FreelanceUK readers, your final call to action

It’s inevitable. It’s a ‘done deal’ The Treasury won’t listen. So the first big question facing FreelanceUK readers today, writes Kate Cottrell of IR35 advisory Bauer & Cottrell, is:

Why bother responding to the off-payroll consultation?

In short, if you are enjoying your freelance contracting career by running your own company this is probably the biggest threat to your future you have yet to face

Why not spend half an hour to have your views considered? You do not have to answer all the questions posed by HMRC/HMT in the consultation, and can simply give your view (anonymously if preferred) in a few paragraphs, by emailing: offpayrollworking.intheprivatesectorconsultation@hmrc.gsi.gov.uk

Many commentators consider this is a ‘cut and dried’ situation and that you cannot make a difference, but the government has said ‘no decisions have been taken’ and there is no reason not to try.

What else can I do?

Now is the time to prepare. If the IR35 rule changes go through for the private sector in April 2019, you may be looking at just six months more of carefree freelance contracting from now onwards.

Are you really confident of your IR35 position? Does your client agree with you? What is your agency doing and are they working on introducing new systems? This is absolutely not the time to keep your head down. Bear in mind that, in the public sector, way before the reforms were formally introduced, a lot of organisations started to deem their contractors as ‘inside IR35,’ in a bid to minimise the headache for their organisation, on and after commencement day.  

Are you ready for a pay cut?

Do you know what your financial position will be if your client declares that IR35 applies and it, or the agency, deducts tax and NIC from your invoice? Where will the employers’ NIC come from? Are they going to change your day rate? The answers to these questions are vital for businesses and individuals.

Will you be happy in an umbrella company?

The rule changes in the public sector have resulted in thousands being forced to operate through umbrella companies. How will this affect you if the same happens in the private sector? You are likely to earn even less than continuing with your limited company inside IR35. It is highly unlikely that you would be able to choose the umbrella company you use. How will you know if the umbrella company is compliant with tax and NIC legislation? Would you be liable if the umbrella company gets everything wrong? What will you do with your limited company?

What to do now

  • Get your views heard – respond to the consultation
  • Properly review your IR35 position
  • Use online calculators to work out your potential new bottom line
  • Raise the issue with your agency and your client – what are they planning?
  • Don’t be tempted by any ‘solutions’ being offered

So a dozen questions loom large for you and about half a dozen actions too. But start now, because knowing you have prepared and planned for these changes whatever emerges in Budget 2018 in November will not be something you regret. Not doing anything might be.

Editor’s Note: Related –

More IR35 reform? HMRC’s own research puts the case in tatters

Where HMRC’s new IR35 consultation is less than honest

Call to fix three IR35 reform issues before any rollout

 

9th August 2018

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