Walkers' Sensations Poppadoms vs. HMRC: The Chip of Theseus
ft.com
ft.com
Okay, I'm sold. When I have the money, I'll get a subscription to the FT.
On a less jocular note, this article is a good reminder that, contrary to most discussion here on HN, laws aren't algorithms that the powers that be execute against the world, but are rather heuristics that courts have to interpret in the context of specific cases.
I just want to know what's going on in the world, and interesting analysis. I don't want analysis that tells me that I'm a good person, I want analysis that tells me something interesting about the world, even if I don't agree with it. If I have to pay a Bond villain to get that, so be it.
I think this is a crank belief, and my guess is that you are an aggrieved ex-contractor. But i would definitely be interested to hear more about this theory.
Big consultancies are exempt because all their staff are paid at market rates and taxed as normal employees. Let's be honest - most contractors were paying a much lower rate of tax than anyone else holding a similar position. I believe this gap has now narrowed considerably though - been out of contracting for a few years now.
Big consultancies aren't exempt because they "pay market rates" - they're exempt because the worker doesn't own the delivery company, so the client carries no IR35 risk. Meanwhile, the consultancy bills the client often 2-3x the day rate and books the margin as corporate profit - profit that’s often structured to minimise UK tax exposure (through internal charges, offshore entities, etc.).
It's tempting - and convenient - to reduce a small, one-person business to "just an employee in disguise," but that's classism in its purest form.
Contractors didn't have tax advantages over big consultancies or employees - in fact, they often paid much more. They had none of the multinational tax structuring, none of the offshore routing, none of the internal "cost shifting" that lets large firms declare minimal UK profit and no top accountants on tap.
Employees typically see a small fraction of what the consultancy actually bills for their work. So the idea that big consultancies "do it right" while small independents were somehow gaming the system is a myth - one that government and corporate lobbyists have carefully exploited to shut down independent economic actors and funnel the contracts back to large firms.
While you are strictly correct that the legislation doesn't apply unless you are the owner of the small business providing the services - I guarantee you that if the consultancies did not in fact pay their employees at market rates, and instead paid low and then distributed dividends (or some other tax avoiding scheme), then there would be similar legislation that applied to them.
The tax man just doesn't like large numbers of workers paying less tax than they think they should.
[1] https://www.gov.uk/guidance/understanding-off-payroll-workin...
You say, "if big firms did X, they'd face similar rules" - but they already do worse, on a much larger scale, and they're rewarded with government contracts, tax privileges, and regulatory cover.
IR35 wasn't about fairness. It was about shutting down small, skilled independents so big firms could lock in the profit stream.
> The tax man just doesn't like large numbers of workers paying less tax than they think they should.
This is pure classism - the assumption that a working-class person cannot possibly run a legitimate business competing with a big consultancy on price and quality. No: they're just a tax-dodging worker who must be stopped.
It was because they really didn't like contractors using tax avoidance schemes to pay a much lower rate of tax than other people in the same position. Pay low, pay no income tax, national insurance or employers national insurance, and take the rest in dividends.
The fact that large multi-nationals do a lot worse tax wise in other areas of business is irrelevant to IR35. They are much harder to get under control than individuals. Although I still maintain that if they paid their workers the same way most contractors did, HMRC would clamp down on that very quickly. Because they can easily go after people's personal tax affairs; big corporations with expensive lawyers not so much.
It's really not classism either. It has nothing to do with being working class.
First, you say big consultancies would face similar crackdowns if they paid their workers like contractors. But that ignores the fact that big consultancies already do far worse - they pay those workers far less, charge the client multiple times more, and funnel profits through complex corporate tax minimisation schemes. And somehow, that's fine?
> Pay low, pay no income tax, national insurance or employers national insurance, and take the rest in dividends.
That's a misleading argument. Taxes aren't hypothecated - it doesn't matter if it's labelled income tax, NICs, or dividends. What matters is overall tax contribution relative to the full value of the work delivered.
A contractor's small business typically generated more total taxable value - as both personal and business tax - compared to the portion of client fees that actually passed through to consultancy employees and stayed in UK tax channels, once the consultancy layered on profit extraction, internal costs, and offshore routing.
Secondly, this "tax avoidance" narrative was easy to sell because most people don't understand how the tax system works - and because the independent contractor is visible, familiar, and easy to resent. They look just like the person judging them - maybe even sit at the next desk - but they're earning more and keeping the rewards of their own work.
It's far easier to stir anger at that visible success than to explain how large firms quietly charge clients £1,000 a day for the same job, pay the employee £45k, and funnel the surplus offshore. The real extraction happens invisibly - while the system trains people to aim their anger sideways, not upwards.
> Large companies are just harder to control.
