4 ms·

If someone's really freelance i.e. running their own business, then IR35 doesn't affect them. IR35 is meant to target disguised employment i.e. someone turning

If someone's really freelance i.e. running their own business, then IR35 doesn't affect them. IR35 is meant to target disguised employment i.e. someone turning up to do the same job as people sitting at the next desk who are salaried. The latest IR35 changes moved responsibility for policing IR35 onto the client (for large companies) engaging the contractor's company so these large companies started taking notice as they had a new risk Even then it's still possible to be outside IR35 - provide your own hardware, fix issues you create at your own cost etc. The big thing that originally brought in IR35 (20 odd years ago) is contractors spending 5yrs at companies essentially doing the same job as permit staff, which avoiding paying employers NI etc.

Silhouette 5y ago
What you are describing is the theory. What the rest of us are talking about is the reality. Since the recent changes, large numbers of freelance or contract positions are being deemed inside IR35, often without a proper assessment and in some cases even forced into an umbrella arrangement. Whether or not they were actually disguised employment does not matter to many clients affected by the changes. The result is that even genuine independents are ending up with all the tax implications of employment and yet none of the benefits, while still carrying all the risks and overheads of operating as an independent business, the worst of both worlds. Obviously that is not an attractive arrangement and that is why many people have gone permanent and many clients have had to become employers, losing the useful flexibility on both sides. A consequence of this is that the overall market for independent flexible labour has also shrunk, which makes it less efficient for clients still wanting to use it properly and increases risk and puts downward pressure on rates for the freelancers and contractors. No doubt there was always some abuse of the system for disguised employment purposes, but the evidence has always been sketchy about how much that really happened, and the changes in recent years have also hit the legitimate part of the independent workforce hard even if it was not the intended target.
- youngtaff 5y ago
  I'm aware of the reality as I'm a freelancer who has by and large remained outside IR35 (via good legal / financial advice, and careful selection of clients) When I was employee I worked at places were there were many contractors who were essentially disguised employees and being paid for their time, rather than on a project basis with anything at risk Who knows how we ever got to the position of nurses, and lorry drivers being employed on a limited company basis - probably because the 'employers' wanted to avoid the NI bill

Silhouette 5y ago

What you are describing is the theory. What the rest of us are talking about is the reality. Since the recent changes, large numbers of freelance or contract positions are being deemed inside IR35, often without a proper assessment and in some cases even forced into an umbrella arrangement. Whether or not they were actually disguised employment does not matter to many clients affected by the changes. The result is that even genuine independents are ending up with all the tax implications of employment and yet none of the benefits, while still carrying all the risks and overheads of operating as an independent business, the worst of both worlds. Obviously that is not an attractive arrangement and that is why many people have gone permanent and many clients have had to become employers, losing the useful flexibility on both sides. A consequence of this is that the overall market for independent flexible labour has also shrunk, which makes it less efficient for clients still wanting to use it properly and increases risk and puts downward pressure on rates for the freelancers and contractors. No doubt there was always some abuse of the system for disguised employment purposes, but the evidence has always been sketchy about how much that really happened, and the changes in recent years have also hit the legitimate part of the independent workforce hard even if it was not the intended target.

youngtaff 5y ago
I'm aware of the reality as I'm a freelancer who has by and large remained outside IR35 (via good legal / financial advice, and careful selection of clients) When I was employee I worked at places were there were many contractors who were essentially disguised employees and being paid for their time, rather than on a project basis with anything at risk Who knows how we ever got to the position of nurses, and lorry drivers being employed on a limited company basis - probably because the 'employers' wanted to avoid the NI bill