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Will Osborne cut and simplify corporation tax?

Robert Peston | 00:00 UK time, Wednesday, 19 May 2010

Tonight, the new chancellor has his first outing in front of what you might call middle business, as opposed to Middle England, when he addresses the CBI's annual dinner.

George OsborneGeorge Osborne's theme, for a change, won't be cuts, but growth - or how to engender the kind of renaissance in Britain's private sector that would generate the tax revenues and jobs that can help us out of our malaise.

So what's his cunning plan?

Well, when he thought and hoped the Tories would be governing alone, his flagship policy on all of this was to simplify the tax system for companies and reduce the headline rates of corporation tax - from 28p in the pound to 25p for larger businesses and from 21p to 20p for small companies.

The costs of reducing these taxes was to be financed, according to the Tories' manifesto, by "reducing complex reliefs and allowances".

And the Tories told me that they would do all this in the emergency budget they've consistently said would take place within 50 days of a general election.

Readers of this column will know that I've highlighted on a number of occasions that in respect of this particular tax policy, there has been a significant and unusual ideological divide between the Tories and Labour: Osborne wanted to streamline the tax system for companies, in contrast to the Treasury of Gordon Brown and Alistair Darling, whose philosophy was to target tax reliefs and fiscal aid at sectors thought to be particularly deserving.

So I was slightly surprised that there was no mention of any of these tax reforms in the agreement between the Conservatives and the Lib Dems that underpins their governing alliance.

Did that mean Osborne had ditched these ambitions to simplify that are redolent of his Conservative predecessor at the Treasury, Nigel Lawson?

I'm told not, by those close to Osborne.

On the other hand, his new Lib Dem colleagues have been pointing out that Gordon Brown's jibe - that the policy amounts to a tax cut for banks and a tax increase for manufacturers - is not a total canard.

The fiscal reality is that manufacturers tend to be big beneficiaries of allowances for capital spending of the sort that Osborne would reduce - and banks have less opportunity to reduce their tax payments by exploiting such reliefs.

Also most biggish businesses, in my experience, rather like the existing tax credits for research and development, and are unenthusiastic about the Tory manifesto promise to redirect them at "hi-tech companies, small businesses and new start-ups".

It's true therefore that a policy of reducing the various business tax allowances would have the effect of pushing up the tax burden on the kind of companies that make and export things deemed vital to the UK's economic future, even if the headline rate of tax were reduced - whereas the tax burden on banks would tend to be reduced in these circumstances.

That's why the Lib Dems themselves never went further than flirting with the idea of simplifying the corporate tax system two or three years ago: they couldn't see how to implement such a policy without penalising too many businesses necessary for the UK's ability to pay its way in the world.

What will Mr Osborne actually do, now that the levers are in his hands?

I can't see him abandoning the commitment to cut and simplify corporation tax. To do so would be a humiliating U-Turn on a genuinely flagship policy.

On the other hand, I would be staggered if he didn't do something to ease the transitional pain of those companies that invest a great deal, and therefore benefit most from the tax break on capital spending.

Somehow it doesn't seem plausible that Osborne would stand up tonight in a room full of boozed-up manufacturers and tell them that their subscription price for operating in the UK is about to rise sharply.

Comments

  • Comment number 1.

    Never mind this topic Robert...

    This should make the next few days rather interesting!

    ‘Market chaos warning after German ban on shorting’
    http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7738144/Market-chaos-warning-after-German-ban-on-shorting.html

  • Comment number 2.

    One of the tax measures being most keenly watched will be one of the least well-known. It will loom large in the minds of around one million people.

    It's full title is the Intermediaries legislation, introduced in the Finance Act of 2000 but is more commonly referred to by it's name under the coding system HMRC (then the Inland revenue) use to annotate their press releases: IR35.

    In essence, this legislation gives HMRC the power to demand that one person pay both Employer's AND Employees National Insurance on their income.

    There are around 300,000 such small businesses in the UK and they and their extended families will have been voting either Conservative or Lib Dem, since the manifesto of both parties promise to review and replace the legislation.

