MY THOUGHTS ON IR35 - What IR35 is REALLY about and its impact on companies and contractors

[@HareshKainth]

I do agree with everything you have said. Im already looking to work abroad.

[@ryan.connaughton]

Same

[@becksy539]

Full time employees don;t pay for their training either, contractors have to to be self certified, i've spend north of 20k on courses in my life and i've been on jobs were the full timers complain and whine about me because im on £2 an hour more, i can be hired/fired with 1 days notice, no holiday pay, no pension, etc,

[@FYPNLP]

There were NO LIES in this video. Excellent content. I recently went perm after years of contracting. I'm going to see how the dices fall with IR35, but i will certainly give you a call as I want to create links with recruiters who have clients overseas.

[@JimRamsayJWR]

Despite me making money from youtube, wedding videos and selling some of my footage to clients, I have gone permie with teh client I was contracting for in the IT sector

[@lewis72]

It is not a requirement to have a skill set that is not available with the company to be outside of IR35. I've filled in the Government's own online IR35 assessment and was deemed to be outside even though my skill set is similar but not identical to to those in full-time employment.

[@RevorecRecruitmentSolutions]

True. Maybe my wording was incorrect, but I meant as in a specific skillset job function. IE we employ IT software developers who specifically work on a specific niche program only. Having someone do exactly that but on contract without paying the same tax as their permanent counterparts additionally is what the government want stopped. Maybe my wording was wrong.

[@mjwmontgomery]

Companies are directly outsourcing jobs abroad (india, poland etc) rather than paying the tax.

[@RevorecRecruitmentSolutions]

Oh definitely yes. We're looking at registering offices in Delaware and Dubai to help as the tax is ridiculous

[@tonyh1460]

I've just switched from outside to inside with the same 'employer' now I'm working through an umbrella company, I'm planning to close my ltd as I no longer need it, so my question is, why as I paying a SHEDLOAD of employer's NI when I've no company?

[@RevorecRecruitmentSolutions]

I dont know. But the government want you to pay more tax hence why theyve closed the ltd company contractor loophole as they see it. To get more tax is my answer

[@tonyh1460]

Hi Seb, sadly yes, and closing my company and pulling all the built up funds out will incur CGT, even though I’ve paid Corporation Tax on the profits every year. That’s a double taxation!

[@RevorecRecruitmentSolutions]

But employers have to contribute more by having to pay constant NI and tax for you as youre permanant. All about tax.

[@tonyh1460]

Good help us after this year’s budget !!!

[@mikes9753]

What about delivery drivers in my takeaway business? My shop is a partnership type and i got 2 drivers who cover random days throughout the week. Sometimes i got other random drivers covering days when my "permanent" cannot come. They self employed at the moment, should they be categorised as employees?

[@RevorecRecruitmentSolutions]

If contracted then yes. But if on zero hours then they claim via Universal credit if not enough hours. If theyre self employed then they can again apply through hmrc for a self employed grant. The exact amounts vary dependent on their circumstances

[@mikes9753]

@@RevorecRecruitmentSolutions they both got fulltime jobs and thats their part time extra income. It is zero hours and pay also depends on how many deliveries are there throughout the evening.

[@RevorecRecruitmentSolutions]

The original question was from the IR35 video. But unless these guys are limited company contractors which is extremely unlikely as part time takeaway delivery drivers then IR35 doesnt play into it. Itll just be taxed via permanent employment but as a second job in the eyes of HMRC and therefore a little more tax will be taken by way of income tax.

[@iamtv6129]

Perfectly explained thank you

[@carrie20074]

AS a freelance designer i get most of my work through recruitment agencies. They are all now telling contractors and freelancers to sign up to umbrella companies inorder to get paid. I spoke with an umbrella company 2 days ago and they charge £28 a week to do the admin. Is there any way you can through your limited company pay the PAYE tax yourself to cutout umbrella companies. I am already set up as a PAYE worker within my own limited company

[@RevorecRecruitmentSolutions]

Good question. To be honest I wouldn't want to advise either way without knowing your expertise in tax, NI and payroll. The idea of an umbrella company is as a buffer rather than just a tax and NI facilitator. Recruitment agencies use umbrella companies as it saves us time and money doing all the tax, NI and payroll ourselves. Theoretically you could do this yourself within your own limited company but unless you know what you are doing, have the time and resources to do it properly and understand the required legalities from an accounting angle I wouldn't advise it generally. I am not an accountant so wouldn't consider myself an expert to advise.

