Posts by d3vy

Re: "without pre-installed software"

"Apple OS is free. You're paying for it in the hardware."

Wasn't that the point of the court case, that they didnt want to pay for the OS via inflated hardware cost?

So the point still stands, Try to get apple H/W with no OS and see how far you get.

The fact the guy wasn't asking for a refund for the windows licence that he didn't want but also £2k+ in "Damages" says quite a bit about his motives.

Re: "Which will prove what, exactly?"

"I used to go up to Pc World with a guy who liked to approach a staff member and ask about PCs, feigning ignorance of computers and asking about everything on the feature lists until the staff member tripped up and then catch them on it."

Curious, does your friend do this in other shops? Or is he only a dick in PC world?

Does he for example go into car showrooms and try it on the sales staff there?

I hope one day your friend meets someone who is more informed than him who promptly (and rightly) makes him look like the utter tit that he is. in public if possible.

Deriving entertainment from belittling others is a sad endeavor for an adult to undertake, don't you think? Does your friend have emotional problems? Was he bullied at school?

" and when the sales droid comes over ... tell them in that case, you've lost a sale and walk out."

You might as well tell the checkout girl (or boy) at Tesco that you're not buying their beans. Sales staff are not on commission, other than the slight hassle of trying to provide assistance to some one who has no intention of buying anything* you wont factor into their day.

* An act which in my opinion makes you look like a bit of a tit.

Re: standard operating procedures

"Clickbaity would have been something like "Electric car smashes into tree, killing innocent driver in grisly fireball - was robot autopilot responsible?"

"Robot car kills all occupants and threatens emergency services, What it did next will shock you"

"Gotta worry about the validity of opinions of those who can't distinguish between ownership and rental"

What's wrong with the pretty woman option of a short term lease with option to buy at the end?

Re: Another option (if you really want to stick with Windows)...

@Annon.

You're talking out of your hole.

There is nothing that stops you using win7 in a VM, You cant use the same Licence for the host and the VM.. but if your setting up the VM to get round not being able to run win7 as the host OS this hardly seems to be an issue.

The solution to the problem would seem to be to use win10/linux as the host and windows7 in the VM... whether the performance impact of running in a VM makes it worth it is another matter... probably better just to buy an older generation of CPU.

I came here to comment that they could use the the money to plug the imaginary 400 million gap that non compliance with ir35 apparently causes and scrap the annual consultations they have been wasting millions on... They could then stuff the rest up their arses for all I care.

Re: Ermmm ... quite.

@Keith

Nobody is forcing you to stay on payroll with your employer.

Contractors operate businesses, businesses remunerate owners and directors in many ways which are subject to different tax rates. Get over it.

Re: Doesn't really reflect what the market wants..

"people think twice about inviting me to meetings"

I like to "jokingly" tell people that their meeting just cost the company £x00 as I leave.

There was one *quick* half hour meeting which was held by a permie PM and a small team of contract developers (some of whom were quite specialist) we worked out the company was paying approx £10-15 a minute for us to be in there.

The whole meeting should have been an email with a project plan attached.

Re: James Avon Clyde (Lord Clyde) said it best

"Tony- have an Internet!"

Just make sure that its clear that it is given as a tax free prize, you dont want to end up liable for CGT on the the whole internet!

Re: Why only IT?

@Dr Syntax

"Indeed. In the printing industry they seem not to bat an eyelid about engaging sole-traders because that's how freelance graphic designers work."

There is a difference between a sole trader and a Ltd company. Sole traders generally get paid directly and then declare all earnings (minus some expenses) in a standard tax return.

Ltd contractors have another layer between them and the client.

Re: Can someone explain to me how it works in the UK?

@Anon

"Please correct where I'm wrong:

1) before IR35, many/most people were taking 100% of their income as dividends and paying no employment taxes at all"

I was about to write a big explanation, but Im going to sum it up as "No, that is not right."

Essentially the thing to remember is that we have to pay Corporation tax (20%) on ALL profits then a further 7.5% on all dividends (Rising to around 30% when we hit the higher rate threshold)

2) companies are paying about the same or not much more to contractors than they pay to permies, so they liked hiring contractors as they could avoid paying for benefits and contractors liked it because they could dodge employment taxes

In a way yes, but in another more important way, no.

Companies like it because they can hire contractors with specific skills to complete a project then bin them off when they are no longer needed. For example, they might hire someone who knows SSRS to create a reporting suite for them, then once its done end the contract. Hiring a permie with the same skills would mean an ongoing cost beyond the end of the project for someone whos skills are no longer needed within the company.

