[varispeed]

You say the consultancy “absolutely can substitute one worker with another.” In practice, clients regularly contract for named individuals, reject substitutes, and retain the same person for years. But it does not matter, because the substitution test is never applied to them. A one-person company in identical working conditions has to defend its right of substitution. A large firm placing a single named worker in the same arrangement is never asked the question.

Now the tax argument. Picture three people sitting next to each other doing the same job at the same client. One is employed directly on £70k. One works for a large consultancy, earns £60k, and has no idea the consultancy charges £2k a day for their labour. One runs their own company and charges £600 a day. The employee pays income tax and NI on £70k. The consultancy worker pays income tax and NI on £60k, while the consultancy captures the spread and, being a multinational, routes the margin offshore paying little or no UK tax. The small business owner pays themselves a salary, corporation tax on profits, and dividend tax on what they take out - and spends the margin locally.

From a pure tax yield perspective, the small business owner generates the most revenue for the Treasury and the most benefit for the local economy. The large consultancy generates the least. Yet the entire framing of IR35 is designed to make the two employed workers resent the business owner for “not paying their fair share,” while the consultancy quietly extracting the largest margin and contributing the least tax is never part of the conversation. Paying through dividends and salary is not avoidance, it is the normal mechanics of running a limited company, which exists precisely because PAYE was not designed for how independent businesses operate.

If a large consultancy places a single named worker at one client, on client equipment, during client hours, for four years, with no practical substitution ever exercised, why is that firm not subjected to the same deemed-employment assessment that a one-person company would be in identical circumstances? Because the legislation is scoped by ownership. It activates when the person doing the work also owns the business providing it. A worker who builds and runs their own company is treated as inherently suspect. A separate corporate entity extracting the same margin from the same labour is not.

If you think that framing is wrong, explain why the ownership trigger exists rather than a universal status test applied equally to all companies supplying labour. That is the question.

[scott_w]

> You say the consultancy “absolutely can substitute one worker with another.” In practice, clients regularly contract for named individuals, reject substitutes, and retain the same person for years. But it does not matter, because the substitution test is never applied to them. A one-person company in identical working conditions has to defend its right of substitution. A large firm placing a single named worker in the same arrangement is never asked the question.

It's a good thing that HMRC don't apply this as the only test then.

> From a pure tax yield perspective,

This is totally irrelevant to the discussion. In fact, the rest of this paragraph is irrelevant because it's just you going off on some rant you derived from a Communist Party pamphlet or something.

> Because the legislation is scoped by ownership.

Not only ownership, it's a mixture of factors. I've worked with other IT workers who fall outside the scope of IR35.

Plumbers and electricians fall outside the scope of IR35 in most situations, despite being single person limited companies. You say it's triggered by ownership structure, yet these businesses follow the same ownership structure without triggering IR35. If it's triggered by ownership structure and classism, how does this fit into your thesis?

> If you think that framing is wrong, explain why the ownership trigger exists rather than a universal status test applied equally to all companies supplying labour. That is the question.

I already did and so did you right here:

> Picture three people sitting next to each other doing the same job at the same client. One is employed directly on £70k. One works for a large consultancy, earns £60k, and has no idea the consultancy charges £2k a day for their labour. One runs their own company and charges £600 a day. The employee pays income tax and NI on £70k. The consultancy worker pays income tax and NI on £60k

These three situations create three completely different contracts, working structures and, thus, tax arrangements! It's wild how you seem to get it but your brain won't allow you to see the answer that's staring you in the face.

[varispeed]

The plumber example actually undermines your argument. Plumbers typically provide services to individuals, not businesses, which places them outside the scope of Chapter 10 entirely. They can self-declare as outside IR35. But if that same plumber were delivering services to a corporation meeting Chapter 10 criteria, the client would have to perform a status determination, and depending on their risk appetite they could absolutely deem that engagement as inside IR35 to cover their compliance exposure. IR35 has nothing to do with number of clients, type of trade, or whether you are a plumber or a software developer. Presenting plumbers as inherently outside IR35 by nature of their work is misleading.

You dismissed the tax yield comparison as "a Communist Party pamphlet." That is not a rebuttal. If the stated purpose of IR35 is protecting tax revenue, and the structure generating the most tax for the Treasury is the one being constrained while the structure generating the least is left untouched, then the policy is not achieving what it claims to achieve. You have not addressed this because you cannot. You say the three workers create "completely different contracts, working structures and tax arrangements" and that my "brain won't allow me to see the answer." The working structure is identical. The contracts differ because the law requires them to differ depending on who owns the supplying company. The tax arrangements follow from that. You keep pointing at the consequences of the policy and presenting them as the justification for it. That is circular reasoning.

You have repeatedly described how you think IR35 works, inaccurately in several places, while avoiding the question I am actually asking. I am not asking about the mechanics. I am asking about the design. Why does the deemed-employment test activate based on who owns the company supplying the labour, rather than being applied universally to all companies supplying labour in identical working conditions?

Resorting to personal attacks and dismissing inconvenient arguments as "rants" is not the same as answering the question.

[scott_w]

> Plumbers typically provide services to individuals, not businesses

> But if that same plumber were delivering services to a corporation meeting Chapter 10 criteria, the client would have to perform a status determination

So? You’ve spent 2 days arguing it’s about ownership structure and something about classism and now suddenly you agree with me that it’s actually about the specific nature of the contract? Make up your mind instead of just deciding what undermines my argument. You don’t even seem to understand your own.

> You dismissed the tax yield comparison

Because it’s irrelevant to what the law is trying to achieve which is to ensure an employer/employee cannot reduce the tax they pay. Whether it’s the optimal tax strategy is a different question. Given you have no clue about your own argument, I’m not going to take your word that it’s actually better to allow Inside IR35 to pay less tax.

