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  • So when is somebody a genuinely self employed contractor offering out his or her service is, or whether they really employees of a company and on a very sort of high profile level?

  • We've seen some broadcasters over the course of the last couple of years who really fallen foul of this, the most recent one being TV presenter Ayman Homes, who work for ITV on he's lost a case against H M Revenue and Customs because they say, Really, he was an employee of ITV and that he was using a vehicle, a company vehicle as a way, you know, perhaps not paying as much tax as he would if it was fully on P A y E.

  • But it's not just relatively Heidi paid broadcasters this effects, I mean, for example, one of the things that really first put me onto this was a lesser of a sort of really quite upset letter I got from someone saying 15 years ago, Nigel, I started my own niche company.

  • Providing I t on Project Control service is I worked over the years for 25 different companies.

  • They are my clients.

  • I voted conservative in the election because I thought they were the party off business, he says.

  • My current client now refuses to work with limited companies.

  • They have put a blanket ban on them and indeed other firms that I do work with.

  • So he's There's a small guy running his own business doing work for big companies.

  • And he says the other big firms are also saying the same.

  • So it's now impossible for me to get work via my company, and he goes on to make the point.

  • Good night, buddy, that he doesn't get health provision, doesn't get pensions, doesn't get any protection of any kind at all.

  • He's running his own business, and he's incurring costs in running that business.

  • And if the firm's iWork for now, say they're not gonna cooperate for him on that basis, he's got a problem.

  • And I think from what I can pick up on this and other tax issues, they're awesome.

  • Really concerns.

  • Let's drum boil this down.

  • Let's try to understand exactly what is going on.

  • I'm joined this morning by Mark Levin High street accounts and instituted taxation.

  • Harrow Martin.

  • Good morning.

  • Welcome.

  • Good morning.

  • Thank you very much.

  • So at the moment it is my responsibility.

  • If I'm the person with a limited company and I'm providing, you know, I could be an electrician's, I could be providing I t service is, you know, and I designate, I designate that I'm that I'm providing that service and you, as the company pay me the amount plus B 80 if I'm V 80 registered.

  • But all the rules about a change are there in a couple of weeks, dramatically So it's actually vice a versa.

  • The responsibility is now on the top of the pyramid.

  • It doesn't matter how many people were in that pyramid.

  • You might have an umbrella organization employing lots of subcontractors will come on, I'm sure will come under the umbrella cos a bit later on.

  • But the whole idea was that you then turned around and said, If you wanted your money, you then went to probably human resources of the big employer, the big employer.

  • Let's talk about being the main people at the top there, that the giants of the World Bank's building societies, big buildings and people like that would put BBC on one side because that's a separate issue on.

  • They now have the responsibility of ascertaining who were paying this money, too.

  • Are they really self employed?

  • Is it a limited company are reliable for national insurance?

  • And here is where the bomb is going to be bitten because from the six of April, national insurance will bite in and Persia and tax will be deducted if the main employer decides that they're glorified employees.

  • Now, no matter how many steps that you take and you can take steps, you could actually try and ascertain your own tax status by a tall initial letters.

  • A c e S T.

  • Which stands for check employment status tax.

  • It's a bit floored on its being around for some time with us on The Web revenue website was updated in about November, but there are flaws in it that can be challenged.

  • So what you need to do if you're the person that got your own one man band personal service company, I'll try and avoid initial letters.

  • What?

  • Come.

  • But if I am, you know, a one man company or two man company providing I t service is and I go to, you know, a major company and I go to them once, twice a year on I update that computer system.

  • Whatever I do, you know, I submit a bill.

  • It's a couple of ground each time or whatever it is, you know, it's then as it is now, my responsibility to sort that out with the tax man.

  • But if that then becomes the responsibility of the company is it will From the sixth of April, they were just said, You know what?

  • We can't be bothered with this.

  • Correct.

  • We don't want years down the line to find out that, actually, that actually were in trouble.

  • So they're just gonna deduct national insurance and P A Y, and that's gonna leave a lot.

  • So that's gonna leave a lot of self employed people much worse.

  • Office It is, indeed.

  • And here's the irony.

  • When these rules first put out inside union revenue, about 1/3 of their contract subcontractors quit.

  • Really?

  • Yep, because they found out they were gonna be caught.

  • So in sent simple money terms, it's a negotiation between you as the contractor providing the service on the final employer.

  • What's the price for the job?

  • A lot of people have estimated you need to put your prices up between 20 and 30% God so that your take home pay is gonna be the same before the fifth of April 2020 as it is going to be afterwards.

  • Now, if anybody gets it wrong in this chain, talk about a chain.

  • Let's think about a relay race where you somebody starts it off, passes it on to somebody else.

  • That's how the chain of work works.

