Tag Archive | "IR35"

More People Self Employed than on Minimum Wage


While the exact figures on self employment in the UK are not known, it is estimated to be around 5 million people…more than on minimum wage.

Compare this to 10 years ago where around 3.5 million were self employed, but nearly 5 million were on minimum wage. It just goes to show that working for yourself is the place to be, rather than putting up with some stupid boss and getting paid barely anything.

They are even saying that by 2021 there will be more people self employed than working in the public sector, which doesn’t surprise me at all when you consider how the government treat many of their workers.

Despite all of these encouraging statistics and the fact that many self employed people are taking to the internet to say how great it is…the government are not that convinced, and instead, they are now saying that many people that go into self employment are “reluctant” to do so.

Yes you read that right. Here we are in a day and age where your average man or woman can wake up, go to their kitchen table and turn on their laptop and then spend a few hours “working” before going to mow the lawn or have a session down the gym, but according to the experts in the government this is wrong and more should be done to get people back into employment, and back on minimum wage no doubt.

You know, I just think some of these MPs and government workers have it in for the self employed. Maybe they are jealous? Who knows what the reason is.

Firstly, they punish their own self employed contractors, bringing in the IR35 changes that meant public sector workers ended up paying more tax.

Then Philip Hammond went on the attack against every self employed person in the UK, demanding more tax and National Insurance payments, before back tracking only a few days later after massive outrage from just about everybody in the country.

Now, it appears that many in the government want to get the self employed back into traditional employment after they have decided that most people are “reluctant.”

Yes I’m sure they are very reluctant to earn more than minimum wage while setting their own hours. Very reluctant indeed.

Every time I read one of these new news items, reports, or statistics from the government I generally give it a quick glance over before chucking it directly into my bin.

Why can’t we hear good stories about self employment, instead of the usual rubbish? I doubt anything is going to change though.

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Contractors Told – “Contact Your MP”


If you work as a contractor in the public sector, then now is the time to contact your MP about the new IR35 proposals.

I’ve spoken before about how these changes are going to make a huge difference to the public sector in general, mainly because if they do go through then we can expect many contractors to start looking at moving to other industries.

Basically, there are a few main things that are going to happen should the IR35 changes take effect.

The first is that contractors in the public sector won’t be able to decide if they require the IR35 status or not…this decision will move elsewhere.

After that, if they decide that IR35 is not relevant, then any contractor will have to pay tax like an employee, as well as things like National Insurance.

In other words, you end up being treated like an employee but don’t get any of the benefits, such as holiday pay and pension entitlements.

If you’ve been reading the news on this site recently, then you are no doubt aware what I think of this whole thing.

Does it make any sense? Not really. It’s almost as if the public sector are trying to get rid of all the skilled contractors in the industry, even though they rely on them so much.

What are they going to do when thousands decide to go elsewhere, because let’s face it, there is not many contractors who are going to stay if they don’t have that IR35.

In fact, a new survey that was released in the last few weeks gives up the answer we need. Of the thousands interviewed, over half said they would definitely leave the public sector under the new rules, with a lot more saying they were undecided.

Anyway, what should you do if you are a contractor in the public sector and you disagree with the new changes? It’s simple…contact your local MP and let them know what is going on. If enough people do that it is only a matter of time before the issue gets mentioned in Parliament, and once this happens there may just be a chance something will done.

At the end of the day, if you don’t try then nothing will get done and the IR35 changes are going to pass through without opposition.

Please note that even if you are a contractor that doesn’t work in the public sector then you may still want to contact your MP. Who knows what changes they will be making next, and it could be in your industry.

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HMRC Confirm IR35 Rule Change to Go Ahead


In a move that has sparked outrage among many contractors throughout the UK, it has been confirmed that HMRC are changing the way the IR35 is policed within the public sector.

This has been on the horizon for a few months now, with many experts predicting they wouldn’t actually go through with it. It seems like they were wrong though, with the new rule change expected to be enforced very shortly.

It was first announced during the 2016 budget by George Osborne, as he outlined his intention to clean up the public sector and catch out “contractors” who should really be classified as employees, and in turn pay more tax. However, many people are arguing that what will really happen is that innocent contractors will get wrongly and unfairly classified as employees, leading to them being taxed extra in the process.

