| HMRC 09:14 - Dec 3 with 3911 views | bluey_the_blue |
Another week, yet more losses for HMRC in IR35 tribunals.
Again, ruling by judges was that contracts lacked Mutuality of Obligation - meaning contractors not bound to accept any work offered nor client obliged to offer work outside contract.
HMRC's own tool for determining IR35 status *assumes* MOO is present in every contract; HMRC currently going through a flurry of cases, wasting taxpayers money in the process.
When will they be reined in? Changes for private sector contracts have to be blocked, changes in public sector rolled back. |  | | |  |
| HMRC on 10:29 - Dec 3 with 2895 views | ItchySphincter |
It's a complete U-turn from where they were three years ago, in my industry at least. I've operated as a limited company for several years and now even that may not escape the reach of IR35. |  |
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| HMRC on 13:22 - Dec 3 with 2810 views | bluey_the_blue |
| HMRC on 10:29 - Dec 3 by ItchySphincter |
It's a complete U-turn from where they were three years ago, in my industry at least. I've operated as a limited company for several years and now even that may not escape the reach of IR35. |
Having a limited company is never 100% outside of IR35, never has been.
It's generally been based upon unfettered right of substitution ( the ltd company is providing services, not you as a named individual ), mutuality of obligation ( you can refuse to accept any further work, client not under obligation to give the ltd further work ) and standard direction and control ( how the work is performed ).
HMRC right now are simply executing attempted money grabs - for those appealing and always winning, many simply pay up. The fact the general public are happy with that is staggering. | | | |
| HMRC on 13:25 - Dec 3 with 2807 views | londonlisa2001 |
| HMRC on 13:22 - Dec 3 by bluey_the_blue |
Having a limited company is never 100% outside of IR35, never has been.
It's generally been based upon unfettered right of substitution ( the ltd company is providing services, not you as a named individual ), mutuality of obligation ( you can refuse to accept any further work, client not under obligation to give the ltd further work ) and standard direction and control ( how the work is performed ).
HMRC right now are simply executing attempted money grabs - for those appealing and always winning, many simply pay up. The fact the general public are happy with that is staggering. |
I’m amazed that the area of Tory policy you disagree with is the one that’s attempting to stop people and companies avoiding tax. Amazed. | | | |
| HMRC on 13:44 - Dec 3 with 2776 views | bluey_the_blue |
| HMRC on 13:25 - Dec 3 by londonlisa2001 |
I’m amazed that the area of Tory policy you disagree with is the one that’s attempting to stop people and companies avoiding tax. Amazed. |
IR35 is and always has been fundamentally flawed, Lisa. That's the problem.
You're acting as if I'm against the overall concept - I'm not, there are many disguised employees abusing it which then causes sh1t for genuine small companies as a consequence. Same as I don't have sympathy for those caught by loan charges, my anger there is the way HMRC are allowed to backdate things to include periods where those schemes were deemed legal.
Javid has now said they'll review the proposed changes - not enough due to the upcoming chaos in April 2020, but...
What you fail to grasp, Lisa, are the following problems.
1) Limited company ( deemed PSC even though that has no legal status but hey ho ) provides services to a client. From April 2020, private sector clients will make the IR35 determination NOT the contractors.
2) Clients being risk averse will make blanket decisions ( ALL INSIDE IR35 ) even though each decision has to be on a contract by contract basis.
3) Clients now refusing to extend or take on any Ltds. Spoiler; banking industry will be fvcked when IT contractors walk en masse.
4) HMRC created a tool - CEST - to be used for making the determinations. HMRC themselves in tribunal hearings have stated they will not abide by decisions their own tool renders.
5) HMRC tool automatically assumes all contracts have MOO even if those contracts don't.
6) Every case that has gone to tribunal, HMRC have lost at tribunal.
7) Numerous business have pointed out HMRC haven't given promised guidance on the changes.
8) Inside / Outside IR35 only has a legal bearing on tax status. Inside, for tax purposes you're a disguised employee. The contractor then bears the brunt for PAYE/NI... no comeback on client.
9) Inside IR35 disguised employee so you get sick pay, holiday pay et al, right? Wrong. Inside IR35 only applies for tax, no employee rights conferred...
IR35 is a horrendously bad piece of legislation aimed at scaring contractors to pay up - I know some who have paid when threatened with investigation even though they've been clearly outside IR35. | | | |
| HMRC on 14:45 - Dec 3 with 2731 views | ItchySphincter |
| HMRC on 13:22 - Dec 3 by bluey_the_blue |
Having a limited company is never 100% outside of IR35, never has been.
