BBC Radio 4’s Money Box with Paul Lewis, 18/03/2017
A couple remarks to Paul Lewis:
* The contractor has paid the correct amount of tax in the first place, as defined by the law as it stood at the time.
* The contractor did not merely buy into a set-up “he thought was legal”, the set-up was legal under the law as it stood at the time.
This is precisely the reason why HMRC / Treasury don’t want anyone to look too closely at the specifics, and are introducing 20-year retrospective law, in what can only be desceribed as the biggest smash & grab of this century.
There was a number of other inexactitudes in the programme, but I guess there’s only so much you can convey in a programme like this.
Still, let’s remember that for one self-employed getting a few minutes of airtime, there are tens of thousands others silently slaughtered by HMRC, for only two reasons: satisfying Gauke’s personal lust for self-employed blood (did a contractor steal his girlfriend many moons ago? we’ll never know the real reasons, but a vendetta it sure is), and brushing under the rug over a decade of incompetence, inaction and inconvenient truths.
Some serious food for thought for all victims of APNs regarding the infamous “2019 charge” on Contractor Loans (from gordo at the AccountingWeb forum)
“Tax planning, tax avoidance, tax mitigation…however you want to describe it, it is perfectly in order to resist HMRC from putting the largest shovel in one’s stores. So long as it is within the law.
Interesting that many are happy to give their opinions (not fact) on how the law should have worked and then back HMRC in their wish to dispense with tradition and rules and propose a law sometime in the future, which impacts upon planning undertaken many years ago within the law that existed at that time. Interesting that many seem to know better than the QC’s. However, HMRC do not make the law. They may propose something, but it’s Parliament that creates the law and seeks Royal assent.
I find it intriguing that HMRC have positioned this 3 years hence and then work on getting Accountants to influence clients to throw in the towel, despite the fact that there is no such law as things stand, further, we don’t know what the law might be if it arrives and therefore what settlement would amount to. The idea that the 3 year period is to allow loans to be repaid is misleading and does not explain why the Government did not act to stop any new loans being created from the date of the budget.
I also find it intriguing that HMRC think it better to employ, no that’s wrong, not employ but contract the services of behavioural psychologists to influence peoples’ behaviour, rather than work within the law.
Any behavioural psychologist would know that one way to create stress is to remove any feeling of certainty and create an atmosphere of uncertainty.
Check Companies House for Behavioural Insights Ltd. A company apparently part owned by the Treasury and part by individuals…and part by an EBT! (DS: and whose motto is “enabling people to make ‘better choices for themselves’” – you couldn’t make it more Orwellian if you tried!).
This company achieved Turnover of £4.8 million and profit of £1,4 million in it’s first period of trading. Impressive for a start-up. Who are/is its main customer(s)?
Imagine for a moment, now I am not saying this is true, but just imagine that I could convince everyone to give in and settle between now and 2019 under threat of what the law might be one day….then I wouldn’t actually need the law to be passed.”
Addendum 20/09/2016 : to further understand the inconvenient truth behind HMRC’s operation, read also this article
The truth about HMRC’s abuse of powers against “low hanging fruit” freelance workers is starting to come out.
The Telegraph published a comprehensive article on the topic in its September 21st edition.
Read it here
The comments section is also worth a visit.
One reader summed up pretty accurately where exactly contractors caught in the APN farce are coming from:
“Interesting the volume of comments here by people who don’t have any clue as to why this all happens, i.e, non contractors. Those who are glad to see contractors being targeted here clearly don’t know the full facts.
As a contractor you are forced, yes forced by your client to open up a limited company to trade because they will NOT employ you directly, that’s to stop them from paying tax. You cannot negotiate this, if you don’t do it you don’t work. So then you contact HMRC and say “Hi, how much tax should I pay as a contractor” and they say “errm, it’s not as simple as that, err you have to fill in a self assessment.” So then you go to an accountant and say “Hi, how much tax should I pay” and they say “errn,it’s not quite as simple as that, there’s actually no tax construct for you being a contractor, most people just open up a limited company, but actually you shouldn’t because IR35 says you are actually just a disguised employee, err but just pay yourself dividends and some income.” So then someone comes along and says, you know what, HMRC can’t be bothered to stop the companies that employ you from forcing you in to this, and they cant be bothered to set up a contractor based tax position either, and the way you are trading is actually against HMRC direction anyway (IR35) and we have a simple way of getting paid which doesn’t involve loads of paperwork and is under law perfectly acceptable, AND you get to take more money home, then why the funk wouldn’t you do it? The annoyance is that HMRC could stop this overnight by either setting up a contractor related tax structure OR just stopping the companies who employ us from not paying us directly OR targeting those offshore companies offering the service are not being cracked down on or have any regulation put on to them.
What’s even more comical is that the money we collect and pay to HMRC in VAT and corporation tax is much more than HMRC would get as tax from us as an individual, AND if they make us go bankrupt they will lose a huge amount of future VAT and tax because we will never be employed again. Why make someone bankrupt for £30k when they will make you a million over there lifetime if you let them continue to work?? Added to which most contractors are doing this because they are some of the best people in their industries, and the country will lose the top people who are making this country successful and are in turn paying for all of the average low paid losers who took out a mortgage they can’t afford and are being bailed out by the country.”
HMRC has a very deep responsibility in contractors moving to DOTAS structures en-masse in the early 2000’s. Today, they are complaining about a situation they themselves created.
There is something in there for psychologists!