A representative of HMRC by the name of Philip Horswill recently stated that 400 million pounds was lost last year due to around 90% of contractors in the public sector not paying the correct tax, although he defended the new IR35 rule changes, saying it was “not a tax grab.”

So what are we to make of all this? In my own personal opinion I can see both sides of the story. Yes there will be contractors who end up paying too much tax and lose a lot of the benefits they currently enjoy, while at the same time it goes a long way in helping to clean up the public sector and stop a lot of people cheating the system. Let’s face it, £400 million a year is no joke, and if this really is the kind of money that is being held back from HMRC then something needs to be done.

On a side note, there had been some reports that HMRC have been planning to roll out similar measures in the private sector over the next few months. However, Philip Horswill claimed this is not the case at all, and there are no plans in the future for more rule changes. I think this is the right move, as the public sector is quite a unique scenario in regards to IR35.

With all that being said, it’s expected that many contractors will challenge the decision once all the rule changes go ahead, with many experts predicting this may end up costing the HMRC a lot of time and money in contesting cases and appearing in court.

While this probably will end up being the case to some degree, there is no denying that HMRC needs to move forward in some capacity regarding the public sector and IR35. One thing we can all agree on…it’s certainly going to be interesting to see what happens.

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Industry bodies condemn new IR35 reform consultation


A new IR35 reform consultation published by Her Majesty’s Revenue & Customs has been roundly condemned by trade industry bodies since it went public.

It’s been a bit more than a “chilly reception” when it comes to the HMRC’s new IR35 reform consultation. In fact, I’d characterise it closer to “withering hail of condemnation” than anything else, as organisations have come out of the woodwork to tell the taxman how absolutely horrid its plans are for reforming the way personal service companies working in the public sector handle disguised employment issues.

One such organisation, contractor accountant and insurance specialist Qdos, characterised the whole mess as inherently unfair. The organisation’s reasoning is that with contracting for state bodies being what it is, the questions asked to personal service company contractors to see if IR35 applies will always come up as yes – which would more or less catch every PSC contractor as under IR35, regardless of whether they actually should be or not.

The results of this new IR35 reform, should it actually go forward unchanged (and heaven knows how much HMRC loves to ignore any sort of constructive criticism) is likely going to result in freelancers and contractors will desert the public sector in groves, according to the Association of Independent Professionals and the Self-Employed. IPSE says the UK as a whole will be the losers here; there may be large consultancies that will be drafted in to fill the sudden public sector void, but those will likely be the only winners in this scenario.

Meanwhile, the Freelancer and Contractor Services Asociation says that it’s bewildered that these new proposals are even being tabled by HMRC. The FCSA expressed disappointment that the tax authority seems to be focusing its efforts on how to implement this new legislation instead of whether it should be put into place at all. The new framework is so fundamentally wrong, as well as unethical and unfair, according to Julia Kermode, chief executive of FCSA, that it’s practically a moral imperative to challenge this mess. IPSE chief executive Chris Bryce tacitly agreed, saying that the new IR35 reforms are more or less proposals to tax contractors as full employees without providing any of the statutory rights that you get as an employee.

What a bloody mess. I can only hope that somehow this complete abortion of tax legislation ends up being tossed out with the rest of the rubbish before it’s too late!

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IR35 reform plans questioned by contracting bodies


The Government’s IR35 reform plans have fallen under fire from contracting bodies after a recent report contradicted official compliance data.

A new report from a Public Accounts Committee says that the tax compliance figures that Her Majesty’s Revenue & Customs are wildly inaccurate. In fact, compliance among freelancers and contractors is likely much higher than HMRC’s suggestions, the PAC report says – in fact, the report’s findings say that an overwhelming 90 per cent of temporary workers in the public sectors are tax compliant! That’s not an insignificant figure, especially since the PAC report gathered figures from a wide variety of Government departments.

Meanwhile, the compliance rate as formerly believed before the Budget 2016 was a paltry 10 per cent. Based on this (obviously massively erroneous) figure, HMRC estimated that the new IR35 reforms would rake in some additional £400 million in tax revenue. Treasury officials and representatives from the tax authority maintained their belief in this ridiculously low figure at a compliance seminar recently, though when they were pressed on the matter they didn’t exactly come forward with any more information. Normally when something like that happens, most people will begin to look a bit askance on an organisation that won’t back up their claim with valid statistics and official figures.