    Since they are agreed on this, how can they justify doing anything but replacing it? If Osborne (and Laws) back away from this it will cost them a lot of votes at the next election. They would do well to appreciate the depth of feeling on this issue - ask yourself how you would feel if someone came along and told you that you had to pay Employers NI on your earnings in addition to the Employees that you currently pay? Bear in mind that it is 13% and applies throughout your income, there is no upper limit.

    I'm sure it would be the Number One issue affecting where your vote goes, as it has been for those one million people since 2000. While Labour had a massive majority, they didn't need to care, but as their majority was eroded that issue will have come back to bite them hard because after you allow this to happen to someone they will never, ever, vote for your party again.

    Let's hope this coalition do not make the same mistake.

  • Comment number 3.

    Will Osborne cut and simplify corporation tax?

    Yes - 'Red Tape' and excessive and inappropriate regulation is another form of corporation tax and so are tax breaks for investment

    What is more important is how can G Osborne use tax cuts to stimulate investment for job creation in the 'regions' - Welsh valleys, Cornwall, NE, Cumbria coastline, East Midlands, West Midlands, Staffordshire Moorlands.

    Business leaders operate in the UK as a 'privilege' - Britain's unemployed should also have the 'privilege' of getting a job in their own country

  • Comment number 4.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 5.

    IR35 is the most painful thing my business has to deal with. I'm still turning work away because I cannot afford to be hit by this most unfair tax. Let's not forget that it is a tax on revenue not profit. It is the highest tax by far - you can pay nearly 65% tax on 95% of your revenue. People who don't run small businesses like mine simply cannot believe it is possible, yes it is.

    I'd give my right arm for a simplified tax system for small businesses like mine.

  • Comment number 6.

    Corporations only exist because of legal constructs. These businesses would be partnerships without the associated law. The owners would not have limited liability.

    The deal between state and corporation is 'you get limited liability, in return you pay corporation tax'.

    In more recent times further revenue has been sought from employers national insurance rather than corporation tax. This must encourage employers to set up shop in low cost environments.

    The deal between state and corporations needs to change.

    Employers NI should be significantly reduced to encourage local employment but the quid quo pro should be a change to what can be deducted to reduce profits and therefore corporation tax paid.

    If debt for acquisitions were not tax deductible it might make for better business decisions by managers and shareholders. Long run, it might reduce bankruptcies.

    It should not be possible to to deduct redundancy costs if capacity is moved offshore.

    Clearly, the approach to multinationals would have to be carefully managed.

    Furthermore, I'd consider changing shareholder voting rules. It should not be presumed that uncast votes are a vote in favour of management. A much higher proportion of votes should be needed in favour of leveraged acquisitions. A much higher proportion of votes should be needed in favour of remuneration reports.

    My ideas might not be good ones but nevertheless its time to go back to basics. Just moving the deck chairs about won't generate a job friendly environment.

  • Comment number 7.

    What do you think of John Redwood MP's idea of scaling CGT in relation to how long an asset has been held?

    http://www.johnredwoodsdiary.com/2010/05/18/tax-cuts-and-robin-hood/

  • Comment number 8.

    I don't see how they want to "simplify" the corporate tax system. Reducing the rate isn't simplifying something. If they really want to simplify they can do that and still keep the 28% rate.

  • Comment number 9.

    # 5. At 08:55am on 19 May 2010, pershoreplumb wrote:

    > IR35 is the most painful thing my business has to deal with.

    I thought IR35 was for "tin-pot" businesses that have one
    customer, i.e. computer programmers who are really
    employees for a firm. Is it true that it can hit "real"
    businesses as well?

  • Comment number 10.

    We need to encourage more local production reducing our trade deficit today we do not have the business and production to take advantage of the lower pound. Therefore we need to reduce costs of setting up businesses and then support their export growth with a far more positive export credit system; this is where Germany has a massive advantage over UK.

  • Comment number 11.

    @ Jacques Cartier
    IR35 victims are "tin pot" companies.

    You clearly haven't actually read the legislation itself. It's perfectly possible for a consultancy firm of several partners to be caught by this idiotic legislation on a contract by contract basis. Equally it's really easy to navigate round it if you have the will and the right sort of advice.

    It has garnered not much more in revenue than its policing has cost, and the only clear winners out of the whole thing are the new band of lawyers who have made a fortune out of advising the 1.4 million people who work as freelancers.

