IR 35 and the Loancharge.

I supported moves to get a rethink on these two difficult tax issues yesterday evening , but was on the losing side on both occasions.

35 Comments

  1. Mark B
    July 2, 2020

    Good morning

    Well, there goes the economic recovery.

    1. Hope
      July 2, 2020

      Cash in hand is the way forward. We have the highest taxation in fifty years and Johnson continues to spend and waste like a drunk.

      Corbyn would be proud of him. Sad to say Corbyn was right, he lost the election but won the argument. I cannot think of a time when Fake Tories implemented so many socialist Marxist policies after deriding them at election time.

      This admission by JR epitomizes his minority position in the fake Tory party. A lost voice without influence.

  2. Alan Jutson
    July 2, 2020

    Thanks for trying.

    Afraid far too many closed minds in HOP.

    I wonder how many Mp’s have ever been properly self employed where they have to go out and actually sell their services, with all of the costs which that entails, not knowing from one day to the next if they will earn anything.

    1. Steve
      July 2, 2020

      You underestimate MPs. They are very experienced in selling their services.

      1. Fred H
        July 2, 2020

        love it ……very amusing.

        1. Fred H
          July 2, 2020

          however what you see is too often NOT what you get.

    2. jerry
      July 2, 2020

      @Alan Jutson; Oh the irony when talking about IR35, “how many Mp’s have ever been properly self employed where they have to go out and actually sell their services”, isn’t that the point, those caught by IR35 have not been doing anything like that, the majority might as well have been should have been on the contracting companies own payroll, either fully or part-time and thus taxed appropriately to start with!

      1. NickC
        July 3, 2020

        Jerry, The basis of taxation via IR35 is that the contractor is working as though he were employed by the client as a permanent member of staff. But that is clearly untrue because the conditions and risks are completely different (no sick pay, no holiday pay, no notice period, etc). But HMRC ignores this. That is where the injustice lies.

        1. jerry
          July 3, 2020

          @NickC; Those that get caught by IR35 were trying to reduce their tax liability, what is more prior to the IR35 changes certain government publications all but admitted as much whilst advising people how to go about setting such a company up!

          Otherwise do explain how someone could be employed with company A on Friday morning, resign their job at 5pm, yet be back in the same office, at the same desk, doing the same work, for the same numbers of hours each day, the following Monday morning but as a consultant ’employed’ by company Y (that is owned by the said person, with but one director who happens to be the same said person), on a rolling contract with Company A, there being no end date to the contract and Company Y has no other contracts with any other company, even a year after being set up. Not having sick pay, holiday pay, or notice period, etc is irrelevant to the issue, being no more than a smokescreen.

          If it looks like a duck, quacks like a duck and loves water it almost certainly is a duck.

          1. NickC
            July 4, 2020

            Jerry, Like HMRC, you attempt to brush aside the marked differences in conditions and risks. You have also swallowed the hard left’s version of contracting (finishing as an employee of Co A only to restart safely as a contractor at the same Co). The majority of contractors are not in this position. I was a contractor for some years and only met one out of hundreds to which your description fitted (and he worked for a quango).

          2. jerry
            July 4, 2020

            @NickC; ” You have also swallowed the hard left’s version of contracting”

            Hmm, hardly, considering I am a contractor/consultant.

            On the other hand you have swallowed the hard rights anti tax (paying) version hook, line, sinker and rowing boat!

            “The majority of contractors are not in this position.”

            Indeed and those contractors do not get caught by IR35.

            Otherwise there would be few if any self employed contractors/consultants if everyone was being taxed as if an employee of the customers company(s), what would be the point for customer or contractor.

            If, truly, all the contractors you know have been caught by IR35 perhaps you are just circulating in problem circles, not the wider economy – quite possible considering how wide the abuse IR35 put a stop to was in some sectors.

            As for employment conditions and risks, you means the same issues faced daily by any sole-trader, thus in relation to this IR35 debate, an irrelevant – you do love your strawmen…

    3. glen cullen
      July 2, 2020

      Once again this government doesn’t understand the people nor the voters

  3. BOF
    July 2, 2020

    I have no confidence that this Government has any interest in helping the private sector, the only sector that generates wealth.

  4. Narrow Shoulders
    July 2, 2020

    For the loan charge HMRC should be pursuing the company not the individual.

    Similarly with IR35, if the liability for repaying tax falls on the company paying the contractor then more rigour will be applied to whether the contractor is genuinely self employed. No need for heavy handed regulation, just shift responsibility for future repayment, which is a nuanced change from what the legislation is trying to do.

  5. ukretired123
    July 2, 2020

    IR35 needs reforming urgently and is key to understanding why folks need to cherish start-ups . It has become a block to encourage the flexible workforce badly needed after Brexit.
    It is stifling the enterprising just like Dominic Cummins observed years ago about the World Crass Civil Service where initiative is throttled and sheep following lauded instead.

    How sad the country never gets it. Correction how sad those in power are not bold enough and few understand the real world outside Westminster like you Sir John.

  6. Lifelogic
    July 2, 2020

    As usual you were right and the government is wrong. The back dating of this change is damaging, evil and totally immoral. It is also causing suicides.

