PCG challenge IR35 using FoI disclosure

[curleyted]

IR35 tax rules bring in just £1.5m per year


I'm afraid to say that on this occasion the PCG are missing the point or misusing the statistics.

Yes, it's "only" bringing in £1.5 million each year, but what about all those people that would have considered setting up a ltd a decade ago but now trade through an umbrella?

Whether you agree with it or not, it's bringing in a lot more than 'just' an extra £1.5 million, I'm sure.

[Bel]

Originally Posted by curleyted

IR35 tax rules bring in just £1.5m per year


I'm afraid to say that on this occasion the PCG are missing the point or misusing the statistics.

Yes, it's "only" bringing in £1.5 million each year, but what about all those people that would have considered setting up a ltd a decade ago but now trade through an umbrella?

Whether you agree with it or not, it's bringing in a lot more than 'just' an extra £1.5 million, I'm sure.

I think you're spot on CurlyTed. It's the hidden revenues, possibly caused by the confusion over the IR35 rules, that need to be considered not just the wins and losses.

It's also true that many umbrella users never intended, nor do they intend to start up in business - with or without IR35. These brollie users would probably just want to register directly with recruiters instead, if brollies didn't provide an alternative.

So it's hard to guage the statistics.

[BigJake]

It makes a brilliant story though.

Costs in terms of HMRC time, compliance time/hassle for contractors too - pretty large I'd imagine.

[Bel]

Originally Posted by BigJake

It makes a brilliant story though.

Costs in terms of HMRC time, compliance time/hassle for contractors too - pretty large I'd imagine.

It's also worth considering what IR35 could be replaced with, if it's repealed.

http://www.contracteye.co.uk/ir35_abolish_careful.shtml

http://www.accountingweb.co.uk/cgi-b....cgi?id=196687

[lurch]

Also now covered by the register.

http://www.theregister.co.uk/2009/05..._tax_revenues/

I would be very surprised if they do get rid of it, my opinion is that the government wants people to "play by the rules" even if it costs them money. It's just rather unfortunate for them that people can now see that it's probably costing money.

[Beefy198]

I've said it before and I'll say it again - the government would be loath to seemingly reduce the tax burden on contractors in the current climate. Especially since a lot of people view contractors/consultants as overcharging chancers anyway.

[lurch]

Also contractors are used to being messed around, as a whole it's become an accepted part of the working landscape.

I actually wonder if the volume of contractors in the UK causes the government other problems outside of simply lost revenue (maybe social issues or in the european parliament), and this constant harrassment is because of more than that.

It's my own little conspiracy theory, but the lengths they are going to seem disproportionate to the reward.

[The SMG]

Originally Posted by lurch

Also contractors are used to being messed around, as a whole it's become an accepted part of the working landscape.

I actually wonder if the volume of contractors in the UK causes the government other problems outside of simply lost revenue (maybe social issues or in the european parliament), and this constant harrassment is because of more than that.

It's my own little conspiracy theory, but the lengths they are going to seem disproportionate to the reward.

It's an interesting point and one which has baffled me for years. Nobody could have any doubt that this government want all UK workers to be taxed fully under PAYE - that's a given. But when it comes to contractors, there surely has to be a bit of give and take. Brown & Darling et al want their cake and eat it and I for one want to see some active steps to withdraw the likes of IR35 and FBT otherwise it'll be a blue vote for me and the next election.

G

[CliveP]

Originally Posted by The SMG

It's an interesting point and one which has baffled me for years. Nobody could have any doubt that this government want all UK workers to be taxed fully under PAYE - that's a given. But when it comes to contractors, there surely has to be a bit of give and take. Brown & Darling et al want their cake and eat it and I for one want to see some active steps to withdraw the likes of IR35 and FBT otherwise it'll be a blue vote for me and the next election.

G

Do you really think they'll be any significant changes in tax policy between now and the election? I don't. Remember Government coffers are at an all time low. As curleyted points out, although IR35 has officially only collected a small amount in revenue, these stats fail to report the indirect effect of all those contractors that have chosen the umbrella route (take home c 65%) instead of their own Ltd Company (take home c 80%). It's the fear effect. Not only that, there must be literally hundreds of contractors who have settled an IR35 penalty pre-court rather than suffering months / years of stress not knowing whether they'll end up like Mr. Dragonfly.