IR35

On Friday I attended a presentation at a business breakfast about the problems created by the new enforcement mechanisms for IR35. The Wokingham Positive Difference networking group met in the Town Hall to hear how companies the Inland Revenue would in future assess whether someone was a sole contractor or in effect an employee working for their client company.

I explained I was against the change of approach by the Revenue. I have written and spoken about the issue. I have lobbied two Chancellors, the Minister concerned and the Prime Minister. I further promised to work with other like minded MPs should  a new Parliamentary opportunity present to relaunch the issue in the Commons. Meanwhile implementation goes ahead.

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6 Comments

  1. XXXX
    Posted March 14, 2020 at 6:00 pm | Permalink

    Yep, just as everyone predicted, the government is going to screw people.
    I’ve moved out of IR35. I’ve moved to a US company. So far this year, 5 of us earned 50 million dollars. You’re going to get my PAYE, but you’ve lost all the taxes on those profits. You will get zero.

  2. Will in Hampshire
    Posted March 14, 2020 at 11:52 pm | Permalink

    As an employee of a US technology company, I have to say that my view of IR35 is that it is a tax loophole that allows certain British people with sophisticated financial advisors to avoid tax that most employees of British or overseas employers consider to be unavoidable. As such, I would like the IR35 privileges to be brought to an end.

    • Mark B
      Posted March 15, 2020 at 8:28 am | Permalink

      Will

      The real reason the government want IR35 is ‘tax flow’. It is far easier for everyone to be on PAYE or salaried as they can deduct money at source and they pretty much know how much they are going to get. Not so will PCS’s. With PCS’s the work comes and goes and the hours vary, and as such, so does the tax take.

      The money paid to a PSC’s does not simply disappear into thin air. It is spent in the wider economy and, through the taxes of those employees, VAT, business rates etc the money eventually finds its way back. So the government cannot lose.

      What is happening is, that those with skills and who are mobile will set up shop outside the UK. Then, the UK will lose all not only a skilled person but, any wealth they might generate. Companies are also finding it harder to find people now so the salaries are rising which has to be passed on to the consumer.

      All this is similar to that of the 1960’s 70’s and The Brain Drain, where taxes went too high and many with skills went abroad to work.

  3. Jim Whitehouse
    Posted March 15, 2020 at 5:55 pm | Permalink

    I have been a software contractor for nearly 30 years and I tend to work with a client for the duration of a new product development – typically 2 to 3 years.
    I do not get a relocation allowance to move nearer to a new client and while there, I do not get holiday or sick pay, any pension contribution, or any training. I will leave each position but will never get any redundancy pay. This is all my choice and I earn a small premium for the convenience and reduced risk for my client. There is also a quite small tax advantage in running a limited company.
    HMRC have spent the last 20 years trying to claim that people like me are not contractors but the courts have generally disagreed with them so they are now trying a different approach and telling the client company that they must determine our status.
    Naturally, most companies want nothing to do with this so take the easy path and tell the contractors to work through an umbrella company.
    It looks as if I will have to wind up my limited company (and no longer pay for the services of an accountant).
    On the bright side, if I understand correctly, when I wind up my company, I will be able to take out up to £25k with a tax bill of just 10% capital gains tax – far better than the normal tax advantage from declaring a dividend.
    I did understand that this government wished to reduce red tape and stay out of the of business!

  4. BOF
    Posted March 15, 2020 at 8:07 pm | Permalink

    As ever, when bad legislation is enacted, it is never repealed. No new minister, or Government has the cajones to overturn the decisions of their predecessors or go against the vested interests. One example is the Climate Change Act, another is the .7% of GDP to Overseas Development Fund. IR35 will ost the country dearly.

    Nothing will change unless we get a conservative government to replace the faux Conservatives.

  5. Martin C
    Posted March 16, 2020 at 5:58 pm | Permalink

    I would be interested to know whether IR35 started life as a European Act, or a British one? Is it being rolled out across Europe or just the UK?
    This is not a time for shooting ourselves in the foot.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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