  • If you get it wrong and the tax man hasn't got his money, he couldn't go back right to the very top and ask for that money.

  • So the point that you made about the top man, you don't got to national.

  • It's like I can't be bothered with this.

  • Oh, yeah, you know, why have the liability?

  • Is there any chance?

  • Is there any chance the government could?

  • Yes, changed their mind in the very much protest last week and the government's announcement that the back end of last week was We're going to have a soft landing, whatever that is.

  • No hard reaction in the next 12 months, which is another way of kicking into touch.

  • Yes, you've never noticed these questions.

  • You know that wasn't forward.

  • You get one answer noted.

  • But it would be fair to say, wouldn't it, Martin, that some people have actually missed used this system?

  • Because effectively, let's just give the example.

  • Let's give the example of somebody.

  • It could be a broadcaster, for argument's sake, somebody but somebody whose whose only source of income has come from one company to whom they provide work and service is on.

  • Then they do it through a limited company.

  • Um, and they're able, you know, tax wise to avoid quite a bit of national insurance.

  • What I mean isn't the truth of it.

  • Some people have been abusing this system.

  • Then there'll always be people.

  • Abusing is if you look at the science in the park that says, Please keep off the grass.

  • People will always work, walk on the grass.

  • Yes, they will.

  • They will.

  • I get that.

  • I get that.

  • Now I get this on Twitter.

  • I get one issue with being inside are 35.

  • His travel costs and subsistence could no longer be claimed.

  • I live in rugby.

  • It's 12,000 quid a year for parking and train to go months, t go down to London.

  • That's a huge hit on will demobilize a skilled niche workforce, so she makes the point.

  • You know, if you're commuting down from rugby everyday to London and you work for several companies, you know, employee of anybody you work for, several companies on you earn money from them.

  • At the moment, you can offset your travel costs against it.

  • It's a fair point, isn't it?

  • Absolutely Fairport, and that that's one of the classic ones.

  • The whole idea of travel costs is being contested over many, many decades with the tax man, and there's a case called The Recorder of Portsmouth.

  • He lived in London but had a day job down at Portsmouth at same time, had his other self employment, is a lawyer in London.

  • He decided that he wants to claim London Deport Smith deduction, but because it was an employment that he accepted in Portsmouth, it was held that he couldn't deduct it.

  • But that was a question off.

  • The point of payment was in employment.

  • If the point of payment is self employment, you can deduct it, which in your instance it wasa and it's always better to have more than one person as your customer.

  • Yeah, there must be a lot of you out there.

  • A lot of you out there who and either you or someone in your family axes a contractor on Do you know you will be desperately thing to get these rules changed.

  • Let's take a caller.

  • Let's let's take a real life example.

  • Let's speak to Bennett in Edinburgh.

  • Good morning to you.

  • All right.

  • Thanks very much for having me on the program.

  • Yeah, I'm not an expert in I are 35 or soul.

  • I work as a contractor on and off.

  • They're doing that sort of thing.

  • But let me be perfectly clear for B s.

  • People are now recruiting as the agency's understand what's going on and the end clients understand what's going on that, actually, it's just totally economic.

  • So from my own point of view, the industry that I work in 90% of that work would be in the Southeast, but I maintain a host sold elsewhere.

  • What if you take on that?

  • What doesn't allow you to work for other people?

  • It's intense.

  • You work for a six peak, six week period of intensity and long shifts and that sort of thing on dhe the whole economics off flights, travel, hotels, food and everything.

  • That just means that it's no even worse me considering it anymore.

  • I'm not Sebastian.

  • Huge changes, in fact, speaking personally, I don't know other people in this situation that led by, say, Southeast.

  • Um, it really cuts off that line of work for me unless I was to relocate.

  • Because tax wise, you just be so much worse off.

  • Yeah, yeah, so much myself.

  • You know the experiences and well, well, well, well, well.

  • The one solution we talked about a few minutes go with Martin Levin is you could put your prices up 2030%.

  • Well, I mean, that may well be what?

  • What what's gonna happen?

  • I mean, that I can't see that that's provided that that people prepared to pee that.

  • But the point I wanted to make is we got this whole idea of the northern powerhouse, and we're bringing any chess, too, and everything like that.

  • Well, the reason there's a good reason why people live elsewhere in the country, it's it's much cheaper.

  • It's a no awful lot of hassle when you don't go to your home every night because you're away for six weeks.

  • But the difficulty is, what this is doing is actually focusing.

  • And you know, the people that really do the work in the country.

  • It precludes this size.

  • And this there's trouble with that in the same say if you're already based in the Southeast, it's not going to make a huge meant.

  • A difference for you if you're if you're else where you work.

  • Yeah, you give that example from Edinburgh and we had attacks not long ago from a lady in rugby said no.

