Is George Osbourne going to abolish IR35?

[Bad Bob 10]

Is George Osbourne going to abolish IR35, as the Tories have been promising for over a decade in opposition?

 

Just been having an 'interesting' chat with my boss about it.

By interesting, I mean it could be good, it could be really bad for me!

 

Basically, he was saying how he'd make all his staff contractors if IR35 got scrapped.

 

Would we get better wages from him as contractors? Probably not.

Would we get our employee benefits? Probably not.

 

Just been reading up about ir35 and while it's clear as mud, it's basically to stop contractors working for their old employers to save their employers money.

 

Kind of feels like this could go the over way if IR35 is abolished and employers could screw employees over.

 

What do you guys think?

[andyofborg 11]

The IR35 rules set out to solve a real tax avoidance issue, so if it's disposed of then it's going to be replaced by something else. There are probably more effective alternatives and some are explored here...

 

http://www.contracteye.co.uk/ots-ir35-alternatives.shtml

[Bad Bob 10]

The Tories have left IR35 alone for now it seems...

[Thorpes 10]

Following the bad publicity around civil servants being paid through personal service companies earlier in the year George Osborne announce "Controlling Persons" proposals which were to go beyond IR35. These proposals were dropped in yesterday's Autumn statement.

 

However, the statement said "the government will strengthen the existing legislation to put beyond doubt that it applies to office holders for tax purposes". So if anything IR35 will be strengthened rather than abolished.

[andyofborg 11]

However, the statement said "the government will strengthen the existing legislation to put beyond doubt that it applies to office holders for tax purposes". So if anything IR35 will be strengthened rather than abolished.

 

if the strengthening provides a clear and umambiguous definition of what does and doesn't fall within the activities caught by the ir35 legislation then would that not be a good thing?

[coopers213 10]

Just been reading up about ir35 and while it's clear as mud, it's basically to stop contractors working for their old employers to save their employers money.

[Thorpes 10]

Just been reading up about ir35 and while it's clear as mud, it's basically to stop contractors working for their old employers to save their employers money.

 

The IR35 legislation was brought in to increase the tax take on contractors but mainly IT contractors whose industry works through personal service companies.

 

The main employers of IT contractors are HM's Government including HMRC and Banks.

[Cyclone 10]

The IR35 legislation was brought in to increase the tax take on contractors but mainly IT contractors whose industry works through personal service companies.

 

The main employers of IT contractors are HM's Government including HMRC and Banks.

 

Not quite, you've sort of got it, but just got all the details wrong.

 

It was to stop 'fake' IT Contractors who were in reality hidden employee's. The kind who might leave a company on Friday as a permie, and be back on Monday as a contractor, and then stay for a decade.

 

Real contractors, who work for multiple companies and tend to stay at most places for <2 years are not generally considered to be within IR35.

 

Many many companies employ IT contractors, these do include the government and banks, they also include large IT companies, small IT companies, and companies of every size across every industry.

For example in the past 5 years I have worked in banking, government, law enforcement, magazine distribution, taxation, logistics, e-learning, health, retail and several more sectors. The size of the companies I've worked for has varied between those with just 5 staff, up to multinational corporations.

 

Like most of my colleagues I declare myself to be outside IR35. There is no hard and fast way to determine that status, but I meet all the criteria to not fall within it's scope.

[Thorpes 10]

Not quite, you've sort of got it, but just got all the details wrong.

 

It was to stop 'fake' IT Contractors who were in reality hidden employee's. The kind who might leave a company on Friday as a permie, and be back on Monday as a contractor, and then stay for a decade.

 

 

As you are aware IT contractors sell themselves and their skills. HMRC believed and still do believe that this is the same as any other employed person only that they are operating through a personal service company and getting taxed a significantly lower rate. HMRC brought out IR35 to catch all of these people not just the Friday/Monday people.

 

That is why most IR35 cases brought by HMRC are to do with "Real Contractors". Most cases are brought by HMRC trying to say that the contractor should be employed rather than a contractor. I have never seen an employed Friday, contractor Monday case recorded.

 

The two year rule is a misnomer, I can't recall HMRC bringing a case on time mainly that they are employed using the lack of "badges of trade", ie substitution who can do the job, no set times, using own tools etc.

 

The two year rule is under different tax legislation to do with claiming travel and subsistence allowances.