[@andrewappleyard796]

Ima hgv driver and I have a ltd company. This ir35 confuses me to hell . Most of my work comes from agency's. Not 1 or 2 . A few . I pick and choose what work I do on a weekly basis because of the demand for hg drivers. I can . But most of my work however come mainly from 1 agancy because i choose to do that because it's easy work in compared to the others. So quick question. Dose that in the eyes of the government make me fall in the ir35?

[@RevorecRecruitmentSolutions]

In short Yes, but with a but. The governments view is that IF the job you are doing on a limited company contract is something that the company using your services COULD hire someone permanently to do, then it falls inside IR35 and you'd need to do it on a PAYE basis. The BUT part is whether the company(s) you work for have HGV drivers on permanent staff or not? If that company has nothing to do whatsoever with transport and has no permanent drivers on staff and has never had any permanent drivers on staff you may have a legitimate case. If that company only requires drivers for occasional work (1 or 2 loads per day) then it could be legitimately argued as being outside of IR35. The problem Andrew is that you aren't the only one confused. Most companies are realistically confused as to how this will be enforced. Traditionally anything to do with TAX is something HMRC will come down on like a ton of bricks and they take no prisoners. Under the new IR35 rules coming in, the companies hiring your services will be responsible for deciding whether or not you fall in or out of IR35. But because they will probably be unsure of IR35 implications and fear any backlash, most companies are just putting blanket bans on limited company contractors even if they have a legitimate argument. My best advice would be to expect the worst. Keep the limited company, but don't be surprised if nearer April you get a call or a sit down and you are told it's PAYE or they cannot use you any more. I hope this answers your question.

[@andrewappleyard796]

@@RevorecRecruitmentSolutions Thanks for your reply . That dose help alot .... most of the work I do is a week worth of work . Example I turn up to site I'm allocated a lorry and I'm off ...I'm given a app to work off . Of every load I need to pick up and drop off over the week I sleep in the truck . And can normally be away the whole week . Since you brilliant video I've called arround all the agancys that give me work and they have all said from April they are dropping all ltd company drivers from april due to not wanting to take the risk of been fined . Shame really. I guess from april weather I like it or not I'm going back to paye . Kind regards andy

[@janvrto4822]

@@andrewappleyard796 unfortunately you want be only person in the uk :(

[@royal-1664]

@@RevorecRecruitmentSolutions I'm in the same boat, HGV driver signed up go 7 agencies. Had the phone call today to sign the paper work "other wise we cannot use you". A rumour on the network I keep hearing is that after the Ir35 is implemented, I will have to choose one of these agencies to be my sole employer, and that if I decide to fill in work shortages through another agency I will be placed on a higher tax bracket / emergencie tax code. Is there any truth in this ?

[@bazmina]

@@royal-1664 I've personally not heard that. Plus tax isn't charged by an agency. It's charged by HMRC. I think what I make of that is that if you were to stay under 1 agency there'd be a loophole. However that sounds more a red herring than anything else as HMRC would easily get around that. Unless the agency started trying to be outright corrupt themselves and started forging your assignment details etc. That's going into tax evasion though. Probably a red herring that.

[@philburtonfrench]

Good vid - but I feel you glossed over how much tax contractors pay. I worked my tax out and compared it to my fiance - funnily enough, we pay near enough the same percentage of tax on gross income. When you then consider contractors have no sick pay, holiday pay or job security, I'd say it's fair enough.

[@philburtonfrench]

Dont forget that any money left in your LTD at the end of the year, if you take it, you pay income tax on all but £2000 of that.

[@RevorecRecruitmentSolutions]

Fair point. The message I guess I wanted to convey is that contractors already get a rough deal but the general public dont understand that so taxing them more is a kick in the teeth.

[@mjwmontgomery]

Have been avoiding any contracts in the UK since this legislation. Its killing the next generation of entrepreneurs.