Listen, no one is saying that non-compliance is nonexistent. It happens, of course. People either make mistakes or are trying purposefully to get one over on HMRC. But for pity’s sake, the difference between only 10 per cent of public sector contractors being in compliance with tax regulations and 90 per cent being in compliance is not within the standard margin of error! Either HMRC has gone completely around the bend or this recent PAC report is completely fabricated – and my money is on the taxman being complete rubbish.

The data in the PAC report is all there right in front of us, for anyone to read and understand. Yet HMRC hasn’t exactly publicised their own data that led them to their now obviously outrageous claim. Honestly if you ask me the fig leaf of “ending tax avoidance” has been snatched away from the tax authority’s grand plan when it comes to their IR35 reforms, laying bare for all the Government’s blatant plan to grab as much cash from public sector contractors as humanly possible. Honestly hasn’t anyone ever told them that you can’t get blood from a stone?

 

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New IR35 rules likely to catch everyone, experts say


Now that 6 April has come and gone and industry boffins have had a chance to ruminate over the changes, the consensus is we’re all doomed.

The new IR35 rules that were published in the March Budget announcement are, for lack of a better word, deliberately targeted at contractors who work through personal service companies (PSCs) or limited companies. In a move that’s ostensibly designed to clamp down on tax avoidance, the new regulations are so broad that contractor accountants, tax experts, and contracting trade industry bodies have all come out of the woodwork to condemn and criticise – and honestly I can’t blame them one whit.

In fact, many experts simply assume that when it comes to the public sector, contractors working through PSCs are simply going to be assumed to be within IR35 without any sort of even cursory examination. These experts feel that this places an undue burden on contractors themselves to prove otherwise – and that it sets the bar so high to prove they’re not subject to IR35 that it’s effectively impossible to do so.

Recruitment organisations in particular are up in arms, as the burden it places on them to engage contractors to make the IR35 determination themselves is particularly onerous. The Association of Professional Staffing Companies (APSCo) has been quite vociferous in its condemnation of the new regulations. With the possibility that these new IR35 rules will eventually be applied to the private sector as well sometime in the future, almost everyone is alarmed and concerned. To its credit, Her Majesty’s Revenue & Customs says there’s no plans on the part of the Government to broaden the new rules to the private sector, though I’m sure most individuals and companies are taking HMRC’s statements with a very large grain of salt.

For now, there is some respite. Since the umbrella company model is PAYE, and thus exempt from IR35, PSC contractors can go that route if they want to avoid having to muck about with all that. Of course, if you became a PSC contractor to get a break on your taxes, going PAYE isn’t going to help you out in that regard. However, if the writing on the wall ever becomes a reality, we’re all going to end up under PAYE before long as the Government seeks to eliminate one of the many advantages of working for yourself instead of as a traditional employee. What else is new?

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Hope you’re ready for tax changes this week!


New changes to the way HM Revenue & Customs taxes contract workers go into effect this week – you had better be ready for the new taxation landscape!

It doesn’t matter if you’re a small business that outsources its tax preparation to a freelancer or if you’re a contractor accountant yourself – you’re going to feel the burn from 6 April when the new regulations in the latest Finance Bill go into effect. Don’t act like you didn’t know this was coming, either ;these changes were announced in the 2015 July Budget, so you’ve got no excuses whatsoever besides your own laziness or ineptitude.

Of course you could be forgiven if you simply didn’t have enough time and energy to get prepared – especially if you’re a freelancer or some other kind of sole trader yourself. The vicissitudes of being a small business owner often lead to things falling through the cracks after all, so if you knew these changes were coming up but simply didn’t have the resources to prepare, you do have at least a modicum of my sympathy. Then again, if you work in the accountancy or financial services sector – and you’re a contract worker yourself – you’re deep in the weeds, my friend.

So what’s going into effect? Well there are quite a few changes, but the mot important one for small firms and freelance personnel is that certain types of contractors, such as those working through umbrella companies or a personal service company are going to find it a lot harder to claim their travel and subsistence expenses on their taxes. That’s right, HMRC in its infinite wisdom has decided to close the T&S tax relief loophole for all of us engaging in the practice – as if we’re all nothing but tax avoiders trying to deprive the taxman of its rightful share of our hard-earned cash.

