[varispeed]

> A one-person company who consults for multiple clients, provides their own equipment and sets their own working hours (I have literally worked with people like this) do not fall into IR35. Whether they speak in RP, Cockney, Geordie or Scouse has no bearing on this. How much money they earn has no bearing on whether they fall into the scope of IR35.

You are misunderstanding what IR35 is: the rules bite because the person doing the work has a material interest in the company that contracts to provide it, and then each engagement is assessed in isolation for deemed-employment status; you are conflating that trigger with the status test itself, and “multiple clients / own equipment / flexible hours” is not some automatic escape hatch, nor does the number of clients change the outcome of a given engagement’s assessment.

> This is only part of it. Other criteria include right of substitution, ability to set working hours and location. Clearly a consultancy firm that provides services by multiple workers for multiple clients is very different from an individual who:

Large consultancies routinely embed the same named individuals at the same client for years, on client kit, during client hours, with no practical substitution, and no one performs a hypothetical employment test on the firm itself. The difference is not the day-to-day reality of the work, which can be identical. The difference is that IR35 is only activated when the company supplying the labour is owned by the person doing the labour. That asymmetry is deliberate.

> Because they're two completely different types of contract and working arrangements.

They are not “completely different” in substance. You can have the same embedded role, same hours, same client equipment, same multi-year engagement. The decisive difference is ownership of the supplying company. The regime is constructed so that when the worker owns the company, a deemed-employment test is imposed; when external shareholders own it, it is not.

[scott_w]

> “multiple clients / own equipment / flexible hours” is not some automatic escape hatch

I never said the escape hatch was automatic. The number of questions in the HMRC questionnaire make it clear that there's no 1 trigger either way.

> Large consultancies routinely embed the same named individuals at the same client for years, on client kit, during client hours, with no practical substitution, and no one performs a hypothetical employment test on the firm itself.

Because both the contract and working arrangements are different. The consultancy absolutely can substitute one worker with another of equivalent qualifications.

> The difference is that IR35 is only activated when the company supplying the labour is owned by the person doing the labour. That asymmetry is deliberate.

It's deliberate because the nature of the working and contractual relationship is different. I really don't get what's so difficult about this so let me break it down.

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.

In a large consultancy that's contracting staff to work at companies, there are two clear relationships that are different:

1. The contract with the client, where a fee is paid to the consultancy for the work of their employees.

2. The employment contract with the person embedded in the client. This person is paid their salary and, as such already pay income tax and NI.

Can you see how it makes no sense for the consulting company to pay extra tax and NI for the contract with the client?

If you can't understand the difference, and insist that it's based on some class warfare, I really don't think any human on earth has the words to convince you of something so simple, my accountant explained it to me in about 2 minutes when I first asked him about IR35.

[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.