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You're making two contradictory claims. First, you say big consultancies would face similar crackdowns if they paid their workers like contractors. But that ig

You're making two contradictory claims. First, you say big consultancies would face similar crackdowns if they paid their workers like contractors. But that ignores the fact that big consultancies already do far worse - they pay those workers far less, charge the client multiple times more, and funnel profits through complex corporate tax minimisation schemes. And somehow, that's fine? > Pay low, pay no income tax, national insurance or employers national insurance, and take the rest in dividends. That's a misleading argument. Taxes aren't hypothecated - it doesn't matter if it's labelled income tax, NICs, or dividends. What matters is overall tax contribution relative to the full value of the work delivered. A contractor's small business typically generated more total taxable value - as both personal and business tax - compared to the portion of client fees that actually passed through to consultancy employees and stayed in UK tax channels, once the consultancy layered on profit extraction, internal costs, and offshore routing. Secondly, this "tax avoidance" narrative was easy to sell because most people don't understand how the tax system works - and because the independent contractor is visible, familiar, and easy to resent. They look just like the person judging them - maybe even sit at the next desk - but they're earning more and keeping the rewards of their own work. It's far easier to stir anger at that visible success than to explain how large firms quietly charge clients £1,000 a day for the same job, pay the employee £45k, and funnel the surplus offshore. The real extraction happens invisibly - while the system trains people to aim their anger sideways, not upwards. > Large companies are just harder to control. That's no excuse. They could have been included under IR35 - they weren't, because the system is designed to shield institutional profit chains, not treat all labour pipelines equally. And no, it's absolutely about class - because IR35 rests on the assumption that a skilled, independent worker cannot possibly run a legitimate business, only a disguised employee gaming the system. That's structural classism - whether you acknowledge it or not.

MattPalmer1086 1y ago
I think we will have to agree to disagree! I fundamentally don't think IR35 is a class-based attack on the working class. It was introduced by a Labour government. The consultancies don't pay their workers far less than they could get in a similar position as an employee of the client - or they would leave! They do charge the client a lot more of course - that's their profit, deserved or not. While I totally acknowledge that large multinationals play fast and loose with tax, it's a totally different problem than going after small fry. I would welcome efforts to crack down on that, it's just very, very hard to pull off. So my view is simply that IR35 was the taxman trying to bring in more revenue by targeting a common tax avoidance scheme used by people they thought would be easy to target. And then executed it incredibly poorly.
- varispeed 1y ago
  The class dynamic isn't negated just because a Labour government introduced IR35 - Labour has historically protected institutional labour structures, not independent working people. The origin doesn't matter, the outcome does: IR35 crushed the ability of skilled individuals to operate as businesses, while shielding corporate profit flows. > The consultancies don't pay their workers far less than they could get as employees of the client — or they would leave! They do charge more, of course — that's their profit. Yes - and when those workers realised they were undervalued, they left to set up their own businesses. That was precisely one of the points IR35 was lobbied for: to stop that exodus and lock talent back into captive corporate pipelines. This was never about tax - it was about control over the market. > I would welcome efforts to crack down on that, it's just very, very hard to pull off. No - they could have simply included large corporates under IR35. That was a deliberate exclusion, not a technical challenge. > My view is IR35 was the taxman trying to bring in more revenue by targeting a common tax avoidance scheme used by people they thought were easy to target. Running a legitimate business isn't a "tax avoidance scheme." Contractors paid personal and corporate taxes - and proportionally, they paid far more onshore than the consultancies replacing them. IR35 is a market capture - one of the most efficient, targeted consolidations of skilled labour the UK has seen. And it works.
  - MattPalmer1086 1y ago
    Huh, in my workplace we use a lot of contractors and also use consultancies. They serve different purposes, for us at least. The contractor market is hardly dead as a result of IR35 - even though it is a huge pain in the ass for everyone. I never said that running a legitimate business is a tax avoidance scheme. But I can count on the fingers of one hand the number of contractors I know whose legitimate businesses pay employers national insurance (if outside IR35). From HMRC's perspective, that is a gap they would like to close. Anyway, good to hear different perspectives - we aren't going to agree, but I enjoyed discussing it with you.
    - varispeed 1y ago
      "The contractor market is hardly dead" - no, it's captive. People still need income, but now they're herded into umbrella schemes or inside-IR35 roles that offer none of the rights of employment and none of the autonomy of business ownership. Independence wasn't taxed - it was dismantled. Contractors and consultancies are the same thing, just at different scales. Both supply labour-for-hire. The only distinction is scale and ownership. IR35 only applies if the worker owns the business. That's protectionism. The employer NIC line is a classic diversion. Taxes aren't moral based on the label. What matters is total contribution - and many contractors paid more in combined personal and business tax than consultancy employees and their firms ever did. "From HMRC’s perspective…" That perspective is the problem. It's not built to protect the taxpayer and foster fair economy - it's built to shield corporate structures, outsource enforcement risk, and target the smallest players who can't fight back