    Whether a limited company structure, with one partner as bread winner and the other as book-keeper / company secretary both drawing minimal salaries and taking large dividends, is fair and reasonable is moot. If we had had a government which didn't keep tax rates low and used ever increasing NI contributions as a means of raising revenue, then the disparities wouldn't have been so enormous between employee and freelancer in terms of tax-take. Then again, an employee has pension contributions from his employer, sick pay, holiday pay etc. that have to be funded out of earned income for a freelancer.

    I'm quite sure many feel a little guilty at keeping such a high percentage of their fees, but then again not to circumvent it and pay a marginal tax rate of 52.8%, when they can, is asking a bit much of human nature, when it's 41% for everyone else.

    Please don't belittle the highly paid professional freelancers - without them this country would have ground to halt long ago.

  • Comment number 12.

    AS a contractor I move from contract to contract. Fundamentally this is no different than being a plumber or electrician, except I dela in idea, change, team building, financial modelling, etc. Only the most extreme of interpretations would say that I was an "employee" of any of the businesses that I work for. As a result of IR35 I had to incorporate, which means that I now have a whole added layer of company reporting and tax filing, whereas previously I was a sole trader, just doing my own personal tax returns. Now that I have a company it is easier for HMRC to deem me to be an employee of my company plus there is the risk that they may deem me to be an employee of any company I have a contract with and the consequences of all this is that my company will be forced to pay PAYE and Employer's NI: from which income? The same income that I was earning before as a self employed sole trader! At the same time the penalties for late filing of company returns has increased exponentially, with no regard for the size of company; any suppliers that I deal with now assess both my personal and company credit ratings & sign up different deals, e.g. for phones, between my "personal" and my "business" usage; my banking arrangements now fall into a whole new, more expensive category, even though essentially it is still just me out there trying to get contracts, working hard and earning the same as I was before. Since I have to provide personal guarantees for all my business transactions there is essentially no "limited liability". If the worst came to the worst and my company became insolvent or went bankrupt I would be be tarred by that but the consequences are purely personal on my family & I. I now have all the disadvantages of incporporation and sole trading and any advantages have been substantially removed. Any development of my business that may have occurred, perhaps working with another contractor to cover excess work, are now too risky. My business may be "tin pot" but I am exposed to far more risk than pre-IR35 than almost any other type of business. It is as if all the previous government wanted was to eliminate thsi sort of business and have us all working for large companies like good little drones.

  • Comment number 13.

    # 11. At 11:40am on 19 May 2010, 3rdViscountFareham wrote:


    > Whether a limited company structure, with one partner as
    > bread winner and the other as book-keeper / company
    > secretary both drawing minimal salaries and taking large dividends

    Those are the "tin-pot" brigade I was talking about. As long as
    they get it in the neck, I'm fine with it.

    > I'm quite sure many feel a little guilty at keeping such a high
    > percentage of their fees, but then again not to circumvent it and
    > pay a marginal tax rate of 52.8%, when they can, is asking a bit
    > much of human nature, when it's 41% for everyone else.

    So you admit they have been at it, then? Sounds like they need to
    get proper jobs.

    > Please don't belittle the highly paid professional
    > freelancers - without them this country would have ground to
    > halt long ago.

    Nonsense - most of those "tin-pot" outfits are just computer
    programmers, I've heard. If they truly work for the firm, they
    should be proper employees, not going around doing tax fiddles.

  • Comment number 14.

    #9 you are misinformed.

    The number of customers is irrelevant and nobody mentioned the word "business".

    For people who are in the real sense "self-employed" one of the major sources of work is through agencies. However, there is (separate) legislation that may deem the agency to be the employer in the relationship (and therefore liable for Employers NI), so the people doing the work are forced to run a limited company since the agency will not take chances on being seen as an employer.

    Effectively what this means is that the worker's income is paid into that Ltd Co.

    This means that if they are forced to run a PAYE (Schedule E) system then they become both the employer and the employee and so both forms of NI are payable on that one person's income.

    In a one-man band company it's obvious that there is one income being earned and those who are able to be genuinely self-employed in the technical sense, paying tax and NI under Schedule D) only pay Class 2/4 NI at 8% of income up to the threshold where higher rate tax starts.