It's generally been based upon unfettered right of substitution ( the ltd company is providing services, not you as a named individual ), mutuality of obligation ( you can refuse to accept any further work, client not under obligation to give the ltd further work ) and standard direction and control ( how the work is performed ).
HMRC right now are simply executing attempted money grabs - for those appealing and always winning, many simply pay up. The fact the general public are happy with that is staggering. |
I know what it is. | |
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| HMRC on 14:47 - Dec 3 with 2727 views | ItchySphincter |
| HMRC on 13:25 - Dec 3 by londonlisa2001 |
I’m amazed that the area of Tory policy you disagree with is the one that’s attempting to stop people and companies avoiding tax. Amazed. |
So avoidance is illegal now? | |
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| HMRC on 17:21 - Dec 3 with 2660 views | londonlisa2001 |
| HMRC on 13:44 - Dec 3 by bluey_the_blue |
IR35 is and always has been fundamentally flawed, Lisa. That's the problem.
You're acting as if I'm against the overall concept - I'm not, there are many disguised employees abusing it which then causes sh1t for genuine small companies as a consequence. Same as I don't have sympathy for those caught by loan charges, my anger there is the way HMRC are allowed to backdate things to include periods where those schemes were deemed legal.
Javid has now said they'll review the proposed changes - not enough due to the upcoming chaos in April 2020, but...
What you fail to grasp, Lisa, are the following problems.
1) Limited company ( deemed PSC even though that has no legal status but hey ho ) provides services to a client. From April 2020, private sector clients will make the IR35 determination NOT the contractors.
2) Clients being risk averse will make blanket decisions ( ALL INSIDE IR35 ) even though each decision has to be on a contract by contract basis.
3) Clients now refusing to extend or take on any Ltds. Spoiler; banking industry will be fvcked when IT contractors walk en masse.
4) HMRC created a tool - CEST - to be used for making the determinations. HMRC themselves in tribunal hearings have stated they will not abide by decisions their own tool renders.
5) HMRC tool automatically assumes all contracts have MOO even if those contracts don't.
6) Every case that has gone to tribunal, HMRC have lost at tribunal.
7) Numerous business have pointed out HMRC haven't given promised guidance on the changes.
8) Inside / Outside IR35 only has a legal bearing on tax status. Inside, for tax purposes you're a disguised employee. The contractor then bears the brunt for PAYE/NI... no comeback on client.
9) Inside IR35 disguised employee so you get sick pay, holiday pay et al, right? Wrong. Inside IR35 only applies for tax, no employee rights conferred...
IR35 is a horrendously bad piece of legislation aimed at scaring contractors to pay up - I know some who have paid when threatened with investigation even though they've been clearly outside IR35. |
I don’t even remotely fail to grasp the ins and outs of IR35 Bluey. | | | |
| HMRC on 17:23 - Dec 3 with 2651 views | londonlisa2001 |
Nope.
You’ll have to point out where I said it was. | | | |
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| HMRC on 17:27 - Dec 3 with 2642 views | ItchySphincter |
| HMRC on 17:23 - Dec 3 by londonlisa2001 |
Nope.
You’ll have to point out where I said it was. |
lol. Everyone is so prickly on here these days. It was implied. [Post edited 3 Dec 2019 17:28]
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| HMRC on 17:29 - Dec 3 with 2634 views | londonlisa2001 |
| HMRC on 17:27 - Dec 3 by ItchySphincter |
lol. Everyone is so prickly on here these days. It was implied. [Post edited 3 Dec 2019 17:28]
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Not me.
I have absolutely no prickly thoughts about IR35 at all.
Other than I think it’s funny how much Bluey is getting annoyed by the Tories tightening up very, very loose legislation when they can normally do no wrong. | | | |
| HMRC on 18:36 - Dec 3 with 2595 views | bluey_the_blue |
| HMRC on 17:29 - Dec 3 by londonlisa2001 |
Not me.
I have absolutely no prickly thoughts about IR35 at all.
Other than I think it’s funny how much Bluey is getting annoyed by the Tories tightening up very, very loose legislation when they can normally do no wrong. |
I'm not annoyed by "tightening up very, very loose legislation". You claiming that shows you don't understand the issue or the anger of many contractors.
The issue is HMRC ignoring their own advice, their own tools and persuing cases they know they can't win using taxpayers money.
For IR35 to work, everyone has to have faith in the process. When HMRC's tools don't take into account one of the basic tenets of being outside IR35 then HMRC are acting in bad faith.
I've no problem with disguised employees being targetted. It came about with the head of the Student Loans Company being paid through limited, using as a vehicle for nothing more than tax avoidance. He took the piss in a highly aggressive approach.