MattPalmer1086 1y ago

I think we will have to agree to disagree! I fundamentally don't think IR35 is a class-based attack on the working class. It was introduced by a Labour government. The consultancies don't pay their workers far less than they could get in a similar position as an employee of the client - or they would leave! They do charge the client a lot more of course - that's their profit, deserved or not. While I totally acknowledge that large multinationals play fast and loose with tax, it's a totally different problem than going after small fry. I would welcome efforts to crack down on that, it's just very, very hard to pull off. So my view is simply that IR35 was the taxman trying to bring in more revenue by targeting a common tax avoidance scheme used by people they thought would be easy to target. And then executed it incredibly poorly.

varispeed 1y ago
The class dynamic isn't negated just because a Labour government introduced IR35 - Labour has historically protected institutional labour structures, not independent working people. The origin doesn't matter, the outcome does: IR35 crushed the ability of skilled individuals to operate as businesses, while shielding corporate profit flows. > The consultancies don't pay their workers far less than they could get as employees of the client — or they would leave! They do charge more, of course — that's their profit. Yes - and when those workers realised they were undervalued, they left to set up their own businesses. That was precisely one of the points IR35 was lobbied for: to stop that exodus and lock talent back into captive corporate pipelines. This was never about tax - it was about control over the market. > I would welcome efforts to crack down on that, it's just very, very hard to pull off. No - they could have simply included large corporates under IR35. That was a deliberate exclusion, not a technical challenge. > My view is IR35 was the taxman trying to bring in more revenue by targeting a common tax avoidance scheme used by people they thought were easy to target. Running a legitimate business isn't a "tax avoidance scheme." Contractors paid personal and corporate taxes - and proportionally, they paid far more onshore than the consultancies replacing them. IR35 is a market capture - one of the most efficient, targeted consolidations of skilled labour the UK has seen. And it works.
- MattPalmer1086 1y ago
  Huh, in my workplace we use a lot of contractors and also use consultancies. They serve different purposes, for us at least. The contractor market is hardly dead as a result of IR35 - even though it is a huge pain in the ass for everyone. I never said that running a legitimate business is a tax avoidance scheme. But I can count on the fingers of one hand the number of contractors I know whose legitimate businesses pay employers national insurance (if outside IR35). From HMRC's perspective, that is a gap they would like to close. Anyway, good to hear different perspectives - we aren't going to agree, but I enjoyed discussing it with you.
  - varispeed 1y ago
    "The contractor market is hardly dead" - no, it's captive. People still need income, but now they're herded into umbrella schemes or inside-IR35 roles that offer none of the rights of employment and none of the autonomy of business ownership. Independence wasn't taxed - it was dismantled. Contractors and consultancies are the same thing, just at different scales. Both supply labour-for-hire. The only distinction is scale and ownership. IR35 only applies if the worker owns the business. That's protectionism. The employer NIC line is a classic diversion. Taxes aren't moral based on the label. What matters is total contribution - and many contractors paid more in combined personal and business tax than consultancy employees and their firms ever did. "From HMRC’s perspective…" That perspective is the problem. It's not built to protect the taxpayer and foster fair economy - it's built to shield corporate structures, outsource enforcement risk, and target the smallest players who can't fight back