3) with IR35 in effect you have to take 100% of your income as salary, and have little or no room to take anything as dividends, removing the monetary advantage of being a contractor instead of permie.

No, you dont have to take 100% as salary, you do lose a lot of control over how much you can take and when though... One thing I as a contractor do is plan my renumeration to stay under the higher tax band.. I do this by leaving money in my company until I need it...

As an example Im pretty much at the higher rate now so if I take £1000 as a dividend I have to pay £300+ as tax If I can deffer taking that money out of the company until april I will only pay £75 when I take it out...

4) because contractors were willing to work for essentially the same salary as permies before because it saved them a lot of money, companies got used to the rates for contractors and permies being the same, so it is not always easy for contractors to ask for more, thus many are forced to go back to being permies

Thats not really how rates are decided... but your not a million miles off. It is difficult to ask for a higher rate when there is another contractor willing to under cut you (and there always will be :) )

With regards to contractors going back to being permies, even with the additional tax I'd still be better off as a contractor (I'd have to be very careful when planning to account for sick time and time between contracts, but realistically Im not personally considering stopping contracting. I suspect the only people who are will be the ones who are not proper contractors anyway (ie they are just disguised employees)

Re: I agree with AC.

@Lee D

"the threat of contracted staff "becoming permanent staff" or even moving out of the country? That's the whole idea. Less contracted staff is much easier to tax and manage and audit"

I disagree, while it might be easier for HMRC to administer that cannot be their end goal, if it is then it is very short sighted. I am a contractor, last year my combined payments to HMRC in various taxes came to around £25-30k, I am a web developer I have 15 years experience and I am sure I would have no issues walking into a new permanent role tomorrow if desired, however my salary as a permie would only be 45-50k (that would mean a combined tax & Ni payment of around 15K a year assuming I dont avoid any taxes by paying into pensions etc)

So HMRC stand to lose £10-15k Just for me if I stop contracting.

I'd also point out that HMRCs involvement in my finances (from an admin point of view is minimal) my accountant does everything elecronically and I pay everything online by debit card or by BACS if the amounts are large enough... So saying they want to make things easier is unlikley to be true.

It is important to note that contractors DONT form limited companies for the sole purpose of avoiding tax, Its called a limited company for a reason - you have limited liability so if my company is sued, or goes bankrupt it does not mean that I am on the street with my wife and kids... Alot of clients and agencies WILL NOT hire a contractor unless they are operating a limited company with the relevant insurance... so we are pretty much forced to take the Ltd route. Dont blame us if that then opens up several different *legal* options to us for how we deal with our remuneration.

Realistically what needs to be done is for there to be a legal entity between a Limited company and a sole trader. Something that gives the legal protections of a Ltd but has a clearer tax structure.

"btw my contractor contract gives me holiday and sick rights. Perhaps you lot need to negotiate better?"

Small point, thats not a contractor contract then.

A contractors contract is a business to business contract between the contractors limited company and the client. It is impossible to include Sick pay and holiday rights in a B2B contract because neither of the entities involved is a person.

The fact that you dont know that makes me suspicious about whether you are in fact a contractor - thats basic contracting 101 - EVERY contractor knows that.

"Contractors should earn inflated wages, out of which they should pay corporation tax as well as tax on salaries for any employees (usually just the one)."

I dont believe that you used to a be a contractor. Ill tell you why.

You are suggesting that contractors should receive "inflated wages" technically (and a contractor would know this) we do NOT receive "wages" from our clients. In fact *WE* receive nothing from our clients our company gets paid a day rate and we are paid by our companies (in the form of dividends and a small wage)

You suggest in your post that "I used to be one [contractor] and I paid myself a proper salary. Yes, I earned less, but it was the correct and legal thing to do."

However your logic here is flawed. Contractors DO pay the appropriate LEGAL taxes - thats why HMRC are having the consultation, because they need to find a way to change the amount of tax that contractors are liable for - if the current situation was illegal it wouldn't be a consultation it would be a series of investigations and prosecutions.

The fact that you paid yourself a normal wage when you were a contractor suggests that you in fact were not a proper contractor and were the type of person that IR35 aims to capture. A proper contractor has to plan for times out of work, holidays, luls between contracts, sickness etc this is achieved by leaving money (a "war chest") in the company accounts. Paying more tax than you HAVE to is simply bad planning on your part (I assume that you didnt engage an accountant of IFA as they would have told you the same). *

* PS If you really want to you can phone HMRC and ask them to tax you more, you can do it right now, Tell them that you dont want your 11k personal allowance, they will be more than happy to issue you with a new tax code.