    So is taxing landlords (and thus tenants) on profit they have not even made (as intruduced by the appallingly economically illiterate George Osborne. It is not sustainable either.

    1. Lynn Atkinson
      July 2, 2020

      +1

  7. Iain Gill
    July 2, 2020

    IR35 is a disaster for the country. As is printing work visas like confetti for skills already in oversupply. Both with lead to massive distortions in the marker and make the country far less efficient.

    Really the political class trailing along the bottom as far as having a clue goes.

  8. Stred
    July 2, 2020

    We need a new conservative party that supports small enterprises and does not pander to big business, big unions ot most of all the civil service. The Conservative selection process keeps out MPs that would be likely to do the opposite.

  9. A.Sedgwick
    July 2, 2020

    This Government is following the well worn path of incompetence since Mrs. T.

  10. James1
    July 2, 2020

    Sad, indeed shocking that FDR’s New Deal measures are being cited as an inspiration, rather than the measures of Ludwig Erhard in the early post war years which produced for Germany their ‘Economic Miracle’.

  11. Iago
    July 2, 2020

    Predictable.

  12. Mike Wilson
    July 2, 2020

    What does this mean? I keep reading about the changes to IR35. What is so terrible about them?

  13. NickC
    July 2, 2020

    Jr, I am sorry to hear that about IR35. It is a nonsense for HMRC (ie the government) to say that Ltd Co contractors work under the same conditions as employed people. The contractors take the risks, and do not have the benefits, and have the right to swap the benefits and security for more money. Contractors also enhance labour market flexibility.

    1. Narrow Shoulders
      July 3, 2020

      Genuine contractors will not fall foul of IR35 rules as ever. These laws are trying to stamp down on employees being labelled as self-employed.

      Sledge hammer to crack a nut. Just make the employer liable for any tax due plus fines and the problem will go away

      1. NickC
        July 3, 2020

        Narrow Shoulders, If the government want to tax the self-employed more then the taxes should go up. Instead bureaucrats have invented a convoluted and arbitrary set of rules which results in HMRC re-defining the self-employed as employees. That’s plainly wrong.

    2. flint
      July 3, 2020

      The arguments are well known and well rehearsed. The downsides & injustices arising as a consequence have been highlighted by numerous people & organisations, up to and including The Lords. A number of high profile MPs, including our host, have spoken out against the changes.

      No adequate or meaningful response have been given.

      The truly disappointing and disturbing aspect is that these changes continues unabated. We are left with the conclusion that the government is refusing to listen, or is listening to someone with more influence. Cuo bono?

  14. nhsgp
    July 2, 2020

    One of my brothers has left the UK. You’ve lost his tax and he is a very high earner.
    Yesterday, I had another close relative call me about going offshore to work with zero tax.
    People are just opting out.

    Same with the BBC. My cancellation has gone in. No more broadcast TV.
    I’ve some letters to send out as well, 21 in fact. 1 to the head of ITV saying he has lost a customer.

    I’ve the list of ITV’s top 10 advertisers. They are going to get a letter to and the head of ITV, Carolyn McCall, will get a copy of each.

    So its down to you John. You won’t control the BBC, so others get damaged.
    Just as you won’t control HMRC and their mess, so you lose the tax, and that’s lots of min wage earners who lose services, get taxed even more.

    1. Lynn Atkinson
      July 2, 2020

      Yep. John Gault syndrome. We are all getting it and for the Govt it’s more lethal than CV19.

    2. a-tracy
      July 3, 2020

      Can you still use your tv to watch Amazon Prime and Netflix?

  15. MG
    July 2, 2020

    Final confirmation that the Conservative party is now the party of big business and only big business. Goodbye

  16. a-tracy
    July 3, 2020

    Did the government sort out the scam on second homes that are occasionally put out as B&Bs or AirB&Bs so they don’t have to pay full rates and were reportedly given ÂŁ10,000 business interruption loans even if they hadn’t rented them out the previous three years?

  17. J Brown
    July 4, 2020

    Keep up the pressure. Income tax needs a major rethink. Structured around PAYE, it doesn’t work for all the entreneurs, contractors, freelancers, gig workers, etc. Now is an excellent time for a review, with the opportunity presented by Brexit and rebuilding from the virus.

  18. GADMan
    July 5, 2020

    Hi John.

    What was wrong with my previous comment on this subject? Maybe that the real truth of the situation is too scary to contemplate?

    I guess you are lobby-fodder just like the rest…

  19. XYXY
    July 5, 2020

    Due to typos – re-submitting:

    I suggest that the route to win on IR35 is to “abolish” Employers NI.

    The word “abolish” is in quotes because it won’t be abolished as such (governments say that they can’t afford to lose the revenue), so it will be shifted elsewhere. However it is the real difference between Schedule D and PAYE – remove that difference and the problem is solved in another way.

    Suppose the Employers Allowance were gradually increased and applied to companies of all sizes (at present it doesn’t apply to one-man bands).

    This has a real benefit elsewhere – British workers are more expensive due to the extra 15% it costs an employer to use a British worker versus, say, a call centre worker in India; removing Employers NI removes that disincentive to use British-based workers.

    It would also free up the courts from endless “employment status” cases when all workers are treated roughly the same.

    So a change of tack may prove advantageous.

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