[@RevorecRecruitmentSolutions]

Yet another way to get tax. There's always another one to add too.

[@piersberry7430]

Employ a perm. Get em onboarded , doesn’t matter as they came from a similar sector..train them up, and let em observe a project before getting involved. Hire a senior contractor - smashing it from day one, external experience & senior skill sets put into action... but hey tax em like the perm...and not on the perm head count...

[@RevorecRecruitmentSolutions]

Youve summed up government logic. Only thing you forgot is get someone in government to decide all this who doesnt understand contracting to make the big decisions. Smashing concept.

[@lesbianalien3435]

Can you explain more about hgv drivers with a ltd company please. Most drivers are saying that they will work in other eu countries. Surely this will make a massive shortage in the UK

[@RevorecRecruitmentSolutions]

No problem. For HGV Drivers or any role that could be considered one which would be something that the employer in question could hire for on a permanent basis, IR35 will apply. Basically the idea behind IR35 is that if a role is something that a company could hire for permanently or has a record of hiring for permanently (either apply) then this is considered inside IR35. Therefore tax for limited company HGV drivers for UK work would be paid on a PAYE basis from April's IR35 deadline. The reason why HGV drivers are saying they'll just work in other EU countries is that if they can demonstrate that the work is done abroad and if that is for a foreign employer then the tax in that country where the employer paying the HGV driver is will apply. If the tax is less than the PAYE in the UK then it'll be cheaper for many HGV drivers to nip over to the continent and just work from there. And yes I agree about the potential for a massive shortage in the UK. It is a short sighted government scheme to cream more cash, but this is a risky game considering HGV drivers are heavilly in demand as it is. It's like throwing away the key to your safe full of gold.

[@lesbianalien3435]

@@RevorecRecruitmentSolutions hi thanks for the reply but my experience at the moment with the agencies are that they are trying to get all the ltd company drivers to sign a contract with them or there will be no work. Also saying the the pay will be alot less. Most drvers feel like they are being held to ransom. Can you give any advice? Thanks so much for the reply

[@RevorecRecruitmentSolutions]

@@lesbianalien3435 To be honest the problem is we don't do HGV drivers so I cannot comment on that method. Our contract work is within engineering and technical and the contracts tend to be 6 months - 2 years so it's very different. Without wanting to be critical of HGV recruitment agencies, as I've heard this too but do not know their side of the argument, it'd be unfair of me to give an educated opinion. At a guess it is because they can be more prioritised with who their loyal drivers are for work if they have shown commitment their end and signed an agreement. But as I say I don't know the answer to that question.

[@lesbianalien3435]

@@RevorecRecruitmentSolutions thanks so much. Hopefully it will be a massive failure on the government and it wont last

[@notoco1199]

Government is responsible for 40k + hgv drivers dissappearing after 04.2021

[@arslanemoeye1764]

what happens when freelancer is wokring from umbrella company and not setup limited company ? can he still use substitue ? i do remote work from home, can my substitue be from offshore ?

[@RevorecRecruitmentSolutions]

Yes. The other person just gets paid instead when they work

[@arslanemoeye1764]

@@RevorecRecruitmentSolutions can substitue be from another country other than uk ? my project is work from home and substitue based in india

[@RevorecRecruitmentSolutions]

To be honest I dont know. Itll depend on the contract youre working on, the laws in tgat country, taxes and qualifications to be a substitute. I wouldnt want to advise as I dont know for sure.

[@DauntingGecko]