No? You dont want to do that? Well STFU then.

Individual contractors are already legal... and there are already laws about what is and isnt allowed.. the problem seems to be that they dont want contractors to be able to use the same mechanisms as other small companies when paying themselves.

Re: I can see where this is going.

Citation needed.

Re: How hard can it be?

Also

https://www.gov.uk/tax-relief-for-employees/travel-and-overnight-expenses

So... That's pretty much the same as a contractor.. except a contractor almost always works from a temporary place of work.

Re: Ethical tax compliance @AC "admiral"

"And if you pay a significant other as a part time 'secretary', and split the dividends, then you double the tax allowances, and reduce your tax liability still further. This is what, in my view, is unethical."

Well, there is your problem.

If you pay a significant other t be a "Secretary" then they get a WAGE as they would be an employee of your company and that wage would be subject to PAYE. In order for them to be paid dividends they have to be a shareholder of the company.

Forget for a moment that the shares that the spouse owns are in the contractors company.. Instead take a contractor, who owns 100% of the shares in their company and their wife owns a few shares in some other UK based company (Say.. BT)... are you saying that the wife shouldn't be allowed to take advantage of the 5K dividend allowance in this case? Or is it only a problem when its their partners company earning the money?

In the interests of disclosure. I am a contractor, My wife owns 15% of my company because she put in a considerable amount of work to help me get started (And she still does), She also receives a small wage as an employee from my company which is taxed at the appropriate rate.

None of the above is illegal, in fact if anything its quite well within the rules, we could pay her more easily without it ever being an issue. Ethics on the other hand are a separate issue and are subjective so bringing them into a discussion about tax law is ridiculous (Though I see it happening more and more in the media).

If you really want to bring the ethical argument into it give me 10 minutes to email my brother who likes to think of himself a bit of a anti capitalist, I'm sure he would love to lecture you on why every penny that you don't spend on absolutely essential items should be given to the poor...

Thats why ethics cant play a part in this discussion... its either legal or its not.

"I have an alternative scheme. Everyone has the same tax rates but the stability of the job is viewed as a benefit in kind and taxed accordingly so if you have a nice steady job with long term prospects, say working in HMRC, then you pay accordingly."

Thats the problem though isnt it... contractors are not EMPLOYED by the clients, they are employed by their company which is then engaged by the end client.

I can guarantee that my employment status will not change because I am employed by d3vy LTD, I own the company and Im not likely to fire myself, so you could say that my employment is extremely stable.

Conversely I am now 18 months into what was initially a risky 3 month contract, because after I got started the project scope expanded and my skills matched, so how would you deal with that? change the tax on a contract by contract/extension by extension basis? Hardly simplifying it. How do you quantify what is risky? Every contract is risky, contractors don't need to be given notice, contractually we normally get a week, in practice the fact that you wouldn't be allowed on site to work that week means you wont get paid for it.

One other thing to remember is that its not just contractors taking advantage of these rules, there are a whole host of small companies that do the same, so your plan kind of shits on other small businesses too.. Shop keepers, family run businesses...

There is no way to fix this with the current way that contractors are forced to work.. We need Limited Liability so we cant be "Self Employed" so we realistically *need* to operate a LTD company, but then if we pay ourselves a normal wage we get double taxed because we need to pay Corporation tax AND personal income tax.

I suppose there is an argument that you could run a LTD and draw EVERY PENNY as a wage which would effectively wipe out the CT liability... But then that would mean paying more tax than is needed, no one is going to do that - Prove me wrong, Phone HMRC and tell them you no longer need your 11k Personal Allowance - No? Thought not.

Re: @d3vy

@ Sir Runcible spoon.

Cheers. I already use them for contract reviews so will give them a call and get a quote for ins.

:)

Re: How hard can it be?

Thing is, if you stop contractors claiming travel then you have to stop employees claiming it too.

I know, it's harder to justify many contractors "work address" is also their home but of you think of it in terms of a WFH employee who us asked to spend a month at one of their employers sites.. it's no different, their company would cover tge cost to travel from their normal base, to the remote site.

As a contractor I am a permanent employee of my own company. My company pays my expenses to travel to its clients. Obviously it a bit more blurred because that's the norm rather than an exception.

It might be easier to think of it like CSC, they have tonnes of permanent staff on their books that they send to client sites for months at a time... The staff get reimbursed expenses for travel, the only real difference is the size of the company.

Re: A bit of history

So he's stealing from the company and failing to declare earnings?

