Tag Archive | "making tax digital"

Contractor Plans Legal Fight Against IR35 Reforms

An IT contractor has taken the bold step of planning to take on the government and their IR35 reforms in a legal battle.

As you can no doubt imagine, this type of thing isn’t going to be cheap and that is why he is looking for donations to make it all happen. The cost of full legal action is expected to be around £360,000. Not exactly small change is it.

I’ve reported before about these IR35 changes of course, which came into force during April for contractors within the public sector and has mostly been unpopular.

In fact, some IT divisions within the public sector have seen thousands of contractors walk out once their contract was up, with many more planning to do the same once they get the chance.

Would a U-turn by the government on IR35 change contractors minds? It very well could, but I think many are probably doing just fine out there away from the public sector, maybe even making more money.

As I’ve spoke about in another blog post, contractors and their skills are more in demand than ever before, with many companies willing to pay top cash for those who want to put in the hours.

I’m sure there would be some who might consider a return to the public sector though, because the work is quite steady and predictable, which gives a bit of reliable income.

This legal challenge has got to make it into a court of law, and with over quarter of a million pounds needing to be raised it does make me wonder if we are going to see anything happen? Let’s wait to find out.

You don’t need to send any donations just yet, as the IT contractor has mentioned that any potential supporters should email and say how much they could donate on a monthly basis. £20 a month has been talked about.

The one thing I do know is that the government very often do change their mind. Just take the “making tax digital” plans as an example, where for months it seemed to be at the top of their to do list.

It now appears the plans for making tax digital has been scrapped, after a lot of hard work and millions of pounds spent, so it wouldn’t surprise me at all if one day some government official decided that IR35 should also be scrapped.

What can you do though? Most contractors will simply get on with their life and make the best of anything that comes their way. If the public sector is no longer viable then they look elsewhere, and if the public sector starts to seem more attractive again then I’m sure many will be back.

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Experts Say Making Tax Digital is Too Soon

Most umbrella contractors are by now aware of the plans to make tax digital (MTD), but some people wonder if it might be rushed.

The chair of the Treasury Select Committee has recently wrote a letter to our new chancellor Philip Hammond giving him a reminder…”It’s better to get it right than to stick to a rigid timetable.”

You know, this is exactly what I’ve been saying ever since I discovered the plans for making tax digital, as the government do seem to rush into these things without the proper thought and planning that is needed.

Let’s just say that many contractors might find themselves in a position where it is harder to do their tax, especially if the system is not finely tuned. Do the government care though, or are they just going to keep on going with their original plans? I think we all know the answer to that.

Another respected organisation, the ATT, have also mentioned they have concerns, mainly around the fact that the government were not taking enough time listening to feedback from experts.

In other words, they have decided to move forward regardless of what people think, and without any thought to if this whole “making tax digital” is going to work in the real world.

One of the main issues that has been talked about extensively is the plans to make all self employed people do their tax on a quarterly basis instead of once a year.

In theory this could have been a good idea if the whole process was really simple and it only took you 15 minutes a time, but in reality is that going to happen? I don’t think so.

It will be more time consuming if you ask me, as hard working contractors and business owners around the country will have to put time in their schedule to focus on doing tax returns 4 times a year rather than just once.

In a way, I understand the government’s reasons for coming up with this idea, as in theory it should make doing tax easier. However, they are not understanding the simple fact that most self employed people put off doing their tax for one reason and one reason only…they don’t enjoy doing it.

Now we are going to have a situation where people have to do it 4 times a year. Well, they are not all suddenly going to start enjoying it are they? Instead, it is just going to be something they don’t want to do 4 times a year now rather than just the once.

As always though, we can only wait and see what happens with this. Maybe the government will come up with something that is easy to use and makes the whole process of doing tax enjoyable. I doubt it, but you never know.

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