UK govt study says IR35 contractor tax reforms plain sailing for most

Two-fifths of organizations hired fewer off-payroll staff under the new IR35 rules in September 2021 than in March 2020, according to research published by UK tax collector HMRC, yet critics claims the findings fail to measure the true impact of the reforms. The study was based on 353 interviews between November 2021 and April …

[elsergiovolador]

Level playing field

Taking HMRC marking their own homework aside, I think it is a scandal that there is no level playing field with regards of service based businesses.

Small business providing a service to another business does nothing different than a big consultancy providing service to another business.

Yet, when it comes to small business when the client decides to frame the engagement is scope, so that HMRC does not come poking around, the small business becomes taxed on revenue and can't make profit from such engagement, whereas a big consultancy can.

Big corporation doing the same type of work as small business should be paying the same tax as small business.

I see no reason why when something like Infosys wins a contract, they shouldn't be paying the PAYE tax on the whole value of contract (and making no profit) like small businesses are being forced to pay.

[Anonymous Coward]

Re: Level playing field

The reasons why is that it isn't likely any ex-Mps os senior civil servants will get a lucrative job when they leave government from a small business, whereas much better chance from the likes of Infosys.

[Zippy´s Sausage Factory]

Re: Level playing field

Indeed, it's been speculated that it was originally brought in because certain big consulting firms were watching single contractor companies get contracts they were hoping to get and they greased enough wheels to try and ensure that sort of thing never happened again.

[Anonymous Coward]

Re: Level playing field

And surely a pure coincidence that the Prime Minister (who nobody elected) has via his wife an enormous fortune, the source of which is a large IT consultancy of the kind that benefits nicely from IR35. Virtually his first act (through Hunt, who also nobody elected) was to reinstate IR35 after it had very sensibly been promised to be repealed by Truss / Kwarteng.

[Doogie Howser MD]

Re: Level playing field

IR35 was a shit show long before Sunak turned up, but just to correct you - he was elected by his constituents and made PM by his party. This is how it works in this country, for better or worse. Same rules apply to the other parties too, see Brown, G.

[Anonymous Coward]

Study by nitwits claims nitwits are OK

No hint of bias here whatsoever, of course?

It would be interesting if an independent body would conduct such a study, and by that I exclude any study done by paid consultants because I have seen how that goes: the consultancy gets told what the desired outcome is and is then left to develop a study and/or methodology to arrive at the paid for conclusion (and the results of that erroneous outcome can drive warp policy for decades) in exchange for a fairly hefty amount of money.

[Ste Van De Mull]

You also need to take in to account Off Shore

How many companies started using offshore companies. I have experience of a recent move that a company now does all its IT work via Romania and India.

How has this worked out for HMRC and how many jobs based in UK and not paying UK taxes, is this evasion or avoidance?

[elsergiovolador]

Re: You also need to take in to account Off Shore

Don't also forget that shareholders of Indian company living in the UK as Non-doms only pay flat Indian 20% tax on dividends.

It's interesting that HMRC is looking away when it comes to that.

[Anonymous Coward]

In my sample size of one...

The statement:

"With only three weeks until the expected roll-out date, most firms had already changed their workforces. Therefore, the periods compared in this report of March 2020 to September 2021 do not provide an accurate picture of the before and after scenario."

Is entirely correct.

I was in role, the client did a case by case, but By that point I'd handed in notice anyway.

The next two roles I'd been offered were both blanket inside.

Once the deadline was postponed (announcement made) , one of them then came back and said "its outside now".... (hint: run away!)

It's a shite show!

[Anonymous Coward]

ir35

The government changes on this sure don't make their mind up.

It's been like this for years - a hot button issue!

Especially if you post here and your username is Jake

[EnviableOne]

The study doesn't even look at the main issue caused by IR35

once deemed inside IR35 you are not a worker so not entitled to the benefits, but get taxed as if you are.

basically creating this sub class of indentured unprivileged worker, that the gig economy can take advantage of

[Lonpfrb]

My observations of an offshore service provider:

1. Blanket Ban

2. Fail to source required skills

3. Deliverable based statement of work contacts

4. Business as usual. Jobs exported

Sovereign capability not important...