Nice.

Re: How hard can it be?

Your point was much more eloquently put though :)

Re: How hard can it be?

@buzzword.

Where the F£ck did you get a 40% saving from?

Buying anything for my company reduces my corporation tax bill by 20% of the items value, it has no effect on my personal income tax.

Re: @d3vy

Interesting... I'd have thought that the 'Public' in this instance would be the workers of your client... Prof Indemnity won't cover someone tripping over your laptop bag... pub Liability would.

I might be wrong! Who's your insurer?

Re: How hard can it be?

"I just need to figure out how to calculate graded tax so higher earners pay more without allowing them to offset it against another company employee paying a lower rate (spouse / child / dog etc...)"

Higher earning contractors DO pay more.

The problem is that people don't seem to make the connection.... Contractors are company shareholders, the fact that they own the company doesnt matter... If you (I assume a permie) buy shares in BT/Apple/MSFT etc then your dividends from that get taxed in EXACTLY the same way as a contractors dividends from their company.

The disparity that you see is not because the tax rules are different (They are not), its because contractors have more control over where their income comes from. They can pay themselves minimum wage and draw as much of a dividend as they like... this might mean paying very little tax, or it might mean paying quite a lot depending on how much they want to take out in a given financial year.

With regards to splitting money between spouses, are you suggesting that only one family member should be able to hold shares in a company? What about family run companies?

Personally, I dont think that the issue is a small number of contractors using LEGAL tax avoidance mechanisms... Its the HUGE number of permanent staff using tax avoidance... Lets start taxing child care vouchers, pension contributions, student loan payments... Imagine how much that would bring in.

Re: How hard can it be?

"If you commute to the same place 3 days a week or more then lets's face it, that's your permanent place of work so tax deductions won't be permitted"

Commute from where? My home, or my business address?

What about when I commute once a week and stay in a hotel for 3 nights? Can I claim for the travel/hotel? *

What about if I work from an office (my own office, not attached to my home) but a client wants me on site for a few weeks?... thats not my normal commute - its something a permie would be reimbursed for...

Problem is the contract market is massive, contractors provide a service that is plainly needed, if you piss them all off by not making contracting worthwhile you risk them all going back to permanent jobs, which has two effects:

1. companies, the NHS and gov't loose access to a mobile work force that they can dip into when needed and discard when done.

2. The gov't collects less tax. No really, my CT bill last year was double any single years PAYE before I started contracting.

Go back to the drawing board :)

* I've known permies that do that because it was cheaper and less hassle than getting the train.

Re: How hard can it be?

I dont want you to feel that Im picking on you.. but I just re-read your comment and had to add something:

"the train season ticket will cost you £10,000 a year. A contractor can pay that out of pre-tax income, whereas an employee (even a short-term one) simply can't"

That is simply false, my last full time employer offered several pre tax schemes for buying things such as the cycle to work scheme, child care vouchers and (Someone do a trumpet noise here) ****TRAVEL SEASON TICKETS****

Incidentally - Contractors cant get any of the above benefits*

* Well - except the cycle to work - My company owns a bike that I can borrow for getting to local clients.

Re: How hard can it be?

"Paying your wife is another trick which employees can't do either; a contractor pulling in £100k a year could save at least £12,000 by using his wife's (and/or children's) tax-free allowances. It's not terribly common, but it does happen."

Its hardly a "trick", if you are a contractor and you run a limited company you can have employees, you have to pay employees whether they are family or not In my case I pay my wife £210 a month this payment is for her to clean my home office, sort my expenses, answer emails & phone calls when Im on a client site (pretty much 9-5 every day) and to chase unpaid invoices. Now I could hire someone to do this, and I'd have to pay them more (Spouses don't need to be paid minimum wage)... In your eyes is this me dodging tax?

In your original post you said "...another trick which employees can't do either..."

Do you know what else employees cant do?

They cant be held financially liable for mistakes.

They cant be told that their services are no longer required and asked to leave the site there and then.

They cant be required to supply their own software licenses for tools required for their work.

The list goes on.

Yes contractors get paid more. No its not necessarily fair that they get to use different tax avoidance mechanisms, but they do, contractors get some benefits to being a contractor, employees get different benefits for being an employee.

If you are an employee and you think that contracting is an amazing wonderland where money rains from the sky as you skip merrily from contract to contract why don't you jack in your job and give it a try? If you like I can put you in touch with a few good recruiters.

I'd go one further... If contractors and employees are the same make all employees pay £1500 a year in public liability and professional indemnity insurance.