That's no excuse. They could have been included under IR35 - they weren't, because the system is designed to shield institutional profit chains, not treat all labour pipelines equally.
And no, it's absolutely about class - because IR35 rests on the assumption that a skilled, independent worker cannot possibly run a legitimate business, only a disguised employee gaming the system. That's structural classism - whether you acknowledge it or not.
I fundamentally don't think IR35 is a class-based attack on the working class. It was introduced by a Labour government.
The consultancies don't pay their workers far less than they could get in a similar position as an employee of the client - or they would leave! They do charge the client a lot more of course - that's their profit, deserved or not.
While I totally acknowledge that large multinationals play fast and loose with tax, it's a totally different problem than going after small fry. I would welcome efforts to crack down on that, it's just very, very hard to pull off.
So my view is simply that IR35 was the taxman trying to bring in more revenue by targeting a common tax avoidance scheme used by people they thought would be easy to target. And then executed it incredibly poorly.
> The consultancies don't pay their workers far less than they could get as employees of the client — or they would leave! They do charge more, of course — that's their profit.
Yes - and when those workers realised they were undervalued, they left to set up their own businesses. That was precisely one of the points IR35 was lobbied for: to stop that exodus and lock talent back into captive corporate pipelines. This was never about tax - it was about control over the market.
> I would welcome efforts to crack down on that, it's just very, very hard to pull off.
No - they could have simply included large corporates under IR35. That was a deliberate exclusion, not a technical challenge.
> My view is IR35 was the taxman trying to bring in more revenue by targeting a common tax avoidance scheme used by people they thought were easy to target.
Running a legitimate business isn't a "tax avoidance scheme." Contractors paid personal and corporate taxes - and proportionally, they paid far more onshore than the consultancies replacing them.
IR35 is a market capture - one of the most efficient, targeted consolidations of skilled labour the UK has seen. And it works.
The contractor market is hardly dead as a result of IR35 - even though it is a huge pain in the ass for everyone.
I never said that running a legitimate business is a tax avoidance scheme. But I can count on the fingers of one hand the number of contractors I know whose legitimate businesses pay employers national insurance (if outside IR35). From HMRC's perspective, that is a gap they would like to close.
Anyway, good to hear different perspectives - we aren't going to agree, but I enjoyed discussing it with you.
Contractors and consultancies are the same thing, just at different scales. Both supply labour-for-hire. The only distinction is scale and ownership. IR35 only applies if the worker owns the business. That's protectionism.
The employer NIC line is a classic diversion. Taxes aren't moral based on the label. What matters is total contribution - and many contractors paid more in combined personal and business tax than consultancy employees and their firms ever did.
"From HMRC’s perspective…"
That perspective is the problem. It's not built to protect the taxpayer and foster fair economy - it's built to shield corporate structures, outsource enforcement risk, and target the smallest players who can't fight back
That is way too sophisticated. The simpler explanation, governments look for ways to squeeze more tax out of people. IR35 was an easy win for them, since it typically impacted only people who were effectively already employees by using tax loop holes to pay less. I know, I was one of them.
IR35 was never about raising tax. If it were, big consultancies would have been a primary hit, as this is where actual tax avoidance is.
You may have accepted the "I was one of them, using loopholes" framing, but running a small business isn't a loophole - and repeating that myth only props up the system that shut you out.
If you run a genuine small business, then you're not in IR35 because you'll be doing jobs for multiple clients.
Come on, let's not pretend here.
Certainly true that working for multiple clients simultaneously pretty much insulates you from being inside IR35 though.
That is what I was, and every single other contractor I knew.
They for example often publish articles encouraging lower taxes, but also those advocating for wealth taxes, land value taxes, estate taxes, non-dom/exit fees which are often the ones which specifically target the ultra rich.
The important thing to note is that on any financial trade, a party is on each side, and both will be reading the FT so they have a vested interest in trying to present both sides to capture this audience.
There are heavy-weight bond investors for example, who believe government debt is too high, and we need to tax the ultra-wealthy in order to reduce deficits.
I’m not sure who you think wealthy and powerful people are, if not those
McVitie's won with the astute argument that, unlike other biscuits, when a Jaffa Cake goes stale it becomes hard like a cake, not soft.
> They are not ready for human consumption
I understand why they made the argument but I couldn't understand how. I tracked down the judgement from last year:
> Walkers initially argued that the products were designed to be used with dips, chutneys and pickles, and as a side with a meal. On this basis, they contended that the products required further preparation before consumption and so did not fall within Note 5.
> In the hearing, Walkers accepted that there was nothing on the consumer packaging that stated that any preparation was required. It was agreed that the packaging would be required to state any such necessary preparation. We also noted that Walkers’ own promotional material showed people eating the product directly from the package, without any dips etc, and without a meal. On that basis, and in the light of case law on ‘preparation’ in this context, Walkers agreed that they were no longer relying on this argument.