    Compare that to someone nailed under IR35, doing pretty much the same thing and operating in the same way - instead of 8% they pay 23%. Not to mention that they also pay 13% extra on anything that is also paying higher rate tax.

    Bottom line is this. People get distracted by the word "business" - the apparent business is a Ltd Co that people who find work through agencies are forced to work through. The real issue here is that whatever structures are in place, in the end there is one PERSON with one income and taxing that as both Employer and Employee is just plain wrong.

    Thus IR35 is totally unfair and as I mentioned above, both the Lib Dems and the Tories' manifestos promised to get rid of it.

  • Comment number 15.

    # 12. At 12:07pm on 19 May 2010, JohnfromLondon wrote:

    > Fundamentally this is no different than being a plumber
    > or electrician, except I dela in idea, change, team building,
    > financial modelling, etc.

    We need plumbers and electricians to fix pipes and lights. We don't need more
    "ideas, team building, financial modelling" though, thank you very much. That's
    what I call "make work" projects. I'm surprised anyone is daft enough to
    buy it. But I need plenty of "change" (specially the metallic kind!)


  • Comment number 16.

    I've been looking into this IR35 malarky. It's intended to put a stop to "personal service companies", which are basically a tax fiddle, used by one-man-bands to avoid being treated the same as normal workers. We can't be doing with that - it was rife among computer programmers, so I'm told. They were basically normal workers, but they finagled things to become "disguised employees". Profits could be distributed as dividends, which are not subject to National Insurance payments. As the other bloke says, people were pretended to employ their family and housemates to gouge even more. They were acting like MPs!!!

    Anyway, anybody can see that a lot of abuse was going on there, and it's quite right that this loophole has been stopped up. I'll be writing to HoC/MP to try to make sure we don't open that particular can of worms again.

    For the good of the country, we all want less tax loopholes for dodgers to crawl through, not more.

  • Comment number 17.

    14. At 1:30pm on 19 May 2010, chris911t wrote:

    > For people who are in the real sense "self-employed" one of the
    > major sources of work is through agencies.

    There seem to be more little middlemen cropping up here!
    Does anyone actually do any work, or are they all just
    talking shops?

    > However, there is (separate) legislation that may deem the agency to
    > be the employer in the relationship (and therefore liable for
    > Employers NI), so the people doing the work are forced to run a
    > limited company since the agency will not take chances on being seen
    > as an employer.

    You're right - there's no difference betwen a middleman "employer" and a
    middleman "agency" - they both do little work and take a cut.

    > In a one-man band company it's obvious that there is one income being
    > earned and those who are able to be genuinely self-employed in the
    > technical sense, paying tax and NI under Schedule D) only pay Class
    > 2/4 NI at 8% of income up to the threshold where higher rate tax starts.

    It's mad - they pay even less NI than I do! We need to nail those
    cheats. On the other hand, we need electricians to make the lights work.
    It's when those computer programmers jump on the band wagon - we can't
    be doing with that!


  • Comment number 18.

    @ Jacques Cartier

    I'm sorry that you want to pick and choose points from what was intended as a serious contribution, and then wilfully mis-represent them.

    Freelancers appear in most of the professions. They are locums for doctors and priests, project managers for house builds, interim managers for expanding companies, change managers for those consolidating. The engineering industries need occasional help from draughtsmen, chartered engineers (such as myself) of all persuasions, while the oil industry requires everything from divers to meteorologists. The IT sector which represents around 22% of the total, is split from everything from blue-sky thinking designers to humble testers, with the programmer somewhere about half way, I suppose.

    Many, if not the majority, take on multiple short-term assignments, many of which overlap. This totally confuses the IR35 legislation because it runs counter to the way that its arhcitects 'thought' that freelancers work. Had they bothered to actually find out, then they might have come up with something that was more reasonably tailored to the industry and was fair and equitable. Instead, as usual, the 'Treasury knows best' - only they didn't, and produced ineffective legislation - and annoyed an awful lot of people unneccesarily.