That doesn't mean every contractor using a limited to run a small business is doing the same. My company has a few income streams, not great ones, but enough to not rely solely upon providing services to clients. Every contract and indeed working practises when providing service are 100% outside IR35. Not everyone does that, there are plenty of pisstakers.
Disguised employees should be hit for PAYE and NI. They ruin it for everyone else - BUT the client essentially gets away scot free. A company forcing employees to use ltds to minimise their own tax should be dealt with, for example. | | | |
| HMRC on 18:39 - Dec 3 with 2590 views | londonlisa2001 |
| HMRC on 18:36 - Dec 3 by bluey_the_blue |
I'm not annoyed by "tightening up very, very loose legislation". You claiming that shows you don't understand the issue or the anger of many contractors.
The issue is HMRC ignoring their own advice, their own tools and persuing cases they know they can't win using taxpayers money.
For IR35 to work, everyone has to have faith in the process. When HMRC's tools don't take into account one of the basic tenets of being outside IR35 then HMRC are acting in bad faith.
I've no problem with disguised employees being targetted. It came about with the head of the Student Loans Company being paid through limited, using as a vehicle for nothing more than tax avoidance. He took the piss in a highly aggressive approach.
That doesn't mean every contractor using a limited to run a small business is doing the same. My company has a few income streams, not great ones, but enough to not rely solely upon providing services to clients. Every contract and indeed working practises when providing service are 100% outside IR35. Not everyone does that, there are plenty of pisstakers.
Disguised employees should be hit for PAYE and NI. They ruin it for everyone else - BUT the client essentially gets away scot free. A company forcing employees to use ltds to minimise their own tax should be dealt with, for example. |
I promise you I do understand the issue. There is no need for you to continue to explain it. | | | |
| HMRC on 18:44 - Dec 3 with 2584 views | bluey_the_blue |
| HMRC on 18:39 - Dec 3 by londonlisa2001 |
I promise you I do understand the issue. There is no need for you to continue to explain it. |
Then I'm curious, irrespective of your opinion on my circumstances, why you don't seem to articulate that you agree HMRC's conduct is abhorent? I'm sure you do but maybe you don't want to be seen agreeing with me publicly.
Can't blame you tbh. | | | |
| HMRC on 18:49 - Dec 3 with 2576 views | londonlisa2001 |
| HMRC on 18:44 - Dec 3 by bluey_the_blue |
Then I'm curious, irrespective of your opinion on my circumstances, why you don't seem to articulate that you agree HMRC's conduct is abhorent? I'm sure you do but maybe you don't want to be seen agreeing with me publicly.
Can't blame you tbh. |
Because I don’t agree it is. Too many people have taken the p*** for too long and it’s about time it was brought to an end.
Too many contractors are using it to reduce their tax burden and too many companies are doing the same.
The amount of lost NI is huge. | | | |
| HMRC on 18:54 - Dec 3 with 2566 views | Darran |
| HMRC on 18:49 - Dec 3 by londonlisa2001 |
Because I don’t agree it is. Too many people have taken the p*** for too long and it’s about time it was brought to an end.
Too many contractors are using it to reduce their tax burden and too many companies are doing the same.
The amount of lost NI is huge. |
If people aren’t breaking the law on tax under every government as far back as we can remember they aren’t taking the piss. |  |
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| HMRC on 19:03 - Dec 3 with 2560 views | londonlisa2001 |
| HMRC on 18:54 - Dec 3 by Darran |
If people aren’t breaking the law on tax under every government as far back as we can remember they aren’t taking the piss. |
Yes they are though Darran.
Contractors (most, at least) use what has been drafted as an IR35 compliant contract. It always includes clauses about things like ability of the contracting company to substitute other workers instead of the main contractor etc etc. It often bears no resemblance to the reality. It’s done for reasons of reducing tax.
The law hasn’t been broken as the contracts comply with the legislation in place. But the contract used has not reflected the actual relationship between contractor and client. That’s what has taken the piss. | | | |
| HMRC on 19:06 - Dec 3 with 2550 views | Darran |
| HMRC on 19:03 - Dec 3 by londonlisa2001 |
Yes they are though Darran.
Contractors (most, at least) use what has been drafted as an IR35 compliant contract. It always includes clauses about things like ability of the contracting company to substitute other workers instead of the main contractor etc etc. It often bears no resemblance to the reality. It’s done for reasons of reducing tax.
The law hasn’t been broken as the contracts comply with the legislation in place. But the contract used has not reflected the actual relationship between contractor and client. That’s what has taken the piss. |
No they aren’t. If they are doing everything legally they aren’t. It’s not them taking the piss it’s incompetent successive governments allowing them to avoid paying their fair share of tax. | |
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| HMRC on 19:07 - Dec 3 with 2542 views | builthjack |
Perhaps they would be better off getting tax off these huge companies that pay fck all.