I probably wouldn't really count these are "real" poppadoms, they're poppadom inspired mostly potato based snacks[1], sold in the crisps isle.
[1] https://www.tesco.com/groceries/en-GB/products/264339339 for an example of the product at a shop.
https://www.pringles.com/en-us/products/pringles-the-origina...
Whilst "dried potatoes" are the top ingredient, they also contain plenty of corn, rice, and wheat products.
Surprisingly, I have found that in the States, the "purest" seeming snack food is Fritos Original Corn Chips:
https://www.pepsicoproductfacts.com/Home/product?formula=LBS...
"Ingredients: Corn, vegetable oil (corn and/or canola oil), and salt."
Some of you may have read my story of the Olive Section at Carrefour in Catalonia. The same thing had happened with the same friend when she visited me in Phoenix. She had heard tell of a vast selection of crisp flavours. So we went to the convenience store/Subway/gas station on the corner, where half of the store shelves are chips, dip, and salty snacks. She was impressed and chose two bags, including a chili lime flavour.
And here I sit with the Kalamata olives and the Manchego cheese. Jamón Serrano is not easy to come by; sometimes I settle for Prosciutto.
This sounds right up my aisle. Where can I find the story?
Once you've seen it, it's hard to get out of your head.
Huge credit to whoever came up with this subtitle
Here is a map of where they're available in the UK[0]. I think you under-estimate the cut-throat nature and absolute consumer abundance of good crisps in the wider British Isles...
From what I can tell, the tariff on "Potatoes, Thin slices, fried or baked, whether or not salted or flavoured, in airtight packings, suitable for immediate consumption" from Ireland is 14%, reduced to 0% if they originate in Ireland https://www.trade-tariff.service.gov.uk/commodities/20052020...
The idea is that VAT was supposed to apply to everything equally (AFAIK in most EU countries it does?), but applying it to some things like food, children’s clothes or books was seen as kinda a bad idea when they brought it in for the UK in the 1970s, so they don't have it (technically the do, but at a 0% rate which is a technicality only accountants care about). But with food they didn't want to apply to frivolous luxuries. Which in some cases is fairly obvious (alcohol has VAT), and snacks like crisps are also bourgeois luxuries, so get the full 20% (oh, for the days of 17.5%...). This split does lead to some interesting tax tribunal decisions, so a chocolate covered biscuit does have VAT, but a cake with a chocolate topping doesn't, leading to the famous Jaffa Cake case, or this case about rather crisp like Poppadoms made by a crisp company.
[1] Except a lot more confusing.
Also, papadums are spelled differently by Indian restaurants around here, because it is, after all, in transliteration.
This was inevitable as mass-produced snack food is influenced and derived from foreign cuisine. Papadums served in a restaurant are about 6” diameter, puffy, thin and delicate. Caraway seeds and other bumps are often noticeable. Always need a good chutney to dip into.
The Indian groceries also sell shelves full of savory crispy snacks that run the gamut. I hope that Walkers can hold their niche amongst cricket fans.
Then there are paapads, which are basically the thin, less bubbly, often nearly plate-sized North Indian variety, often dosed with a smattering of spice. These are fire toasted and are the ones you commonly get at your local Indian for appetizer.
Then there's the South Indian appalam/pappadam which is smaller, made of rice, and often bubbly. Those usually are not spiced and are fried, often to eat with rice meals and not alone.
In some parts of South India like Bengaluru and Calicut, you can even get pappadams made out of jackfruit. These are usually made into conical shapes and are eaten as snacks.
பப்படம் → पापड़
The English Wikipedia covers the name's variants. And the jackfruit variety.
https://en.wikipedia.org/wiki/Papadam#Etymology
It is not my favorite appetizer, but the restaurants all seem to prepare them about the same. This is in the American Southwest with restaurants advertising cuisine of North India (vegetarian), Punjab, New Delhi, Pakistan, etc.
They are probably the most delicate crisp I've ever eaten. They crumble when I breathe on them or if they touch a drop of chutney. I wouldn't purchase them in a grocery store, for fear they would already be in crumbly pieces.
This is what I was arguing against. All of the above examples I quoted are different products with just the same root word. The only similarity might be the base ingredients and the shape.
> It is not my favorite appetizer, but the restaurants all seem to prepare them about the same. This is in the American Southwest with restaurants advertising cuisine of North India (vegetarian), Punjab, New Delhi, Pakistan, etc.
That's because all of those restaurants are still North Indian cuisine. A South Indian restaurant will have the other kind. And honestly, they aren't supposed to be eaten as appetizers, but rather along with the meal. The pappadom with chutney and sambar combo was something I only learnt of when I went to the UK the first time.