    No-one is claming that the limited company route is really the right one for the freelancer, but you should know that the S138 provisions in 1983 effectively 'forced' them to incorporate. Again a rule designed by the Treasury for a market sector they didn't understand, and didn't consult.

    Post 12 makes one point that should definitely be considered when addressing any cahnges to the taxation rules : how do you start off with a consultancy business and manage to retain enough money in the company to give it a chance to expand with futrher personnel ?

  • Comment number 19.

    I dont see why Short Selling is even allowed. What social benefit does it bring? Who does it help?

    if you do not feel it is safe to invest in something without the need to hedge against it, dont invest, its clearly a dodgy investment. perhaps then investment banks will look for things other than the stockmarket and sovreign debt to "invest" in. How about investing in socially beneficial endeavours? A venture capital arm pumped with excess investment capital to invest in tomorrows small businesses, tomorrows green technology, transport infrastructure etc?

    Lots of things one can invest in other than stupid useless financial products.

    It is patently obvious all these convoluted products labelled CDS's and securities did NOT reduce let alone eliminate risk. They serve no other purpose than to shift ever increasing piles of make believe money around financial institutions at the expense of your average taxpayer.

    Find me a bank that predominantly invests its capital in socially useful vehicles and I will transfer my current accounts, busness accounts and savings to it!

  • Comment number 20.

    @ 3rdViscountFareham - it's usually best to ignore wind-up merchants like "Jacques Cartier". He's on of about half a dozen off-putting obssessives on Robert's blogs (four of whom appear to be doing some actual work today), all making grandiose claims about their own business prowess and offering mad solutions to current problems, like a return to using seashells as currency.

    The name would imply he's French-Canadian, which might go some way to explaining his abrasive attitude towards the English.

  • Comment number 21.

    ... or Jacques Cartier suggesting we "need" sparks but don't need programmers. Perhaps a case of "Life on Mars" in reverse?

  • Comment number 22.

    Mr Cartier is ironically (& I'm sure quite unintentionally) making a legitimate point against IR35. Individuals who are self-employed should be treated as such, not forced to incorporate because state employees don't understand how business works. Of course, in the past, there have been abuses, as there are in all tax processes, but the attempts to remediate these abuses (totally unquantified other than by Treasury guesswork) is completely disproportionate in its outcomes. Unfortunately Mr Cartier also does not understand how reliant many businesses are on contractors and seems to equate "work" with physical activity - perhaps he digs ditches for a living? If I go into a company for 6 months and rebuild their internal reporting systems, processes and delivery team and assist them in understanding their business better, that is a better use of funds than them employing me "permanently" as I fund my own annual leave, any sick leave, have no employer pension contribution, no redundancy liability, and no employers NI liability. Much of UK Inc that is still working is working in services, including any accountants, lawyers, accounts clerks, programmers, and so on, regardless of whether they are "permanently" employed or contractors/temps/consultants - even the HMRC & Treasury blokes who dream up their schemes. It was easy to hit middle class contractors, but notice how little they did to tackle non-doms?
    Finally, contractors are at the cutting edge of the employment market as they can be easily "disposed of" when cutbacks are required, unlike "permanent" employees who can stick like limpets to their jobs, even when no longer required (look at the BA disputes - not to mention those likely to come from civil service cuts). We live & breathe in a market that is extremely competitive and if we don't deliver what our customers want and need will soon be without customers! Our incomes are extremely responsive to market conditions, unlike "permanent" pay and no-one "owes us a living". If Mr Cartier really thinks that "ideas" are not needed I hope that he isn't running anything of significance!

  • Comment number 23.

    Jacque Cartier your post are both unnecessarily offensive and lacking in knowledge.

    There are many examples, computer programmers, interim managers, quantity surveyors who take assignments often for 3-9 months. These people do not work for severally projects at the same time but move from one project to another often with several weeks or months gap between projects.

    These people do not regard themselves as employees of the companies the assignment are with nor would those companies consider them employees either, at best they are self employed consultants and always purely temporary.

    What IR35 does is penalise people for wanting to work for themselves and take control of how they work and for whom they work. As for calling them tin pot businesses clearly you have no respect for small british companies, who constitute the majority of companies in the UK. I suspect that either you work for a big institution who could not care less for the small companies or a civil servant who think we, the private sector, are all beneath you

  • Comment number 24.