If you’re outside IR35 you’ll have nothing to worry about. Of course it’s going to be easier to fall inside IR35 than before, thanks to the new “supervision, direction or control” test, which is much less forgiving when it comes to determining if you’re going to fall victim to the disguised employment rule. SDC is rather horrid, and people have been complaining about it for more than six months. Not that this changed the minds of the Government, as it routinely ignores the pleas of those who owe it money.

So there you have it: hold on to your bums, as we’re going to be in for a bumpy ride!

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Is IR35 going the way of the dodo?


New rumors are swirling that IR35 finally may getting tossed out in the street – but are we throwing the baby out with the bathwater?

I can’t believe I’m saying this, but the newest rumor coming out of Westminster right now that IR35 regulations might be getting dismantled might not be the best news for the contractor community. While disguised employment has been a right pain for all too many of us, and the idea of it going away for good should seem like cause for celebration, the problem here isn’t that it’s going away but what’s rumored to take its place.

So what fresh hell is this that we’re in for? Hold on to your knickers: the new rumor is that, in place of IR35 tests to determine if you’re an employee or not, you’ll simply be made into an employee after a certain amount of time spent working for a particular client. While it seems like more than a bit of over-reaching when it comes to the Government determining your employment status for you, in some situations this could be appropriate, such as when you’ve been working for the same client exclusively for a year or more. But that’s not what’s being planned, according to the rumors coming out of the Treasury – apparently the Chancellor of the Exchequer wants to set the threshold at a single month.

Yes, you read that right. George Osborne in his infinite wisdom wants to forcibly convert you from contractor to an employee if you work for any client for a month or more. Do you feel gutted right now? Because I know I do. So yes, you’re going to have to be responsible for paying National Insurance if you work 32 days or more for the same client, because the Treasury is bleeding money and it needs to plug up the holes with as much cash as possible.

The Government says it’ll make around £400 million more a year in revenues from this “brilliant” plan, and will throw out IR35 regulation as a result, since it won’t be needed anymore since contracting will effectively be a thing of the past. Sure, I suppose you can continue to work for clients as a freelancer as long as you never take a project that lasts more than a month, but that’s no way to live, is it? Honestly, for what it’s worth, I’m tired of the Government making our lives more complex and complicated just in the search for more money for it to mismanage and misspend.

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CIOT tells HMRC to change its approach to IR35


The Chartered Institute of Taxation (CIOT) has had it with Her Majesty’s Revenue & Customs when it comes to the approach the tax authority takes to IR35 rules.

HMRC simply has to call greater attention to these disguised employment rules, says the CIOT, and it needs to do so by showing how contractors and other types of temporary workers can fall under the IR35 rule by specifically pointing out cases that were actually decided against contract workers. Disguised employment regulations are designed to target anyone trying to engage in tax avoidance by masquerading as an employee of a company while still operating like a contract worker by “working” for their own limited companies, even though they’re really operating like a regular employee; this tax avoidance process has been in the press everywhere over the last few years as some high-profile agency workers in the public sector were found to be pulling the wool over everyone’s eyes. Now, HMRC has IR35 violators squarely in its sights in an attempt to regain some respectability.

The tax authority is in the middle of considering changes to IR35 rules in order to make them more effective, and CIOT recently commented on the possible changes that HMRC has been considering. One, which is to transfer the obligation away from the individual but the organisation he or she is working for is likely to be an abject failure according to the trade industry body, as it’s unlikely to make non-compliance any less nor is it going to make administration of the rule any easier.  Meanwhile, the CIOT says that the new “supervision, direction, control” test to determine if agency workers are indeed masquerading as employees or not is flawed to the point where genuine workers might end up being called on the carpet when they actually haven’t done anything wrong.

So what’s the professional taxation industry body suggesting instead? Well it would like to see an annual reporting obligation that would be shared between organisations and the freelancers and contractors they hire in order to see if IR35 would apply on a case-by-case basis. The CIOT says that HMRC could target the organisation if it wilfully misled the taxman when it came to non-compliance.

So is this approach by CIOT actually a good one? Is it something we should look into adopting? Damned if I know. IR35 has been such a mess for years that it seems almost impossible to unravel the massive snarled rat’s nest that it’s become. At this case we might need to deal with it the way Alexander the Great dealt with the Gordian Knot – just cut it to ribbons and move on.

