal framework to interpret the rules.
The IR35 reforms, which put the onus on the employer, rather than the contractor, for determining their employment status, were introduced in the public sector in 2017. Following a year's delay, they were introduced to large and medium-sized private sector businesses in April 2021.
Intuit will cough up $141 million in settlement costs and has promised to not make any misleading claims about its supposedly free tax-filing software, prosecutors in the US announced on Wednesday.
Attorneys General Letitia James in New York and Herbert Slatery III 1in Tennessee led efforts to sue Intuit for allegedly scamming taxpayers with false advertising. All 50 US states plus the District of Columbia joined the lawsuit, and accused the tech giant of luring people into using its TurboTax software on the false pretense it would be free.
This legal action followed a probe by ProPublica in Intuit's allegedly unfair trade practices.
The UK's chief finance minister, Rishi Sunak, has blamed legacy IT for his decision not to increase social security payments as inflation hits the highest rate in 30 years.
According to reports, the Conservative politician in charge of The Treasury was prevented from raising some benefits because of aging systems at the country's Department for Work and Pensions (DWP), which has overall responsibility for social security.
Some benefits were increased by 3.1 percent last month. The chancellor was told he could not introduce further increases because the systems at the benefits agency could not support this, said The Times. A government source said: "The system was simply not built to be flexible."
India's government has seized over $724 million of bank deposits held by Chinese gadget-maker Xiaomi and alleged the company has improperly moved funds offshore.
The Directorate of Enforcement, an arm of the Department of Revenue charged with investigating money laundering and violations of foreign exchange laws, did the deed. In a statement [PDF], the Directorate justified the seizure of ₹5551.27 Crore with a claim that Xiaomi has sent similar sums abroad under the guise of paying royalties and payments to other members of the Xiaomi group but did not receive any services in return.
"Xiaomi India has not availed any service from the three foreign-based entities to whom such amounts have been transferred," the statement reads, later adding an allegation that Xiaomi "also provided misleading information to the banks while remitting the money abroad."
IT contractors who have faced blanket bans on employment via their personal services companies (PSCs) could face years trying to challenge the decision, according to officials from the UK's tax collector.
Speaking to members of parliament, Her Majesty's Revenue & Customs (HMRC) compliance director Nicole Newbury acknowledged that businesses implementing blanket bans on contracting PSCs could be found not to have complied with freelancer tax reforms, dubbed IR35, but challenging decisions could be a lengthy process.
The new rules, which place the burden of determining the tax status of freelancers on the employer, were brought into the public sector in 2017. They came into force for medium and large businesses in April 2021 following a report from the House of Lords, which said they were "riddled with problems, unfairnesses, unintended consequences."
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