If IR35 was a border between two countries it would not be clearly defined as The Donald would like between Mexico and the USA…it would be undefined by any fencing… but guarded by a minefield.
In this analogy…Christa Ackroyd, a presenter for the BBC… has just stepped on one of those mines. She has just lost her appeal with HMRC, found to be inside IR35 and hit with a tax bill of £400,000. As the title states, it could be a lot worse. HMRC have the right to add up to 100% in penalties, making this an £800,000 “mine”
No business can operate with this level of uncertainty…which means, if we allow this situation to continue, there will be no freelancers working as knowledge based businesses. They will become “gigsters” working for the large consultancies, paying tax as if they were employed, without enjoying the rights afforded those who PAYE.
And for every Christa Ackroyd working direct there are a 1000 working through agencies with no sight of the contractual chain… stepping in the same minefield.
Which is one of the reasons I started The Project Pool.
I think freelancers, working as genuine businesses through their own Ltd Co, would like to do their stuff without worrying about the confusion that is IR35. Which is why we asked John Chaplin from E&Y to draft us a contract which takes us away from this dangerous border area and allows us to indemnify the freelancer from any Tax and penalties. If Christa Ackroyd had been working through The Project Pool…we would be picking up her Tax bill.
If you are a freelancer, join us and help change the way we work.