Contractors: IR35 & general discussion

Contractors: IR35 & general discussion

Author
Discussion

worsy

5,777 posts

174 months

Thursday 21st November 2019
quotequote all
wormus said:
Guvernator said:
We've gone over reasons why there are literally thousands of contractors and why a lot of companies prefer using them. If they wanted to hire more permies or pay dividends, there is absolutely nothing at all preventing them from doing that now. No one is holding a gun to their heads and forcing them to use contractors so maybe and I know this might be a bit out there as a concept, contracting is actually beneficial to everyone concerned which is why it's so prevalent.

Unfortunately envy usually prevents those who don't participate from seeing the benefits hence posts like yours. Envy politics is the main reason why there is such a clamour to stop it, it started with the bankers and now it's the turn of the contractors. and once they've done with us, they'll move on to the next target. The race to bring everyone down to the same level rather than allow people to rise up out of the 9-5 rat race.
Why would envy come into it? Anyone can do it, it’s currently just a way for people with average talent to take home more than they have the capacity to as a perm. Through tax avoidance and thankfully HMRC are stopping it.

Also you are wrong, we would certainly hire more perm if more were available so no it doesn’t suit everybody.


Edited by wormus on Wednesday 20th November 20:52
wormus said:
Mr Pointy said:
The only reason you can't get more permanent staff is that the pay & conditions you offer aren't good enough.

Pay a sufficent amount & you'll be inundated.
Easier said than done, we’ve found the contractor market to be so buoyant that anyone who’s any good is already contracting. Most don’t want to go perm but that may change now. It’s not the same all over the U.K., the supply and demand varies by city.
confused

98elise

26,381 posts

160 months

Thursday 21st November 2019
quotequote all

wormus said:
Why would envy come into it? Anyone can do it, it’s currently just a way for people with average talent to take home more than they have the capacity to as a perm.
wormus said:
...we’ve found the contractor market to be so buoyant that anyone who’s any good is already contracting.
You're contradicting your self now!

Gazzab

21,062 posts

281 months

Thursday 21st November 2019
quotequote all
wormus said:
I agree with pretty much all of that. My point is the compensation should be based on market rates, not tax evasion. If you are genuinely running a small business you have nothing to fear but this designed to target disguised employees who put themselves at a tax advantage by working behind an intermediary. If the market wants to adjust upwards to compensate it will.

I’m not anti contractor at all, just think it should be fair, especially as we are all asked to contribute more to better public services, NHS etc.
I won’t debate the evasion statement as assume you are referring to those take the pee out of IR35 determination. But the tax income aspect is an interesting point. It seems that the implementation of IR35 will reduce tax income for hmrc.

Dromedary66

1,924 posts

137 months

Thursday 21st November 2019
quotequote all
98elise said:
wormus said:
Why would envy come into it? Anyone can do it, it’s currently just a way for people with average talent to take home more than they have the capacity to as a perm.
wormus said:
...we’ve found the contractor market to be so buoyant that anyone who’s any good is already contracting.
You're contradicting your self now!
He hasn't got the mental faculties to remember what he wrote a few hours ago, not surprised he hasn't the ability to go contracting.

Countdown

39,691 posts

195 months

Thursday 21st November 2019
quotequote all
Mr Pointy said:
wormus said:
Also you are wrong, we would certainly hire more perm if more were available so no it doesn’t suit everybody.
The only reason you can't get more permanent staff is that the pay & conditions you offer aren't good enough.

Pay a sufficent amount & you'll be inundated.
I disagree. I think the tax advantages incentivise people to work as Contractors rather than Permies.

This entire thread isn't about day rates suddenly being reduced. Employers will still be paying Contractors the same amount of money (and in most cases they'll still be getting more than permies doing the same job). The thread is about Contractors being upset about the tax regime changing.

Countdown

39,691 posts

195 months

Thursday 21st November 2019
quotequote all
Gazzab said:
I won’t debate the evasion statement as assume you are referring to those take the pee out of IR35 determination. But the tax income aspect is an interesting point. It seems that the implementation of IR35 will reduce tax income for hmrc.
it won't. As Wormus mentioned in an earlier post the tax that Contractors were "paying" will simply be paid by somebody else instead because somebody else will get to earn it or keep it.

