New Electrical Regs - Again

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IIRC, this is because they are deriving their income from only one source - ie acting like an employee.

Perhaps it's the system that allows employers to treat what is staff in all but name as self employed. A truly self employed person will have several different sources of income. If a firm chooses to employ him on what amounts to a permanent basis - these days - they should be forced to pay the usual employer contributions and have the same responsibilities. Otherwise the taxpayer in general is subsidising that firm.
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Dave Plowman snipped-for-privacy@argonet.co.uk London SW 12
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That would be fine if the IRS's ire were directed at the employer.
But it isn't. Much easier to pick on the little man.
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"The road to Paradise is through Intercourse."
The uk.transport FAQ; http://www.huge.org.uk/transport/FAQ.html
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They are in my industry, forcing employers to deduct tax and NI from certain grades near regardless, which of course they'd rather not do because of the paperwork.

Well, many 'little' men will only work on a cash basis.
The whole thing is unfair and a nightmare, but what else do you expect from politicians?
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Dave Plowman snipped-for-privacy@argonet.co.uk London SW 12
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[18 lines snipped]

Good point. Best one in the whole debate, in fact.
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"The road to Paradise is through Intercourse."
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On Mon, 06 Oct 2003 19:46:14 +0100, Dave Plowman

Not true. There are a great many IT consultants to date who have had active contracts with multiple concurrent "employers" who have been deemed to fall into IR35 regardless. You try finding a permanent employment position where your employer is happy to allow you to work for multiple companies! (I'm not talking about helping out one night a week at the local pub either).
Besides which, if these people are actually disguised employees then how come they don't get holiday and sick pay paid for by their employer, amongst other benefits?

See above.

I think we may be singing broadly from the same hymn sheet.
The solution as I see it should be simple. The employEE and employER could offer a choice at the start of the assignment declaring whether it is permanent or contract. If permanent then the EE gets the usual benefits and not as much money into their bank account. And the ER gets to pay the tax that is intended.
IR35 was the wrong solution to the problem I think. Defining the problem - many "so called" consultants took the mickey by paying a stupid low salary (many still do I believe) and then taking huge dividend payments, on which NI payments were not due.
So to combat that problem all they had to do was to declare that the first 'N' pounds of income (where 'N' was say 20K - but pick a number) had to be treated as salary regardless. After that they could do what they wanted with the rest - re-invest, divvies, whatever.
That way the rich and famous (David Beckham etc) would have to apply the rules the same as everyone else and there wouldn't be any argument possible on who was in and out.
PoP
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In my industry, the IR has guidelines as to who may be considered as self employed. Having multiple 'employers' is just one of them. Others revolve around being your own 'boss' like risking money, supplying equipment, making your own hours, employing others, etc etc. I'd say you could bring a test case to see which of these should apply in IT, as we did in broadcasting. And won, FWIW.

If you're in a staff position, you'd be on PAYE, so IR35 wouldn't apply.

Because it suits the employer not to, of course. But plenty in my industry who *are* on the equivalent of IR35 do get sick and holiday pay. Of course, if you're above the national minimum wage a bit of creative accounting can easily make it part of the hourly rate or fee anyway...

IMHO, it all stems from the Thatcher paranoia of getting rid of 'jobs for life' thus 'improving' efficiency and profits in industry. Make people compete for work at every turn - even in the lowliest of jobs. But didn't realise the implications of this on tax or NI income. So the idea is to make what *are* self employed people with no job security or the normal 'perks' of permanent employment like sickness, holiday pay, pension, etc still pay as much to the IR. And also stop them claiming unemployment benefit when they're between jobs. When 'freelance' working was unusual, it didn't matter that much that they paid much less tax overall. But when you make vast numbers freelance - against their wishes too - the old rules cost the government too much in lost income.

I'd make a start by having IR35 etc apply to MPs.
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Dave Plowman snipped-for-privacy@argonet.co.uk London SW 12
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These same things apply in IT but they're rather "greyer" in the legal sense. The other problem is that precedent doesn't apply at the level where the cases are brought (I don't think) so there could be very many cases. So far in the cases handled by the two contractor organisations (PCG and Shout99) nearly all cases have been won against the IR. It's the huge waste of time and money that is the problem, I can't believe that the IR are actually making any more tax revenue out of this.