    # 18. At 2:38pm on 19 May 2010, 3rdViscountFareham wrote:

    > @ Jacques Cartier

    > I'm sorry that you want to pick and choose points from what was
    > intended as a serious contribution, and then wilfully mis-represent > them.

    Sorry doesn't cut it, 3rdViscountFareham. There is a serious
    issue here.

    We need to simplify the tax system without granting a tax
    holiday to thousands of tin-pot one-man-bands. There
    is a huge hole in the public accounts, and freebies for
    certain sectors, while the rest of us suffer, is
    very unhelpful.

  • Comment number 25.

    Put simply, If you tax me, I will not vote for your change in the voting system.

    RealPolitik!

    Why should we pay the bankers bills?

  • Comment number 26.

    # 23. At 4:14pm on 19 May 2010, Justin150 wrote:

    > These people do not regard themselves as employees of the
    > companies

    We don't care what they think - it's what we taxpayers think
    that matters. Some of them (as you very well know) are tax dodgers,
    out to make a scam - that's why the rules were made. Some of them
    even pretend to hire their families on giant wages for doing
    little bits of paperwork, so don't come here spouting this
    nonsense that they are all good coves. Many, many of them
    fiddle their VAT: you know how it works - even lunch or
    dinner is classed as a "meeting" etc.

    > What IR35 does is penalise people for wanting to work for themselves
    > and take control of how they work and for whom they work.

    As long as they pay their FULL whack, I have no problem with that. But
    if I find that they've been scamming, as they have in the past, we'll
    come down on them very hard.

    > As for calling them tin pot businesses clearly you have no respect
    > for small british companies,

    Last time I checked, you need "company" to make a company.

  • Comment number 27.

    22. At 3:57pm on 19 May 2010, JohnfromLondon wrote:

    > If Mr Cartier really thinks that "ideas" are not needed I hope
    > that he isn't running anything of significance!

    Oh, you know, spacecraft, supercomputers, that sort of thing.
    Small stuff, really, compared with "ideas, team building ..."!

  • Comment number 28.

    # 18. At 2:38pm on 19 May 2010, 3rdViscountFareham wrote:

    > Freelancers appear in most of the professions.

    I know that. And they are all welcome to ply their trade, as long as they don't try to pass off steady work as self-employment. We can't go back to the old days, when every Tom, Dick and Harry had a pretend firm that they stacked their tax off against. What's your solution, that lets the real "Selbständiger" get an even break, with letting all the fiddlers loose in the treasury?

    Instead of just harping negatively from the sidelines, like Tim and Jack, why don't let me know - what's the right balance?

  • Comment number 29.

    Monsieur Cartier, it is very simple:

    Nobody should pay both Employers AND Employees NI on their income. Period.
    That is why IR35 is wrong.


    The so-called "dodging" of paying dividends is as a result of the fact that the enforced Ltd Co leaves a choice of extremes - dividends or PAYE (and PAYE where you are both the employer and the employee for tax purposes).

    And most use a combination of the two in paying a salary (on which of course they pay both forms of NI) and top it up with dividends.

    You should also bear in mind that they are largely unable to claim the benefits normally associated with NI since becoming "unemployed" when you are a director of you won company is difficult.

  • Comment number 30.

    To anyone offended by my use of the term "tin-pot business", I profusely appologise.

    From now on, I'll simply call them "Mom and Pop operations", as they do back in Canada. I hope that is a sufficiently neutral term, as it implies a tiny business which is designed to cream off the tax advantages of being a "company" without the risk of putting up your own money.

    Is that about right?

  • Comment number 31.

    29. At 7:01pm on 19 May 2010, chris911t wrote:

    > The so-called "dodging" of paying dividends is as a
    > result of the fact that the enforced Ltd Co leaves a
    > choice of extremes - dividends or PAYE (and PAYE
    > where you are both the employer and the employee
    > for tax purposes).

    Look, Chris, one would have to be surprisingly naive
    to think that these "Mom and Pop Operations" weren't
    at it.

