IR35, Robin Cook, One annoyed freelancer/business man!

date posted 31st May 2001 14:21

Hi all,

Thought I would drop this message into the forum as it may interest some of
you. Firstly I (Gary - a lurker here for some considerable time) have been
running my own limited company now for about 5 years, I have been providing
IT and Telecommunications support to oil companies - mainly offshore. I am
now trying to break into Internet and web development which has brought me
to an interesting "situation" recently.

I contacted an Internet portal with a view to getting some information from
them to help my (potential) Internet clients integrate themselves into the
portal a little easier. The portal came back to me and basically said, Hey
we've been trying to do this for some time now and are having trouble - call
us NOW! Which I did, I knocked up a very small demo programme to show them I
could solve there problem. I am now developing a bigger application which I
am taking to their UK offices in June to give them a better demo of the
application. There is also
a possibility that I will have to travel to the US to show their development
team, if they are convinced then hey presto things look good. If they are
then this industry portal alone opens up a "potential" market of about
£5.6Million (yes I know, potential is one thing, reality is another!). The
other upside is that what I have done could apply to any industry/portal and
therefore if this one buys into my solution others would be more willing to
buy in and so the market potential gets bigger.

OK, now here is the problem I faced and was annoyed about the other day.
Because of IR35 I don't know how much tax I should be saving for. Nobody
seems to know if I will fall into the IR35 trap or not - my accountant,
other "freelancers" and small businesses, even my local Revenue office
seemed a bit hazy. I think most people would agree that the whole issue is a
bit vague even still and the very best advice I seem to get is that "we will
have to wait and see what happens in the first few test cases". Now I have
money in the bank to cover my tax if I DO fall into IR 35, but that means I
do not have enough money to fly to the US to show off my nice new solution.
If they won't pay my expenses then what do I do? They are not obliged to pay
and yet it is a huge potential for me, if I go ahead and pay for the air
fares and that leaves me short for my tax (no guarantee this company will
accept my solution) and what a mess I will be in then!

OK, still bear with me, - I'm getting close to being where I wanted to be
now.

I was walking through my local town about a week ago (Chaloner Street,
Guisborough, Cleveland (UK)) going to a bakery to get myself a lunch time
sandwich. At the top of the road I notice a large huddle of Yellow and Red
clad people surrounded by a circle of Police. Aha, I think, my local Labour
MP - Ashok Kumar. As I got to the top of the street (opposite side to the
throng) I looked across and saw - Robin Cook (Foreign Secretary). I thought,
right (because of the mood I was in about my predicament) I'm going to go
and confront him about IR35, but then thought No, just let it go. All the
way to the bakers and back I was kicking myself for not getting in and
asking him a good question. But on my way back, he was a little further down
the street so I thought, bugger it, I'm going in!

It went something like this - (I've got to say that I really wish I had
known he was going to be there as I am better when I have time to think up
questions and counter arguments - but here goes, I tried my best for us all)

I walk down towards the crowd and get stopped by the police, I hang behind
looking on.

Robin Cook spots me (smiling), he smiles back pushes a few people out of the
way puts his hand out and says very loud and bubbly:

RC : Hello sir, how are you?
ME: I'm fine thanks, how are you? (I know pretty sad start!)
RC: Very well thanks.
ME: (Still with a firm grip on his hand) Do you mind if I ask you a
question?
RC: Er, no - go ahead (looking around him a little)
ME: Can you tell me how the labour party can stand up and say they are the
party for small business and yet at the same time bring in and support
legislation such as IR35 which basically stifles British entrepreneurial
spirit?

At this point Ashok Kumar charges in, putting his arm between me and Robin
Cook

AK: Just write to me, write to me and I will respond to you.
ME: Why? I have asked a valid question I think I deserve an answer?

(a few giggles from the crowd - police turn their backs on us )

RC: That's OK, I think we are the party of the small business and we a tax
businesses very fairly.
ME: Whats fair about IR35? It just seems a little harsh on those of us whom
are trying to show some entrepreneurial spirit for the benefit of our
country as well as ourselves?
RC: (Now a little surly with a bit of a smirk) We are just making sure that
those people who should pay tax do so and that people do not dodge tax.
ME: I pay plenty of tax and do not want to dodge paying tax. However I think
it puts some of us at a bit of a disadvantage and it is a very vague
regulation also...... (trying to lead upto my predicament but he won't let
me)
RC: Look, we have made it very clear about 5 times now, there is nothing
vague about IR35
ME: Well I don't think that is so, plenty of people like me and others such
as accountants don't seem so sure....... (trying to mention the test case
scenario I mentioned above - but he cuts me off again)
RC: That's your accountants problem, not ours.

He is now making every attempt to get away and Ashok Kumar is doing his best
to retrieve RC

ME: Can you also tell me if the cost of implementing IR35 is greater than
the extra tax you are recovering from the regulation?
RC: (VERY VERY Surly and with a smirk) I think YOU will find that your tax
office will be VERY efficient. Goodbye, I have other engagements.

He moves towards his car and then when away from me back to all the waiting
supporters whom give him more adulation. I am pushed out of the way by the
yellow and red mob and the police step between me and the throng.

So there you have it from the foreign Secretary, IR35 is VERY clear, Very
Fair and helps small business!

I have to add at this point, this was NOT a labour slag off, I'm not saying
any other party would be any better or worse on IR35, I just never bumped
into any other high ranking MPs yet. I think the attitude he showed though
was a bit of an eye opener, his surliness and the way he said a few things
were almost done in a way that made me feel like I was some tax dodger. He
never wanted to listen to my real problem and how it may have helped my
region. All my earnings are a net gain for the UK as all the companies I
work for are foreign companies, and last year I paid in excess of £12,000
tax!

I would also like to point out that though I was "determined" to get my view
across, I never behaved in an improper manner. When we shook hands I just
retained his hand as I usually do when speaking to somebody and shaking
hands, I let go as soon as he pulled his hand away though.

Anyway, thought 1 or 2 of you may have been interested!