Really? That’s why they brought it in then because it’s bullshit. It was being abused by white collar for example contractors in the Banking and IT industries. Tradesmen working for building companies pay tax at source even though they’re not cards in. Highly paid contractors do pay tax but not enough, why do they choose to go down that particular route? It’s to avoid the full tax and National Insurance liability and the companies hiring them weren’t paying their share either, so fuck right off with your “bullshit”.
Totally wrong, they brought it in because there were thousands of 'contract' workers being employed in organisations like the NHS, doing jobs that should have been 'cards in' such as IT support and data entry. A lot of these people were forced off the books into these arrangements and into 'service provider' businesses even though they were not part of the knowledge economy. They then lumped in Engineers and Developers working via Ltd Co's into the same pot. Even though the working arrangements were totally different.
The CIS scheme is totally different, its basically there to protect subcontract construction workers from unscrupulous employers. Again, not well paid people that should be paid via PAYE.
The system benefits nobody. The low paid people are back where they were in the first place, except usually now paid via body shops that take a slice of the pie while adding nothing.
At the other end of the spectrum, Engineers, Software Developers etc now find themselves being forced into 'Inside IR35' arrangements via Umbrella Companies that benefit HMRC short term, but ultimately increase project costs.
I've got a contract running at the moment inside IR35. You explain to me why the following is fair...
Client pays a fixed rate per hour for the work.
Contractor recieves payment via Umbrella Company having first paid;
BOTH Employers AND Employees NI Contributions.
A Management Fee to the Umbrella Co.
Full rate Tax deductions at 40% rate.
In reality this means that for this project every £100 earned ends up with me getting around £40 and HMRC and various other twats get the other £60.
It gets even funnier when you know that at the beginning of the Tax Year HMRC assesses my Tax and I am required to pay it IN ADVANCE for the year albiet in 2 stage payments.
At the end of the year, they look at the Tax return and I get a fair chunk of Tax back but that money has sat in HMRC's account for most of the year.
And all this while still getting no holiday pay, no statutary sick pay, no other benefits. These things all have to be paid for myself via insurance if I want to have them.
If I have to stay away during the week I can't reclaim the expense. Neither can I reclaim the 20% VAT on my expenses.
And while this is happening, on my non IR35 project work I'm collecting VAT at 20%, paying VAT at 20%, I pay class 1 NI on the small amount of salary that comes from the direct Ltd Co work, thats Employer and Employee (12% + 13%). I then pay 20% Corporation Tax on any profit thats left.
Absolute bollocks lapped up by ignorant tossers like you that know a fraction of the true story.
And all the while the real Tax Avoiders i.e Amazon, Google, Apple, Facebook, Banks, Energy etc get a free ride. They decide how much Tax they want to pay and HMRC rolls over. Same goes for the Gov cronies (of all sides) usually to be found with fingers in the pie of the 'Service Provider Co's'.
In the meantime, contractors get paid less (less than an equivalent paid employee), Clients pay way more and the competitiveness of the country to deliver high value projects gets much worse.
Its OK though cos some internet tools only see the White Collar Tax Dodger headlines. So yeah, all bollocks and you know fuck all.
