Re: I agree with AC.
And - again - if the risk is there but the rest is the same then you raise your prices to compensate. Exactly what you're threatening to do is exactly what this is designed to do - get you to pay more tax, thus charge more to cover yourself, which encourages companies to use permanent staff rather than contract staff.
Permanent staff are a) better are clearing the job queues for longer periods, b) easier to tax, c) not subject to third-party, shell-companies and other schemes (not suggesting they are illegal or even immoral) in order to shufty tax around.
The point of this, and the threat of contracted staff "becoming permanent staff" or even moving out of the country? That's the whole idea. Less contracted staff is much easier to tax and manage and audit, which is why the taxman likes it and wants to go that way.
As it is, you yourself have created a shell company and made them jump through hoops. That costs. From your point of view, sure, it's a solution. From the taxman's point of view, you buggering off to another country (anything you try to take with you or send back that might amount to a wage would be taxed) is actually in his favour, and someone will have to hire several permanent staff generating equivalent tax income to replace you.
I've played the game and IR35 was my warning to get the hell out of there. And, yes, at several points I was actually doing exactly what IR35 was designed to stop - disguised employees. When there was a low point and I fell back on long-term customers with long-term demands, it did come down to me, working for them, via a contract, for a year or more. That wasn't to say I wasn't actively seeking other clients, or doing bits here and there, but exactly what the taxman DIDN'T want, that's what happened, and that's why IR35 came in.
I used to calculate my own tax returns. I'm a mathematician, by education. I gave up and - after a while - went permanent. I can't say it hurt my career or my clients at all (in fact, my second employer after that was a client who bought me full-time from another employer because they couldn't do without me and couldn't hire an equivalent).
When the taxman is actively working against what you're doing, it's pretty much a one-way street. You're going to get taxed, sooner or later. This may not be to your direct benefit, but that's what tax basically is anyway.
It's ignorance to assume that tax laws are formed to make your life easy or allow you to live and work exactly how you would like. They are formed to tax you, and to discourage behaviour they don't want you to be doing (even if it's not "illegal"). They don't want you working long-term in full-time positions as a contractor for a pittance of clients. It gives them lots of hassle, and was historically used for tax evasion.
If you can prove that's not you, then you're sorted.
If you can't, then you're going to get taxed.
If that tax is unavoidable because of the way you do business, you need to raise your prices.
If that prices you out of the market, it prices all of your direct competitors too.
If you need to change the way you do business because of that, that's what the tax is DESIGNED to do.
Hate it, by all means. I mean, it's tax. Please do.
But it's doing exactly what it was designed to do: Make you prefer permanent employment or move out of that particular taxation method - both of which mean their lives are simpler and the tax has done its job.
Biting the hand that feeds IT
