If a company classifies you as inside IR35 does this mean that you are classed as their employee?

Potbellypig

autoeng68 said:

I'm not trying to get an answer i like, i'm just trying to get an answer.
Seems to me the situation where you work as an employee, and are taxed as an employee, but dont have any employee rights is a situation that's been seriously overlooked with this new legislation which is why i'm struggling to believe thats actually the case.
I totally agree these changes to IR35 will mean no one can be working for a big company and still be self employed. The fact that a Tory government (who are meant to help and support self employed) have brought this in is just outrageous!

The actual system of contracting has been abused for the last couple of decades to be fair. It was never going to stay as it was. Many years back what actaully happened was you set up a Ltd company, invoiced, spent it all, declared the company bankrupt and then repeat. They put a stop to people being able to do that though.

I wouldn't go as far as saying no-one, but the changes have and will make it much more difficult. On the flip side, some companies are now employing rather than contracting, but of course for many the wages will be a lot lower.

autoeng68

Marcon said:

autoeng68 said:

I'm not trying to get an answer i like, i'm just trying to get an answer.
Seems to me the situation where you work as an employee, and are taxed as an employee, but dont have any employee rights is a situation that's been seriously overlooked with this new legislation which is why i'm struggling to believe thats actually the case.
I totally agree these changes to IR35 will mean no one can be working for a big company and still be self employed. The fact that a Tory government (who are meant to help and support self employed) have brought this in is just outrageous!

You've completely misunderstood what IR35 is about.

Can you please explain then? (and dont just send another link)

DoctorStrange

autoeng68 said:

So as i understand it if you take an "inside IR35" position then:-

• You have to pay the same tax and NI as the permanent employees and can no longer have "self employed" status
• You have no employer and therefore no employment rights

Anyone "inside IR35" will therefore be cheaper to employ, and the employing company will not have to give them any benefits (holiday pay, pension etc)
Call me cynical, but i can see lots of companies creating "inside IR35" positions in the not too distant future as they can employ people cheaply and dont have to give them any benefits!
Also not surprised that this situation is being introduced by the current Government!

Correct.

"Inside IR35" means you're treated as an employee *for tax purposes only*.

The Govt admitted in the consultation that there's no link between employment taxation and employment rights.

That said, the rules for determining one's employment status are the same for both rights and taxes, so by definition if a company provides reasons you're inside, you can always present those same reasons back to then when claiming employment rights - they can hardly argue against themselves!

autoeng68

That is exactly my argument! If they have assessed your status and come to the conclusion that you are an employee for tax purposes then that same criteria should means that you are actually their employee and you have employment rights.
The main difference between Inside and outside IR35 is whether they are employing a company to provide services (Outside IR35, you have the right to send a substitute) or are directly employing a specific person (Inside IR35). 
Therefore effectively an Inside IR35 role should not exist, they should either be Outside IR35 or directly employed by the company.
Dont get me wrong i dont believe everybody wants to have employment rights, I worked for many years outside IR35 on the basis that i was more tax efficient and was therefore able to take home more money and keep more money in the business, which luckily i did as i've needed it the last year to support me through the pandemic as i have had no work and very little government support (i'm one of the 3 million excluded)
The fact that you can be employed by a company at arms length (through an intermediary company) to avoid giving you employment rights, but in that situation the employee is not getting any financial advantage i think is outrageous.
Its obviously going to be popular with companies, in the Automotive industry most companies have made a blanket decision and put all positions as inside IR35 already and very few are offering direct employment.

Potbellypig

autoeng68 said:

That is exactly my argument! If they have assessed your status and come to the conclusion that you are an employee for tax purposes then that same criteria should means that you are actually their employee and you have employment rights.
The main difference between Inside and outside IR35 is whether they are employing a company to provide services (Outside IR35, you have the right to send a substitute) or are directly employing a specific person (Inside IR35). 
Therefore effectively an Inside IR35 role should not exist, they should either be Outside IR35 or directly employed by the company.
Dont get me wrong i dont believe everybody wants to have employment rights, I worked for many years outside IR35 on the basis that i was more tax efficient and was therefore able to take home more money and keep more money in the business, which luckily i did as i've needed it the last year to support me through the pandemic as i have had no work and very little government support (i'm one of the 3 million excluded)
The fact that you can be employed by a company at arms length (through an intermediary company) to avoid giving you employment rights, but in that situation the employee is not getting any financial advantage i think is outrageous.
Its obviously going to be popular with companies, in the Automotive industry most companies have made a blanket decision and put all positions as inside IR35 already and very few are offering direct employment.

There are still other perks to contracting and flexibility is the main one in my opinion. In today's world especially, contracting is absolutely perfect for dropping in and out of work whenever it suits you. Taking holidays (just days off these days I suppose), dropping kids off anywhere/anytime, not having to ask for dentists/doctors appointments, starting and finish when you want etc etc.

I'm in the automotive industry and I am outside, so not all. They have also offered loads of permanent positions within the company to some of those who were deemed inside.

If you are being told to that you are inside and they are treating you more like an employee then I'd work on the flexibility.

autoeng68

Who do you work for then? i'm looking for a new position and would consider either an outside IR35 or a permanent position i'm struggling to find anything at the moment.