    Tell me, hand on heart, that they weren't on the make
    with these "pretend" firms. All of the computer guys
    only had one firm, and they worked for it for years and years!
    That was how it was; every Tom, Dick, Harry
    had thier own little
    set up, they were all "employees" in all
    but name and they all got away with it. Tell me if I'm wrong.
    Please? Pretty please? You know I'm right, eh? I should know -
    I had my own set-up (strictly above board, like, unlike
    many others). And I can tell you a few tricks, as well.

    So nope - if I have to pay, theyhave to pay; we're all in this
    togther, and I don't want little gangs getting a free tax holiday
    at my expense. No way!!

  • Comment number 32.

    I have a horrible feeling that this man is not right for the job..I know he is rich,well educated,young but to my mind does not have any more clue than I have about the macro economics of running a country..but in the spirit of keeping the country going lets see how many more are out of work because of his policies..lets say in 2 years..my guess would be around a million directly attributable

  • Comment number 33.

    Jacques

    Nobody is "at it" - you seem determined to ignore the injustice of people paying 24% NI on their income and simply refuse to understand that the company is forced on people by the existence of Section 134 and it's subsequent revisions.

    Most of these people would be happy to be self-employed in the Schedule D sense and be done with it, but that is simply not possible under the convoluted tax regime we live under.

    You really need to get this and stop guessing that it's about tax dodging - most of these people pay a lot of tax and would pay a lot more if they didn't have to keep turning down work due to this self-defeating piece of legislation.

    I can put my hand on my heart and tell you that that IS what is going on here. Most people have no problem paying the right amount of tax but this is clearly the wrong amount.

    We will see what the emergency budget holds and in the meantime I feel that there is no point in pursuing this further with you.

  • Comment number 34.

    Jacques Cartier?

    I've come across numerous employees with a downer on contractors/consultants. Bitter twisted fingers pointer who aren't happy with their choice to be a permanent employee, but without the courage to take the step to go self employed with all the risk and uncertainty it brings. Thing is when you confront them with the choice they always back down and cite I have a mortgage to pay or I need a regular income I have a family...etc.

    Contrary to your vitriolic accusations most contractors are genuinely self-employed. We have to source our own work usually on short term 3-12 month assignments, with various organisations. Usually the work is in specialist subjects that we bring a degree of expertise or skill to. It is a very competitive market, you get thrown in the deep end and left to sink or swim, if you can't cut the mustard you'll be out on your backside without any notice and your work will soon dry up as your name will get around the network. In comparison with being employed there are no safety nets; paid holidays, sick pay, pensions, training, inter alia.

    Your so called "tin pot" companies have my respect, at least they have the courage to put their skills out there to be counted and take the risks associated with that. I guess here it is a case of those that can do, those that can't throw stones. If you believe in your abilities that much why don't you stand up and see if you can cut it, instead of belittling what you have obviously limited understanding of.


  • Comment number 35.

    34. At 10:48pm on 19 May 2010, no1important wrote:

    > We have to source our own work usually on short term 3-12
    > month assignments, with various organisations.

    Yeah – right ... like the bloke above who just calls up “agencies”!
    Look, a 12 month assignment is called "a job"!


    > Usually the work is in specialist subjects that we bring a degree of
    > expertise or skill to.

    The main expertise appears to be tax dodging, and whining about it.

    > Your so called "tin pot" companies have my respect, at least they
    > have the courage to put their skills out there to be counted
    > and take the risks associated with that.

    It's hardly an achievement to just “get a job” or “start a mom and pop operation” etc. For goodness sake, try to keep some perspective here. Anybody can do that in 120 seconds.

    > If you believe in your abilities that much why don't you stand up and
    > see if you can cut it, instead of belittling what you have
    > obviously limited understanding of.

    Rather than slinging muck around, why can't you accept that we are all in this together? I'm sick of people popping up here demanding tax reductions for this, that and the other – the “money's all gone”, my man! Starting one of these little firms is a 10 second thing, and you just pop down the "agency" to be a cleaner or a computer programmer etc.

  • Comment number 36.

    As I said Jacques Cartier you don't know what you are talking about furthermore it is you that is whining not me and you slinging the muck.