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Budget 2015: contractors must feel stabbed in the back


Let’s call it, because everyone else is being polite about it. George Osborne has plunged a dagger into the heart of the self-employed community with his ’emergency’ budget. Contractors’ contributions to the UK’s economic recovery this last two years? The Chancellor has all but forgotten them, based on today’s evidence.

And those now-familiar rallying cries from the Conservatives, saying they’re behind ‘hard working families’? Looks like that herald excludes households whose breadwinner operates through a Limited Company. Not that there’s anything wrong with ’employed’ working families getting their just rewards. Far from it.

The issue is this: setting up and creating a limited company takes balls, courage and commitment. It’s not like clocking on or playing on a level field with staff, which this budget seems intent on promoting.

As a limited company contractor, you:

  • sacrifice the luxuries of maternity, sickness and holiday pay;
  • pay accountants out of your own pocket (rather than have payroll administer it);
  • market your service or skill in the market without a brand (other than the one you create) behind you;
  • move Hell and high water to get to clients sites to provide the specialist skills that they neither have nor are willing to train their staff for.

It’s this ‘can-do’ attitude of contractors and their willingness to help kickstart the UK economy that’s helped bring about the beginning of the end of recession. And this budget is the thanks for it?

The recent drafting in of outside help in order that the government can understand self-employment better? They need it more than anyone could have conceived.

Biting the hand that feeds you

For months and months, self-employment buoyed the country’s employment figures. Since taking power, we’ve heard Tories announce (at every opportunity) that there are more people in work than ever.

But they seem to have overlooked one key factor. There are also more self-employed people in work than ever, many of them contractors. There are:

  • IT Contractors building the frameworks in order that employers can bring in more staff;
  • doctors and nurses contracting to myriad NHS Trusts, actions that have helped prevent the health service collapsing under the weight of the UK’s largest population ever;
  • civil engineers lending their expertise to companies on an ad hoc basis all over the country;
  • oil and gas contractors working hard and long to end our dependence on Russia for fossil fuels.

It’s all these gutsy, self-employed limited company owners, and more, who are returning Britain to the forefront of technology and recovery once more.

It’s not about the money, money, money (ka-ching, ching)

Many, many of these key operatives contract through their own Personal Service Company. What Mr Osborne doesn’t seem to understand is that choosing to work this way is about so much more than the money. Yet that’s what this budget has focused the world’s eyes on.

The ensuing policies all but say: “if you’re a single-employee limited company owner, you’re in it to save on your tax bill.” That’s not only wrong, it’s tantamount to slander. What limited company contracting is about is:

  • individual contractors striving to build a brand, as well as provide a service;
  • creating the right impression – home and abroad – with a Ltd. after that brand name;

    • (this, in turn, opens doors to tenders that sole traders, freelancers and foreigners cannot);
  • separating you, the entity, from any debt your company accrues, otherwise risking being thrown on the mercy of the State, should your business falter.

Money is often the furthest thing from an individual’s mind when they start up for themselves. They become successful because they fulfil a need, and this country has been needy this last few years.

Yet how has the Chancellor repaid the very people to whom he, and the country, owes so much? A double-pincer attack, that’s how. Let’s introduce this as Crowded House once did:

Four Seasons in One Day

Spring: it’s (up) in the air

Dividends: A tax-free allowance of £5,000 will take the place of the tax credit limited company owners claim against dividends.

The office for tax simplification may have a word or two about this, as all manner of convolution springs to mind at the thought. That’s not to mention the high-earning contractor, who’ll feel the pinch over the fiscal year.

Summer: (time) Blues

Employment Allowance: In an attempt to focus Employment Allowance “on businesses and charities that support employment”, where a contractor is the “sole employee” of a limited company, they “will no longer be able to claim”.

That’s another cool £2,000 down the Old Kent Road.

Autumn: (what the) State meant:

Umbrella (open) season: As we expected, discussions have now begun in earnest, re: scrapping of travel and subsistence for umbrella employees.

Yes, the new term is those under supervision, direction and control. But anyone offering their service through a PSC or umbrella company may want to consider their payment structure.

Winter: to summarise dis content

IR35: We heard that the taxman was investigating fewer cases of IR35. We wondered whether SDC would replace it. HMRC‘s lack of comment, however, did also cause us concern.

