Working as a contractor can be to the benefit of both business and individual. The individual can specialise, and offer skills that are only needed on occasions - maybe a 6-12 month deployment. They get engaged to deliver that service, and then finish when it’s done. The business gets the service without having to do all the administration taking on an employee, who they know is going to leave after a short time. The principle of using contractors is a good one. These contractors should be paid more because of the reasons mentioned ad nauseam above.
The issue here is that people become contractors for a service that doesn’t have a defined end point. They become permanent contractors, and are milking the system. It’s a deficiency by the business, they end up paying a fortune for people who have less invested in the business, but their IT procurement is a bit wank.
Then there’s the tax issue, which tbh we’ve done to death.
You seem to be railing against the tax issue, when the root problem is the dysfunctional business practices of some companies. In my experience it’s actually many companies. I’ve always found it odd that it’s the contractors that have the power, and these big multinational companies are at their mercy. But I simultaneously blame the companies, and have absolutely fuck all sympathy with them. Why shouldn’t people take advantage of them if they can? They are never on your side.
Despite that I’ve had a Ltd company since 1996, the company I regularly invoice did a CEST test (as hirer) on me this week and determined that I’m inside IR35.
They’ve given me two choices - either I continue to invoice them at my present rate and they stop monthly NI and tax, or they offer me a position on PAYE.
Question is, if I continue to invoice, will the NI and tax they deduct be on account against my annual return? If so, I can’t see much of a problem as things will balance out after April.
I don’t believe that IR35 works with a LTD company and you would need to go with an umbrella company.
The agent will deduct NI and tax and what you are left with is effectively take home, you can’t do corp tax and dividends from that. Be very very careful though as HMRC can (and have) take the view that if you are inside IR35 now you have always been inside for the historical duration of the contract and can retrospectively collect tax.
When it comes to going IR35 I have made the decision I am walking away from contracts and having nothing to do with that client again.
The HMRC CEST tool is fundamentally flawed and countless appeals against it have ruled it so
Find a decent contractor lobby group such as IPSE and a specialist layer who can review your contract with your client
A few weeks ago Javid stated that ir35 in the private sector would not be back dated prior to 1st April, so there remains time to restructure the business relationship with your client if you wish to continue as an independent contractor
Just had a letter from my client - ir35 hasn’t changed so our decision and the result of your appeal haven’t changed, you’ll be inside as of April 2021… glad to see they used the delay to get organised
And all the offers to make my contract ir35 compliant? - fantastic except the client can’t be bothered.
the thing that tits me off about this bollocks is that jo-blow cuntsultants are getting buggered about no end for what amounts to a drip of piss in the ocean whereas companies like Amazon, Starbucks and Google are getting away with the ocean.
All because the man in the street can relate and get all riled up about the contractor sitting next to him earning a few quid more (with less benefits and protections but yeah fuck that, we voted for brexit so obviously that shite is all horseshit) whereas Bezos, his excellent taste in wristwatches aside, is carving billions out of the economy but it’s not as ‘visible’ and so doesn’t matter.
Modern government is a something I hold in equal awe and disgust, just as I also hold the ‘common man’ in horror and disgust.
to be fair that’s probably the biggest contributor but at some level i feel it was a populist move / legislation by a government for the social media generation.
What gets me is it is an incentive to clients at the moment - they get to avoid employers NI. The contractors pay Corp tax and dividend tax which are not trivial amounts
But the way it’s been implemented it penalises the contractors, not the clients.
And the split in employment law and tax law just makes it a lot worse. If the deemed employment applied to employment status and came with the same rights then fair enough. But to take the tax but not confer the rights is just perverse.
