IR35 – Did the Chancellor miss a major opportunity?
Instead of fiddling around with tax technicalities – which were very much problems waiting to be solved – and through a process which may well exacerbate the complexities – HMRC – and HMG – should have adopted a much bolder – maybe radical – approach and implemented Working Free’s long-standing proposal.
The Working Free Proposal is around creating a different and new form of Limited Company with some alterations to detail and following the VAT operational model.
The Working Free IR35 Solution
The government should create a new type of limited company which any independent worker, domiciled in the UK, may set up and trade through. Normal rules for limited companies apply except that this type is forbidden to pay dividends and remuneration to family members not formally employed in the business and taxed. They would file quarterly reports – virtually identical to the VAT system – and pay over PAYE and NI relating to remuneration paid out by the company during that period. In this way, legitimate expenses – including pension contributions – can be charged in accordance with company and tax law and the engaging client companies have no responsibilities in this regard. If, and when wound up, any surplus would be deemed to be income of the Directors at the time of winding up and taxed accordingly, following the principle that all retained earnings from whatever source will eventually be taxed as income and as appropriate.
The arguments presented by HMG and HMRC are around out-of-date concepts of tax-dodging and control.
The Working Free view is that, now, Workers – particularly at senior levels – think differently, behave differently and have different aspirations. We also contend that Independent Working will soon represent about half the working population (now about 33m.)
WorkingFree supports the Senior Executive considering or embarking on a new career as an independent professional. We work with Individuals directly and with Organisations as part of restructuring, redundancy, outplacement, career development or other mid-career transitioning arrangements and where independent working at senior levels is seen as an attractive way forward.
We’d welcome the opportunity to tell you more about Working Free – you can contact me at charles.russam@WorkingFree.co.uk or 080081 565604.