Dumbest Things About IR35
So, what are the dumbest things about IR35?
It strikes me that there are quite a few dumb things about IR35 so it is difficult to know where to start.
Let‘s give it a bash.
There was a rash of companies laying off workers on a Friday and then taking them back on as contractors on a Monday.
This was reckoned to be a bit of a con and that these people were disguised employees.
IR35 was created to make these people pay their full whack of tax.
However, as Dawn Primarolo, the Government Minister admitted, far more contractors were caught in the IR35 trap than intended.
Now, they have set up three teams of IR35 Compliance Officers.
Surely, outside Government departmental managers, there can‘t be that many leaving on Friday and contracting with the same firm on the Monday any more.
If you have a niche skill that makes it difficult to get a substitute for you, you are far more likely to be inside IR35 than someone who has run-of-the-mill skills where there are loads of people who could potentially substitute for him or her.
That‘s a bit of a nonsense.
If you become so good at your job that you couldn‘t get someone to substitute for you
then you are far more likely to be inside IR35 than someone else with the same skills maybe even working in the same place who is not so good but the company would take a substitute for him or her.
That‘s a nonsense too!
Why should you be penalised for being good?
There‘s a guy in one of the IR35 scenarios
published by HMRC who cut out the agency and found his own client.
He also has several other smaller clients that he works for.
Surely this guy is in business on his own account.
According to the IR35 scenarios , he is caught for IR35 on his main contract.
I have never met a permanent IT worker who both found his own employer and also had multiple other employers.
Indeed the terms of his or her contract of employment usually states that they can‘t do work for other companies or clients whilst working for that company.
How is this guy a disguised employee when employees are generally not allowed to operate like that?
Why can‘t he or she just say ‘Companies have control over their employees by not allowing them to have other clients or employers.
‘They have no control over me that way and I do work for whatever other clients I want to’.
If you can prove that you have not been paid
more than 10% of your annual income, even though you‘ve done the work, you get 10 points towards being outside IR35.
Every contractor has pretty much the same risk of this happening to him or her.
With the substitute rule, the courts have ruled that you just have to have the substitution rule in your contract.
You don‘t have to have used it.
So, why do only those who have had the misfortune not to be paid get points when all contractors are potentially in the same boat.
They are all exposed to the same risk – which permies aren‘t.
Those that haven‘t lost money aren‘t operating any differently to those that have.
Any Other Dumbest Things About IR35?
I have to say that there are a lot of dumb things about IR35.
You could go on and on including looking at the merry dance between the different players for the last 12 years and all the investigations that have come to nothing.
However, the 5 above will do for now.
We think they are the dumbest things about IR35!