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IR35 in the private sector

S

stevec67

pfm Member
It was coming, I'm just surprised that the Conservatives waved it through. I'm told it is effective April next year.

AIUI if I sell my services to a company and HMRC decide that I am effectively an employee, albeit a temporary one, then the client is liable for employers' NI and I pay PAYE tax at source on my fees. If I'm working as a consultant, ie "I will come in as I see fit and go as I see fit, nobody reports into me and I report into nobody, and I am here to fix this particular thing" then I am exempt, otherwise not. If I come in to replace a member of core staff, say someone sick, on mat leave or left and not yet replaced, then I am in IR35 and tax/NI is payable.

For 75% of my work I am replacing absent staff and I attend meetings, have staff reporting in, etc. Obviously I then pay PAYE income tax and NI, and this will affect my pricing structure. Does anyone here know of a ready-reckoner that will allow me to estimate the financial hit for jobs that trigger IR35? I'll be ringing my accountant soon but a steer here would be worthwhile.

Given that 75% of my work
 
stevec67 said:
It was coming, I'm just surprised that the Conservatives waved it through. I'm told it is effective April next year.

AIUI if I sell my services to a company and HMRC decide that I am effectively an employee, albeit a temporary one, then the client is liable for employers' NI and I pay PAYE tax at source on my fees. If I'm working as a consultant, ie "I will come in as I see fit and go as I see fit, nobody reports into me and I report into nobody, and I am here to fix this particular thing" then I am exempt, otherwise not. If I come in to replace a member of core staff, say someone sick, on mat leave or left and not yet replaced, then I am in IR35 and tax/NI is payable.

For 75% of my work I am replacing absent staff and I attend meetings, have staff reporting in, etc. Obviously I then pay PAYE income tax and NI, and this will affect my pricing structure. Does anyone here know of a ready-reckoner that will allow me to estimate the financial hit for jobs that trigger IR35? I'll be ringing my accountant soon but a steer here would be worthwhile.

Given that 75% of my work
Click to expand...
Bummer...doesn't operating via a ltd co. get rid of this threat?
 
Don't think so. I'm already a Ltd Co. It's now called "Off Payroll Tax" and I need to get to grips with it. I get it, it's been too easy to hire the likes of me as a "consultant" and pay less tax, have no employment protection, etc, for a while. However for the likes of me, true contractors/consultants who work all over and have no protection, no security, etc, taxing at source would kill the sector. I think it's like employing a plumber. If I get a plumber in and he wants £2k for a new boiler, I get him in and off he goes. It's up to him when he does it, he can get people in to help or replace him, and it's a specific job. He finishes it, gets paid, goes off. That's easy, no IR35. It's within IR35 if I say run a big factory and hire a plumber at £x a day, and he comes in Monday-Friday, week in week out, doing whatever work I ask of him, and there is enough to keep him busy, then he is effectively an employee. Until now, provided this situation didn't last too long, you were in the clear. Now, I'm not so sure. Pimlico Plumbers case was a case in point, a number of "self employed" plumbers were running all over London in liveried vans doing "self employed" work for householders who then paid PP, who paid the plumbers a daily rate. These were found to be employees because they couldn't turn down work (etc). True self employed people can refuse, a taxi driver can ignore a pickup if he wants. An employed taxi driver OTOH told to go and pick up John Smith at 10 Union Street at 2pm is an employee.
 
My understanding (perhaps flawed) is that if you are operating as a Ltd company then it has no effect. The change is that the onus is now on your client(s) if they are a medium/large company to decide if you are an employee, rather than you.
But I am new to this (Ltd co set up only a few weeks ago to be a consultant) so interested to know more!
 
Have a look at contractor UK, it's a complicated subject and the pfm lefties always have a tantrum when people moan about tax as everyone should be paying 95% income tax.

The biggie with IR35 is the 'substitution clause'
 
I'm more worried about digital VAT, weather to stay in the FRS and then what constitutes 'goods'
As I understand it the IR35 decision will be taken away from you from next year.

PFM probably not the place for this discussion.
 
IRcnutting35 is the most unfit for the purpose piece of tax legislation ever devised.

The CEST tool is a worthless piece of steaming...

Oh, and despite HMRC saying they will stand by the outcome of the CEST tool they recently in tribunal sought to have the outcome of said test thrown out of evidence.

Case law and tribunal outcomes are all over the place, but with common threads which are useful.

HMRC though do not consider reasoned arguments, they are being driven by their political masters.

Rant over!
 
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