> The working structure is identical.

There are literally three different types of contract, which creates different working structures.

> You have repeatedly described how you think IR35 works, inaccurately in several places

And yet at no point have you actually pointed out where. Instead you run victory laps.

[varispeed]

I have not agreed with you. I said the plumber providing services to individuals falls outside Chapter 10 entirely, which is why your example was irrelevant. I then pointed out that if that same plumber provided services to a corporation, they would be subject to the same status determination as anyone else, because IR35 does not care what trade you are in. You claimed plumbers fall outside IR35 because of the nature of their work. They do not. When providing services to individuals they self-declare their status, which can still be challenged. When providing services to a corporation meeting Chapter 10 criteria, the client performs the determination. The distinction is about who the services are provided to, not what the trade is. Those are different things.

Where you have been inaccurate, since you asked: you claimed IR35 does not apply to self-employed workers as though that were a meaningful distinction. You claimed number of clients determines IR35 status. It does not. Each engagement is assessed individually. You presented plumbers as categorically outside IR35 by nature of their trade. They are not, as above. You have consistently described IR35 as a simple checklist when it is an engagement-by-engagement assessment triggered by the ownership structure of the supplying company.

You say "three different types of contract create different working structures." The working structure is the day-to-day reality of how the work is performed. Three people doing the same work, at the same desk, on the same equipment, during the same hours, for the same client, have the same working structure. They have different contracts because the law imposes different requirements depending on who owns the company supplying the labour. The contract is the product of the legal framework, not the other way around.

You say the law is trying to "ensure an employer/employee cannot reduce the tax they pay." A worker running their own company is not an employee reducing anything. They are a business owner retaining the value of their own labour. The legislation starts from the assumption that a worker's natural state is employment and their company is an artificial structure to be looked through. That assumption is never applied to any other type of business. Nobody asks whether a consultancy's corporate structure is artificial, or whether its employees would be the client's employees "if engaged directly." The question is only asked when the worker owns the business, because the underlying assumption is that workers do not legitimately own businesses - they merely operate through them. That is the class assumption I have been describing from the start.

Same question, still unanswered: why is the test scoped by ownership of the supplying company rather than applied universally?

[scott_w]

> you claimed IR35 does not apply to self-employed workers as though that were a meaningful distinction

No I didn’t. I wouldn’t make this claim because I asked an accountant exactly this question 8 years ago, so I know this is not the case. Clearly you can’t read so it’s a waste of my Friday night trying to argue with someone who insists on being wrong and displays no reading comprehension.

> Same question, still unanswered: why is the test scoped by ownership of the supplying company rather than applied universally?

One last time: because it’s not. We have literally just discussed the plumber example where, depending on the customer, working contract, etc. you agreed with me that IR35 scope is not applied based solely on the ownership of the company. I really do not know what to say any more. You are asserting two opposing things are true at the same time.

[varispeed]

You wrote, in your second reply: "First off, IR35 does not apply to self-employed workers, it only applies to a worker contracting via a limited company." That is inaccurate, and it is what you wrote. Claiming now that you didn't say it does not change the record.

On the plumber: I did not agree with you. The plumber's company is in scope of IR35 precisely because the plumber owns it. That is the ownership trigger I have been describing throughout. Who they deliver services to determines whether they can self-declare their status or whether the client performs the determination. That is a procedural question about who makes the assessment, not about whether the regime applies. The regime applies because of ownership. A large plumbing company sending an employee to do the same job, at the same location, under the same conditions, never enters this framework at all.

These are not two opposing things. The ownership structure is what brings the regime into existence. The nature of the client determines who performs the status assessment. You are confusing the two and presenting that confusion as a contradiction in my argument.

You have now resorted to questioning my reading comprehension rather than answering the question. The question remains: why does this regime target worker-owned companies specifically, rather than applying a universal status test to all companies supplying labour in identical conditions?

[scott_w]

> You wrote, in your second reply: "First off, IR35 does not apply to self-employed workers, it only applies to a worker contracting via a limited company."

Apologies, I misread and thought you said I claimed IR35 does apply, which is why I answered the opposite. In which case, let me state my position clearly:

IR35 is not applicable to a self-employed individual because they are not a limited company. There is no field on the Self Assessment Tax Return to declare yourself in-scope of IR35, which I can confirm having filled out SA forms since 2018. I have no idea why you think it can be applied. It just can't.

> The plumber's company is in scope of IR35 precisely because the plumber owns it.

That is not what "In Scope of IR35" means at all. In Scope is, as we have both said above, based on the contract and work arrangements, which would either be "In Scope" because the arrangement mirrors an employment, or "Out of Scope" because the plumber is functionally self-employed, just contracting from within a limited company.

Also, this is part of why I say you're speaking out of both sides of your mouth. You say it's nothing to do with ownership structure and everything to do with ownership structure at the same time!

> The ownership structure is what brings the regime into existence.

This is what would trigger the test but it does not mean a company or arrangement is in or out of scope. That has to be applied based on the contract and working arrangements.

> why does this regime target worker-owned companies specifically, rather than applying a universal status test to all companies supplying labour in identical conditions?

You're basically asking "why does IR35 exist?" and the answer can be found by literally Googling it: it targets contracted workers who would pay less tax than an employee in exactly the same working arrangements. That is the top and bottom of it and has always been the case.

Why doesn't it target consulting companies? Because their employees are already employed! They already pay the full Income Tax and National Insurance!

I question your reading comprehension because I already fucking answered this question above:

> In an IR35 in-scope arrangement, the one-person limited company would otherwise pay themselves up to the income tax exemption threshold. They would then take a dividend for the rest of the payment, which isn't subject to NI payments, reducing revenue intake to the government.