Hey, now that's a neat idea!
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But the whole purpose of the IR is simply to exist. Being profitable or efficient simply isn't in their rule book. They must be the most inefficient government body by far - and then some. And that's saying something.
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Dave Plowman snipped-for-privacy@argonet.co.uk London SW 12
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wrote:

Why is it strange? Should employers start providing all manner of benefiits which are not taxable? It would get ridiculous.
-- Peter Saxton from London snipped-for-privacy@petersaxton.co.uk
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On Sat, 18 Oct 2003 17:06:48 +0200, "tim"

Oddly enough when car benefit rules first got tightened up and income tax started being charged on the IR's perception of the value of the benefit rather than what it had cost to provide it, the issue of cheap mortgages to Bank/Building Soc employees was raised, since at that time these did not attract income tax. The revenue said they could not prove it had cost the employer anything to provide the cheap loan so they weren't taxed. In the days of 15% interest rates a senior bank employee was getting a tax free benefit worth a significant proportion of his salary
(This IR policy may/may not be the case nowadays).
Contrast that with their position on company cars.
DG
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On Sat, 18 Oct 2003 17:06:48 +0200, "tim"

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On Sat, 18 Oct 2003 15:33:50 +0100, Peter Saxton

Like I said, it is strange (by definition) 'cos it is not income.
Another strange aspect of it is that it's not taxed on the what it has cost the employer to provide it. It's taxed on the notional savings the employee has made by not having to provide a car himself.
I do £22k business miles per year, working from home, 3 other cars in the household. The IR reckon those business miles cost about £7k/yr. I believe it would be fair for me to pay tax on the actual cost of my proportion of the cars use (using IR rates). I'm only home at weekends and the car's full of kit so I use my wife's car, private use of the firms car is minimal but say 1.5k miles/year, IE I pay tax on £7,300 * 1.5/23.5 =£465 But the revenue wanted me to pay tax and NI on £4,400. Note the past tense BTW :-) Not to mention the scale charge for VAT on private fuel which is not mitigated for low private mileages.
That's strange.
DG
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wrote:

Not forgetting of course that ministers have their own allocated car and driver on call at all times - without one penny being due in BIK.
I think shortly after Bliar came to power in 97 some bright spark came up with the idea that ministers could save some money if they used pool cars (and drivers) instead. Naturally that never saw the light of day.
PoP
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And all MPs are allowed huge allowances for all kinds of stuff that would attract tax is it were you and I.
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I do 25000 miles in my company van per year and pay 500 tax. I work from home, NEVER use the van for personal use and think this situation is perfect. Especially when the dic**eads in parliament get pool cars, 2 jags, yah-de-yah and pay sod all. At least they're gonna give me the chance to make some of it back with the new regs he-he! Have a nice day, Richard.
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On Mon, 20 Oct 2003 22:55:49 +0100, "Frisket"
I do a fair mileage in a company van and thought I paid tax at the relevant rate on 500, not 500 as a sum itself. The 500 is the "benefit it in kind" value that is added to my P-what-ever-it-is.
I got a few raised eyebrows when I declined the new replacement car and went for the van, then the new rates came in and suddenly it wasn't such a bad move.
All the best
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wrote:

It's a benefit - non-cash income. Why is that strange?

Why should it be taxed on what it has cost the employer? The IR is trying to tax income so if you had to receive money to get the benefit it would make sense to tax it on that basis.
-- Peter Saxton from London snipped-for-privacy@petersaxton.co.uk
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On Sun, 19 Oct 2003 11:38:42 +0100, Peter Saxton

I wasn't being paid in Ming vases. I just had the use of a car that the business was already running. That's not an income, and I can't realise it as cash. If I applied for a mortgage the B.S. would not allow me to include it as part of my income.

1) It is the one certain way of putting a fair value on it. If I did attempt to get paid in Ming vases that's what the revenue would do. The amounts of tax the IR wanted me to pay were so outrageous it would have been cheaper for me by half to hire a car all weekend, every weekend and whenever else I wanted one to do my private journeys.
2) Please see my other recent posts:
Where I have illustrated with some figures how this is unfair and
How other benefits in kind receive different, more favourable treatment.

But I didn't.
The car is not negotiable, I have to have it, and I can't sell the benefit on to realise cash, but the IR want their tax in cash!

Only if the IR would accept a sensible value for the benefit. If the actual cost to the employer is not an acceptable way of putting a value on the benefit I'd be happy to pay tax on the benefit at the IR's own mileage rates. Can't say fairer than that!
DG
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Really, do they. Tough, that's how it works

But you don't have to take it home with you everyday. (I agree that this isn't enough on it's own, you will have to have a contractual agreement with your employer not to)

>

They do accept a sensible value. Most people with company cars are happy with their deal. Just because you happen to think it's a poor deal doesn't make it a poor deal for everybody

I think you under estimate how many personal miles you really do.
tim

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