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Question for Qdos/Kate C or anyone else from the OTS IR35 forum. This has bothered me for a long time and we never really got an answer...
How did nobody in that original OTS forum complain about the report saying this:
C.25 Where IR35 applies, the individual broadly faces the employed levels of tax and NIC being paid. Those inside IR35 have the benefit of a 5% flat rate deduction on the gross fees they received before having to account for tax and NIC. Based on income of £25,000 (with no expenses and salary at the personal allowance) for 2011/2012 those inside IR35 would take home £18,150 and those outside IR35 £21,438. On £75,000 those inside IR35 take home £45,681 and those outside IR35 £55,815.
Apart from the obvious fact, that £10k difference is hardly "broadly the same"...
It is so clearly wrong that the IR35-caught are in the same boat as employees - ER NI being paid throughout their income being the critical major difference.
This post has 3 examples that show the different outcomes.
Perhaps someone could explain to the freelance community not only how this got in there in the first place, given al the expert input, but also how this was not picked up when the panel of "experts" reviewed the report at the draft stage.
If they would not change it, was that not the time to walk away loudly?
N.B. Paragraphs C26 and C27 are also blatantly wrong. It sounds as though freelancers get to simply pocket 5% "expenses" - but as we all know expenses have to be incurred and justified. Also the issues of people not being able to move house to live near a short-term arrangement are not considered.
Possibly even having to rent accommodation to stay away - where 5% is far too low to cover that cost, especially for a lower paid role.
Essentially, money spent on expenses is not remuneration - quite the reverse in fact, it is money that is not available for remuneration.
Also, higher rates are not a trade-off for employment rights! They are for higher skill, periods out of work, lack of career progression etc. How did that get through the expert net?
These conclusions are nonsensical - please explain how they came to be in the OTS report - were they not challenged? And if they were, what did you say and do when you saw them in the draft of the final report... and still present in the final report itself?
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TaxedToDeath
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