    Yes the money has all gone, because labour spent too much creating public sector non jobs, supporting those that don't work and in maintaining final salary pensions. At the same time they alienated the private sector that was paying for their public sector behemoth. When the recession came it was the private sector that bore the pain and tax receipts have fallen whilst public sector spending has increased. Before you say banks the £163bn shortfall does not include banks bailouts. Private sector has tightened it's belt and done what it can to recover. Many of your so called 'tin pot' outfits will have been the first to have been affected in downsizing.

    At the sametime the public sector has continued to expand as has public sector pay. What the country needs now is a redress of the balance, a smaller public sector, incuding removal of the millstone of final salary pensions, and a tax and legistlation regime that supports growth in the private sector, attracting an inflow of overseas investment and business and an increase in real jobs over non jobs. The 'tin pots' are a significant factor in what will make us competative and give us a fluid workforce.

    Incidentally minimising your tax bill is not a crime, it is a right and an expertise, given that under Labour the UK tax book has become one of the largest and most complex in the world.

    So unless there is any substance to your next posting instead of second hand rhetoric my discussion with you on this matter is finished.

  • Comment number 37.

    actually many of the contractors are probably actually in law "employed" Employment contracts need not include all the terms and the courts will apply the necessary test. The problem is that HRMC invented their own idea of employment status' I would love to see the real what the real employer would so if the computer programmer sent his mate in to work or refused to do what his real boss said. Other people like plumber genuinely have a contact for service and can send their mate and as everybody knows turn up when they like (but they MUST bring their tools.

  • Comment number 38.

    To return to the main topic... poor young GO, he doesn't understand that every allowance for 'enterprise' 'small firms' ect will quickly be exploited by the accountants of firms of all sizes to avoid tax..... oh but he does... that's why he is proposing it. Is it part of the cuts that minsisters don't honour their host by dressing for a formal dinner... I recall JGB was attacked for this faux pas. Will they all adaopt co-olition tunics Mao style?

  • Comment number 39.

    # 38. At 1:13pm on 20 May 2010, cping500 wrote:

    > To return to the main topic... poor young GO, he doesn't
    > understand that every allowance for 'enterprise' 'small firms' ect
    > will quickly be exploited by the accountants of firms of all
    > sizes to avoid tax.....

    He's just a boy, and he doesn't realize how grasping these dinkie
    operations can be. God, some of them would even claim back the VAT
    on a donut! It's no joke, I've seen them..

    And if you pull them up about it, they get all squarky about how
    "well they've done"! Talk about blowing your own trumpet...
    Nah... tax them high.

  • Comment number 40.

    I think M. Jacques Cartier is probably well known to a lot of us under other sobriquets, and is thoroughly enjoying himself during a ban elsewhere.

    My apologies to all for rising to the bait (and incidentally I claim my £5)

    Incidentally cping500, you're quite wrong about HMRC invening their own employment status. IR35 quite specifically applies the Self-Employment criteria which is a complex web of case law built up over 100+ years. To knock one of your points on the head, providing your own tools is not necessarily a pointer in either direction. A famous case (whose name I've forgotten) pointed out that a freelance vision mixer in the TV industry couldn't reasonably be expected to cart round his own mixing console ! He won the case at appeal. Interestingly for years the IR were quoting the judgement at the High Court (overturned on appeal) as a guide to their own staff. Naughty.

  • Comment number 41.

    Well good news - IR35 is to go. Thanks God for that.

    One last point re the so-called "employment status tests" is that but for the existence of national Insurance we wouldn't need them - and IR35 is all about NI not tax.

    When it was introduced it was a genuine levy, in return for your money you got entitlement to unemployment benefit, the NHS and a decent pension. Now if you don't qualify for JSA you get benefits from a tax-based fund instead, the NHS is free even to tourists and the pension isn't worth a damn. So NI is now income tax in all but name.

    If we simply had rates of tax that applied to all worers all this nonsense would go away.

    And finally... Employer's NI. Ugh. A tax on employing BRITISH-BASED WORKERS! In the global village, how can that be justified? No wonder there are so many Indian based call centres when it costs you 13% more to employ someone in this country to do the work before you even start with any other comparisons.

    NI has to go in all it's forms - let's hope the coalition's tax simplification does that.

    In the meantime... I'm off for a glass of champagne! :)

 

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