You are giving out wrong advice. IR35 is not simply "if the business has perm staff around you doing the same job as their line of work as you then you also fall into IR35". You can have similar or the same skill sets as those employed directly by the end client (i.e. the client needs a few independent engineers or IT workers to help us complete something) - you are service company that offers resource to plug that gap that clients need (either they don't have the skills to do it or they don't have enough people for a project). Simply put, IR35 is making sure you are not ongoing disguised employment - it makes no difference if those around you do the same or similar "job" as you. The client wants someone to come in, complete a specific piece of work or set of tasks and leave - you are therefor outside IR35. If however, you are being told what to do like a permanent staff then it's likely you are inside IR35. There are three key pillars to IR35 (you may need a combination of these to be deemed outside IR35): MOO (mutuality of obligation) - essentially, just because your client asks you to do something does not mean you have any obligation to do it as it wasn't in your contract for work (you asked me to build a shed, so I'm just doing that and leaving - not random jobs each day being managed like your regular staff). You can choose what work to do as you are independent. Substitution - the client is not hiring a particular individual. You run your own limited company so clients cannot stop you from sending a suitable substitution to complete the work on behalf of your company for them. Control - the clients can tell you what work needs completing but they do not control how the task is completed. You are not there being supervised and told how it should be done - your company is brought in to complete the task(s) for the client, so they should not be dictation or supervision from them (other than standard health and safety or security issues). You choose when to work, how it's done and so on. If you are struggling to see any difference between yourself and their permanent staff (i.e. you're being managed, have to turn up at certain hours each day, going to team meetings that aren't really for you, etc) then you are inside IR35. This is also known as a no rights employee: norightsemployee.uk/ The client should really be employing permanent staff instead of hiring people with no rights or benefits.

[@RevorecRecruitmentSolutions]

Thank you for your reply. I think you've missed the point of the video as it's called My thoughts on IR35. I understand the regulations and rulings behind IR35 and what it should be if done by the book. The problem is that the content available on the subject is very much matter of fact and doesn't really give the reality of what is actually going on. Companies should be able to define independently whether someone is inside or outside IR35 without fear of any HMRC backlash, but they are clearly fearful and many are placing all contractors (whether they have legit reasons for being inside or outside) as blanket inside IR35 to negate the risk of any backlash. IR35 is, in my personal opinion, a bit of a con in order to draw more tax from the system. As the title of the video states; My Thoughts on IR35 and not these are all facts and don't listen to anything else. Also take into account my position being the go between in the middle of companies and contractors. Doing this I am seeing what I discuss first hand, hence my opinion of how things are actually working regardless of what the official facts say.

[@sams32111]

Does working abroad avoid UK tax though? You can earn the extra money abroad potentially, but didn’t you could bring savings back into the country without it being taxed?

[@RevorecRecruitmentSolutions]

Hi Sam. Good point. The purpose in my example was that we recruit in the middle east. So for example many uk contractors will take a permanent contract in the UAE. It sounds strange to go from contract to Perm but the UAE charges 0% on income tax so once a project is over on perm there you'd simply move on. As it's permanent on income it works differently so you'd be visiting the UK as a foreign Permanent employee rather than a UK contractor doing international work and therefore UK tax on that income doesn't apply.

[@RevorecRecruitmentSolutions]

Here is a run down. You'd declare permanent need to work continuously abroad for at least a year and by taking a permanent role in the middle east paying 0% income tax and on UK equivalent contractor money it's quite easy to be exempt from UK income tax. www.which.co.uk/money/tax/income-tax/tax-rates-and-allowances/working-abroad-and-tax-awcrk9m857uu

[@julijaku3020]

just start claiming benefits as much as you can

[@randyvalantino6850]

In construction a sub contractor can have a 100 men working for them year on year . No employment costs . Lets be honest they are employers

[@RevorecRecruitmentSolutions]

Yes. Ive had contractors out on 2 year projects. But ive had the same project get cut and the contractor still have to cover digs for another few months with no pay off. 2 sides to the argument.

[@randyvalantino6850]

@@RevorecRecruitmentSolutions That does not make it right or legal hmrc should investigate employment in construction . Everyone knows its employment , i know men who are now over retirement age who have to continue working because they have no pension . Take a look at the huge profits big house builders are make . Take a look at the standards of apprentices because no one wants to pay the money for education . You wonder why no one wants to come into construction now mugs game .

[@RevorecRecruitmentSolutions]

I dont disagree. You make good points. The problem is the economics have been alliwed to develop into a system like this. Plus HMRC make huge incomes in thd separate CIS tax. Theyre not going to investigate as theyd lose money by digging up dirt. Thats the problem, the system has been allowed to get this way and the people making the calls would lose money by changing it.

[@randyvalantino6850]

Big house builders could employ all trades no problem

[@RevorecRecruitmentSolutions]

On a permanent basis? When no housing projects are needed? I guess they could but whats the point in having a full time sparky on the books when the project theyre employed on is still at the foundations stage. The economics wouldnt make sense.