We were right to be worried. The government will publish a new discussion document about IR35 once the dust has settled from this summer emergency budget.

Once again, limited company contractors will be beholden to their accountants. Their accountants, come next Spring when many of the measures kick in, will be charging more because of the extra work this budget has created. This extra work the budget has created is so counter productive to the Tory philosophy of rewarding hard working families, it’s scary that Osborne has got it soooooooooo wrong.

What you give is what you get

The whole ethos of creating a Limited Company says a lot about the individual behind the brand. They believe that their skills set them apart from the pack. They believe that by taking on the extra responsibilities outlined above, they deserve more reward. And so they should.

But, based on this budget, the government looks set to pursue the single-employee limited company in a ruthless manner. The fear is that many people who could otherwise aid recovery and the government’s plans for long term growth will choose not to.

We said above that it’s not about the money. But what about when the costs of running your business outweigh that of just turning up and working for the man? On this basis, there’s going to be a fine line in the financial reward between contractors and employees.

Who then, in their right mind, is going to put themselves out like contractors do now, just so that we can [be] in it together? My vote? Ozzy Osbourne could have made a better job of this emergency budget than his namesake. Or is that just too Paranoid?

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HMRC’s diminished capacity wreaks havoc with IR35


Diminished capacity at Her Majesty’s Revenue & Customs has been wreaking havoc lately with the tax authority’s ability to enforce IR35 and other matters.

Apparently HMRC can only deal with around 350 cases of disguised employment, according to the minutes of a February 11th IR35 Forum meeting. Not only that, but according to discussions in that very same meeting, it became apparent that the number of enquiries the taxman took up in the 2012/13 tax year increase thanks to new approaches to IR35 compliance – and that the compliance yield in a particular year simply won’t match up with the number of enquiries opened.

It’s obviously questionable whether HRMC can indeed enforce any IR35 legislation effectively, especially if there’s a 250 case limit that doesn’t look it will be able to be exceeded any time soon. Still, there seem to be no plans to do away with the rules at the moment despite the sluggish pace of the tax authority according to the IR35 Forum minutes.

A revelation like this drives me absolutely mad. Why in the world is disguised employment being pursued with such gusto – or at least given so much lip service when it comes to efforts to stamp it out – when the main entity tasked with rooting out IR35 issues practically crippled in this instance? It seems like a waste of time, energy and resources – especially since those resources just happen to be taxpayer funds in the first place.

And what exactly is causing this capacity problem? Is it a lack of trained staff? If so why won’t the taxman expand its IR35 staff members and step up its investigations if it’s so concerned about tax revenues slipping through its fingers thanks to disguised employment? Is it a funding issue in that HMRC can’t afford to bring more staff aboard? In that case IR35 doesn’t seem to be so important to warrant a larger budget for the tax authority. If that’s the case it seems like politicians are more interested in seeming like they care about such an issue without actually doing anything proactive about it.

Honestly if you ask me we should just get rid of IR35 altogether and let HMRC go after larger firms. There are bigger fish to fry out there, don’t you agree?

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IPSE: tread carefully over tax relief changes, please


The Association of Independent Professionals and the Self Employed has asked the Government to tread carefully when it comes to incoming tax relief changes.

IPSE initially welcomed changes to expenses rules that George Osborne announced in the Budget on March 18th, with the chancellor announcing the Government wants to crack down on any agencies using tax reliefs inappropriately for both travel and subsistence. The new changes aren’t geared towards challenging tax relief for those legitimately working as contractors but instead those who purport to be self-employed but actually work as an employee.

However, the trade industry body said that the Government needs to be cautious when it’s putting these new regulations together, as rules that are too broad or that aren’t constructed carefully enough to snag legitimate sole traders in too wide a net. The new regulations are likely to make individuals working through their own company have to prove that they’re not employed by their end client by proving they’re not under their supervision, direction and control of the client, according to IPSE policy and external affairs director Simon McVicker, and he hopes that the legitimately self-employed aren’t going to have to suffer under an unwieldy burden of proof to that end.