  • That's a very extreme point You make thank you Bennett for making it, Nigel on p A y e.

  • You'll pay between 30 and 40% Tax two hmrc What?

  • I was in I t consultant.

  • I paid the 80 corporation tax Self assessment on dividend tax.

  • HMRC will potentially now beginning less taxes.

  • How is this good for the country?

  • I'm not sure quite how I assess that, but but But what you may well get what you may well get is a lot of young people.

  • And this is this is this is what worries may.

  • A lot of young people now have set up their own little limited companies or acting a soul traders because a lot of young people are in the new technology game.

  • They've got their own particular skill sets.

  • They go out as contractors, and I actually see if these tax changes do go through.

  • I see this is a disincentive for young people to go out and set up on there, and I don't like that coming back to this in a moment.

  • But for now, it's the Sunday edition of an idea for a show, and it's called a past 11 to the tax and national insurance Responsibility shifts from the individual contractor providing the service to the company that is taking the service.

  • And that means a lot of big firms are saying to one man bands all over the country.

  • Hey, if you come into business for us, we're just gonna take away.

  • We're gonna take away P.

  • A.

  • Y.

  • You were gonna take away national insurance that needs a lot of people out there who are running their own companies with genuinely legitimate expenses.

  • If they can't offset them, they're gonna be worse off by 20 to 30% every year.

  • Now, there is another argument here, of course, and I'm gonna put this too high street account of Martin Levin.

  • You know, some people feel differently.

  • Tim Here says the company I work for employees freelances who were disguised as full time employees paying only 11% tax.

  • Unlike the full time employees on, he says freelances are not paying their fair share of tax.

  • And therefore, I'm all in favor of I R 35.

  • What do you What do you decide is a fair rate of text, though, because these guys might might have very expensive expenses, But if But if if, if somebody Okay, if somebody effectively goes the same place of work every day Ah, I'm how were there?

  • So So there are some naughty is here are very much so Yeah.

  • This is what that tool that I talked about earlier.

  • Yeah, CST on.

  • And one of the conditions there was exactly that.

  • Are you coming to the same place of work work every day?

  • Yes.

  • This is where the BBC got caught.

  • Are we going back four decades here for when it first came about.

  • And this was a dinner party where the chairman off the revenue as it then was on the chairman of the BBC around the table and they said, Well, most of our guys come in, use our equipment on their self employed.

  • That was in the mid seventies.

  • So that was where they hold the baby was first born.

  • And if if the taxman does find against you, how far can they go back?

  • 20 years?

  • 20 years?

  • I have.

  • So I didn't realize that No, no, no.

  • I can understand why you didn't realize it.

  • Usually it's six years what I thought 60.

  • When self assessment came out in 1997 it was a question of done and dusted.

  • That year is closed off and you think that is wonderful meal number of times I protected my clients and at that time, by making sure the revenue wouldn't go back.

  • Now they've come back and they said, Careless.

  • They've had these definitions.

  • Are you negligent?

  • Careless fraud?

  • A willful different.

  • I'm really shocked by that.

  • I I have to say In my years in business before politics, I used to keep the stuff for seven years and then burn it all.

  • Didn't wait.

  • Look forward to birdie.

  • Get over, you know.

  • Thank you.

  • The tax man was off by back.

  • Let's, um Let's get a lay.

  • Our next caller from Prescott up on Merseyside Lee, Good morning to you.

  • Good morning, Natural.

  • So how could these rules affect Julie?

  • So monday to Friday, employed by the N hs.

  • Hey, Hey.

  • However, of a weekend I work for the local out of our DP service as a nurse practitioner, so I invited them directly.

  • I don't go from an agency.

  • I'm not limited company.

  • I'm just a one man band.

  • Really?

  • So I'm not sure whether the work work idea of a weekend commander I also wanna Yes, it would have done.

  • But it would have come out in about two years ago when I R 35 was extended and the test for that was if you were paid out of the public purse, it was principally aimed at the BBC.

  • But then suddenly you realize that if government departments such as the N hs or anybody else would have been paying you scores with another one, then they had to established, or you had to prove to them using this Estelle CST that you were a self employed person.

  • Now, of course, it's gonna be slightly different to me, it's still much the same.

  • Go on the revenues website, answer their questions on the C E S T, which is floored because it doesn't thing doesn't cover things like mute mutuality off of obligation.

  • That's a question of they're offering you employer potential contract offers.

  • You work, and you can accept or decline it.

  • Now.

  • You should have done this before, printed here off and sent it to the payroll department or the Human Resources Department.

  • So they had something on their books to cover them in case of errors in the past.

  • Now, from the sixth of April, they will probably be chasing you for it, which, in which case, you can still do it.

  • There's a warning that if you there's a word that I've seen Game they assessed tall.