[@MikesGlitch]

Great video.

[@ursachevasile2393]

Like you said,i can sell my skills some other country

[@fulv_uk]

Or charge more per hour and stay in the uk

[@RevorecRecruitmentSolutions]

Thats basically what will happen if their skill demand warrants it.

[@craigd8685]

Is there any chance of it being postponed due to the election?

[@RevorecRecruitmentSolutions]

Officially there could be but in ny opinion that is unlikely. Considering the conservatives have been in power for some time and the IR35 process for the private sector has been overseen by them, why would they change it? They'll just continue with the process.

[@craigd8685]

@@RevorecRecruitmentSolutions I'm just trying to figure out my best options as I am a hgv driver and there is nothing about us mentioned anywhere that I can find, on how it will affect us working as a Ltd company considering we can be told at anytime there is no work. We also dont get the benefits of holiday and sick pay, does it all depend on how long we work for one company?

[@craigd8685]

Also the company I work for has multiple companies if one of those is classed as a small company am I exempt or will it go on the collective group?

[@RevorecRecruitmentSolutions]

@@craigd8685 the general ir35 ruling says that if the contractor is doing a job that the company normally would employ on a permanent basis that contractor would pay tax as if on PAYE. In your circumstance that would definitely apply to you.

[@RevorecRecruitmentSolutions]

@@craigd8685 also as for job security they can cut you whenever. However under general employment law for any uk employee a company can dismiss them without notice and without redundancy money during their first two years of employment. Therefore being a contractor in essence would be the same rights under AWR rules, same tax and same employment job security as a permant employer for the first 2 years of employment

[@tiffanyscott4101]

cant you become a ltd company? im in the same situation. i work in brightan as a security as self employed. my security company said we have to change to ltd. how will this affect me? does that mean ir35 will be thrown onto me instead of my company?

[@RevorecRecruitmentSolutions]

Yes. But becoming a ltd company is what ir35 is targeting really as in limited company contractors. They want to employ you under ir35 so as of april 2021 now, youll pay the same tax as a permanent employee so they wont get any backlash.

[@tiffanyscott4101]

@@RevorecRecruitmentSolutions seems like my company is trying to diguise me. However i think ir35 wouldnt imply to me as im pretty much a small business

[@RevorecRecruitmentSolutions]

On paper it wouldnt surprise me if you were exempt but in reality I wouldnt be so sure. Ive heard and know many ppl who thought that and got told otherwise. Companies, in fear of any hmrc backlash, are implementing blanket inside ir35 policies. Just be cautious and check it all out.

[@mkleng]

Hi can you hook me up to some Middle East roles?

[@RevorecRecruitmentSolutions]

Hi. It depends on what type of role you are looking for? But if you wanted to send us your CV it's [e-mail] and we'll be in touch.

[@rondamon4408]

It is very simple, now we have brexit, someone needs to pay for it, and the government with it superpowers, just decided that they will make contractors pay for it. Next time I'll vote on the Libertarian Party. Conservatives have just disappointed me.

[@piersberry7430]

Ron Damón IR35 was created by Gordon Brown / Labour Gov at the time. Way before Brexit and the torys!

[@rondamon4408]

@@piersberry7430 but torys could cancel it.

[@RevorecRecruitmentSolutions]

Great bit of info there.

[@johnthomson9678]

Lol time to think about working abroad will call you guys thanks can you send a phone number

[@RevorecRecruitmentSolutions]

Hi John. Our number is 01179661115. However as a caveat we only cover construction and engineering abroad and we are still in earlier stages of middle east networking so will have some limitations but will do our best

[@nialwestwood]

HMRC are shit on my shoe

[@becksy539]

what next, i have to tax the plumber and electrician when i need one for my house before i pay them, whole thing is a joke

[@RevorecRecruitmentSolutions]

Theyre usually self employed. This is about limited company contractors. Two different entities typically.

[@randyvalantino6850]

Probably talking about big house banks builders using sub contractors and how that sub contractor employs trades , not private jobs like yours . Some one comes give you a price to do a job thats true self employment