I think Bluey said that was ok though. |  |
| Swansea Indepenent Poster Of The Year 2021. Dr P / Mart66 / Roathie / Parlay / E20/ Duffle was 2nd, but he is deluded and thinks in his little twisted brain that he won. Poor sod. We let him win this year, as he has cried for a whole year. His 14 usernames, bless his cotton socks.
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| HMRC on 19:10 - Dec 3 with 2542 views | londonlisa2001 |
| HMRC on 19:06 - Dec 3 by Darran |
No they aren’t. If they are doing everything legally they aren’t. It’s not them taking the piss it’s incompetent successive governments allowing them to avoid paying their fair share of tax. |
It’s not ‘legal’ to sign a contract stating a relationship is one thing for tax purposes knowing it doesn’t reflect reality Darran.
I agree that it’s the fault of government for not taking it seriously, however. Which is why I don’t have an issue with them tightening it up. | | | |
| HMRC on 19:12 - Dec 3 with 2540 views | bluey_the_blue |
| HMRC on 19:03 - Dec 3 by londonlisa2001 |
Yes they are though Darran.
Contractors (most, at least) use what has been drafted as an IR35 compliant contract. It always includes clauses about things like ability of the contracting company to substitute other workers instead of the main contractor etc etc. It often bears no resemblance to the reality. It’s done for reasons of reducing tax.
The law hasn’t been broken as the contracts comply with the legislation in place. But the contract used has not reflected the actual relationship between contractor and client. That’s what has taken the piss. |
Lisa, I'm not disagreeing on working practices. They are a fundamental part of the overall contract. HMRC don't go on only contracts, by the way, working practices are also reviewed as part of an IR35 investigation.
Substitution is only one of the three pillars. HMRC tried to claim in an investigation that right of substitution between my company and end client was a sham. I had to point out my company had exercised that right during the contract.
It's tricky because HMRC interpret it as unfettered substitution being required, ie end client not being able to reject. That's an incredibly dumb point given the nature of contracting. My company provides services to defence company, requiring SC to even be on site. My potential substitute lacks SC then end client would reject. That's another issue in itself.
Mutuality of obligation is a far bigger factor than substitution based upon recent tribunal rulings. | | | |
| HMRC on 19:13 - Dec 3 with 2536 views | Darran |
| HMRC on 19:10 - Dec 3 by londonlisa2001 |
It’s not ‘legal’ to sign a contract stating a relationship is one thing for tax purposes knowing it doesn’t reflect reality Darran.
I agree that it’s the fault of government for not taking it seriously, however. Which is why I don’t have an issue with them tightening it up. |
Tighten it up then innit? | |
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| HMRC on 19:16 - Dec 3 with 2529 views | londonlisa2001 |
| HMRC on 19:13 - Dec 3 by Darran |
Tighten it up then innit? |
That’s what I’ve been saying to Bluey mun. | | | |
| HMRC on 19:17 - Dec 3 with 2527 views | londonlisa2001 |
| HMRC on 19:07 - Dec 3 by builthjack |
Perhaps they would be better off getting tax off these huge companies that pay fck all.
I think Bluey said that was ok though. |
Totally agree with you. | | | |
| HMRC on 19:19 - Dec 3 with 2521 views | bluey_the_blue |
| HMRC on 19:13 - Dec 3 by Darran |
Tighten it up then innit? |
It's not being tightened up though, Darran.
Before the contractor would bear responsibility for determination of IR35 status. Public sector had that changed; public sector organisations were then charged with making the determination themselves.
Every contract is different but rather than making the determinations, many simply made blanket "INSIDE IR35" determinations using a tool not fit for purpose as rationale.
Public sector orgs have now lost a lot of contractors, highly skilled people.
Those who have stayed and worked inside IR5 have simply whacked the rates up. Public sector had no choice but to pay, costing them more overall.
Those changes are now being applied to private sector. Some contractors have gone permie - less tax overall going to HMRC now as a result. | | | |
| HMRC on 19:22 - Dec 3 with 2512 views | bluey_the_blue |
| HMRC on 19:16 - Dec 3 by londonlisa2001 |
That’s what I’ve been saying to Bluey mun. |
Which I'm not in itself disagreeing with, however the evidence of HMRC activities is that they act as a law unto themselves.
Any tax regulations passed aren't black and white, aren't concrete until tested in a court of law.
It's accountants interpretations and HMRC's interpretation. The latter have to be found routinely wrong in IR35 tribunal cases and indeed ignoring definitions from their own tools. | | | |
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