Honestly this could be a long row to hoe for the Government, as I don’t see how you’re going to be able to make the distinction between contract worker and employee without some sort of test. At the same time, IPSE says that the Government is taking the problem seriously, as officials from Her Majesty’s Revenue & Customs have already been in contact with the trade industry body – something that McVicker says is a comforting fact and indicates the Government is taking this issue as seriously as it can. If HMRC did indeed reach out without prompting, I agree that it’s obvious that someone at the tax authority is thinking ahead for once; it’s a very nice sign indeed if you ask me.

For what it’s worth, I can only imagine that this is going to turn into something like an IR35 situation in the future. Heaven knows the guidance for disguised employment isn’t exactly crystal clear, so I’m crossing my fingers in hopes that these new regulations won’t be a bloody quagmire.

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New IR35 Forum data revealed by HMRC


Her Majesty’s Revenue & Customs has revealed just which of the recommendations of the IR35 Forum it will be adopting – and which ones it just cast aside.

The IR35 Forum, a group of stalwart blokes and birds that sought to make the disguised employment regulations somewhat less burdensome for contractors and other self-employed Brits, made 32 total recommendations for how the legislation should be changed to make it better. A total of five of those recommendations had some relationship to the Contract Review Service for the tax authority – but HMRC ended up only accepting one of them (though it did agree to have the IR35 content on its website revisited).

In other words, there’s a grand total of two potential recommendations the taxman is deigning to consider. For what it’s worth, I’m not surprised at all. I’m bloody furious but I’m certainly not surprised. Now don’t get me wrong, the CRS was a step in the right direction to provide a way for contractors to get a better view of how HMRC considered contract terms and the like as a great way to prevent running afoul of IR35 or other forms of tax avoidance. The free helpline is fantastic, but there’s something like maybe three advisers that man the phones, and I can only imagine how long the queue is if you ring up CRS right now.

Honestly I’m not even sure if CRS is working as advertised right now. There were 80 contract review requests fielded by HMRC through the helpline in 2013 and only 12 of them were reviewed by the taxman; the next year there were 16 total reviews, but the overall figure of those making requests dropped to 64 – a clear indication that the word has been put out that the programme, while well-intentioned, just isn’t doing much for anyone.

So yes, i’m so glad that HMRC took two of the IR35 Forum’s recommendations to take a better look at CRS and perhaps revise it in some way. Honestly though what about the rest of the damned recommendations the Forum made? How do you go to 32 to five to two with a straight face and claim that you’re thoroughly considered all the recommendations? It drives me absolutely mad, but then again what else can you expect?

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IPSE calls for optional freelancer tax structure to be added


The UK tax system needs to have an optional freelancer tax structure added to it, based on the recommendations of the awkwardly-named IPSE.

The Association of Independent Professionals and the Self Employed, which I liked much better when they were simply known as the Professional Contractors Group, have said that the time has come for an optional tax structure geared towards contract workers to be added to the British tax system. IPSE made the recommendation after the Treasury put out the call for suggestions to be submitted ahead of the Autumn Statement to be made by Chancellor George Osborne on 3 December.

The Treasury gave British individuals and organisations until 17 October to come forward with their proposals or ideas. IPSE has since outlined the recommendations it made during the comment period and has recently made them public, ostensibly to drum up grassroots support for its suggestions as the Autumn Statement creeps ever closer. The trade industry body submitted a raft of proposals specifically created to offer greater levels of support to freelancers, contractors and other self-employed Brits.

The IPSE suggested a new tax structure because the organsiation believes that it would make it clearer when it comes to determining employment status for freelance personnel. Electing to pay under the freelancer tax structure would not only reduce the burden placed on the self-employed, perhaps even obviating the need to have to take on a contractor accountant to navigate the snarl of red tape and bureaucracy most freelancers face when it comes to tax time. An additional benefit of the tax structure would be to exempt anyone from using it from being targeted under IR35, one of the most vile and mismanaged pieces of legislation to ever emerge from the Government. Or at least  think so anyway.

If you ask me this sounds like a brilliant way to ensure that Her Majesty’s Revenue and Customs gets its tax revenue every year without having to rake the nation’s freelancers and contract workers over the coals through artificial rule implementations like IR35. With HMRC so concerned with maximising tax revenue for the Treasury while also spending the least amount of time and money doing so, this could be a win-win situation for both freelancers and the taxman alike. Of course, there’s no knowing if the Government will actually listen to these IPSE proposals or not, but a man can dream can’t he?

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