768

13,602 posts

95 months

Thursday 21st November 2019
quotequote all
Changing tax law won't mean there's somebody else to do the work.

wormus

14,509 posts

202 months

Thursday 21st November 2019
quotequote all
98elise said:
wormus said:
Why would envy come into it? Anyone can do it, it’s currently just a way for people with average talent to take home more than they have the capacity to as a perm.
wormus said:
...we’ve found the contractor market to be so buoyant that anyone who’s any good is already contracting.
You're contradicting your self now!
I don’t see how those two statements contradict each other. The bar for entry into the contractor market is accessible to people with average talent levels and the rewards are such that many choose to do it. It does vary by city though and in cities like London the demand is high.

wormus

14,509 posts

202 months

Thursday 21st November 2019
quotequote all
Dromedary66 said:
He hasn't got the mental faculties to remember what he wrote a few hours ago, not surprised he hasn't the ability to go contracting.
I contracted for almost a decade and decided quite early on I don’t want to be a 40yo developer, guess we are all different.

super7

1,922 posts

207 months

Thursday 21st November 2019
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PurpleTurtle said:
PostHeads123 said:
Most big companies though have IT teams in other places in the world and most can redirect work there, their is still incompetent offshoring about but also a lot of companies are now very mature with this model so the skills are there and just as good as in the UK. End of the day in a lot of companies its the business that determines IT budget, the business in most cases don't see the IR35 change as an issue they see it as a way to cut costs. I agree what they are doing with IR35 is stupid as it will probably cost HMRC revenue and the UK jobs, but it is what it is. Contractors can walk if they want fine but it wont solve anything for them, permies are sitting there waiting for the noise in the job market so they can jump in and pick up the roles.
Utter bks.

I've been with the same end client for a very long period of time. They have outsourced via one of the large consultancies, their team in India has people with 6 years' experience on our application who still struggle to get the absolute basics right day to day. As for their newer people - utterly dreadful. Their communication with our business is mind-bogglingly woeful, not even on the same page of business knowledge.

That's why, 6 years on, me and several UK colleagues are still there, preventing our outsourcers from causing widespread damage to business critical apps and have just been extended for another year, currently discussing my day rate under a brolly.
Ditto..... exactly the same here!!! even though offshore teams have been working on systems for years now, they still have no idea when it comes to problem solving or lateral thinking!!

Countdown

39,691 posts

195 months

Thursday 21st November 2019
quotequote all
768 said:
Changing tax law won't mean there's somebody else to do the work.
The free market finds its own level. If you pay people enough you can always find somebody.

Fittster

20,120 posts

212 months

Thursday 21st November 2019
quotequote all
Guvernator said:
Spot on, contractors have become an essential resource in many organisations, a partly flexible workforce much better suits the modern demands of many organisations. I also don't think anyone is averse to making the tax situation a bit fairer but the way they are implementing this swings it way too far into the camp of why would I bother.

Eliminating a large part of your flexible workforce, right at the time when the UK is facing one of it's toughest economic challenges in a long while is absolute madness.
How are contractors being eliminated? If you want them you can employee them within IR35. If contractors don't want to work at their current rates within IR35, the solution would seem to be to up their rates to negate the tax impact of IR35.


Guvernator

13,109 posts

164 months

Thursday 21st November 2019
quotequote all
The problem is people weren't paying more, salaries in most fields have been stagnant. The reason I went contracting was I got fed up of getting worse off every year. If people are so against contractors, pay your permie staff more, simple.

Countdown

39,691 posts

195 months

Thursday 21st November 2019
quotequote all
Guvernator said:
The problem is people weren't paying more, salaries in most fields have been stagnant. The reason I went contracting was I got fed up of getting worse off every year. If people are so against contractors, pay your permie staff more, simple.
Employers aren't "against" Contractors / "For" permies It's not employers that are imposing IR35, it's the Government. And they're not doing ot because they hate Contractors, it's because they see some Contractors pretending to be Contractors primarily for the tax benefits.

We've just employed a Contractor for a Project. He meets all the criteria set out in CEST so he will get paid gross. IR35 isn't going to be the end of people who are genuinely contractors. It is going to be the end of people who are basically "In-House IT project staff" who are pretending to be self-employed because of the tax benefits.

Alex

9,975 posts

283 months

Thursday 21st November 2019
quotequote all
Countdown said:
He meets all the criteria set out in CEST so he will get paid gross.
The off-payroll reforms are not law yet, so it's still up to the contractor to determine his status, not you (unless your organisation is public sector). For now.

Also, CEST is not accurate, and even though HMRC say they will stand by the results, HMRC cannot be trusted. They will stand by the result if it says "inside IR35"...

hyphen

26,262 posts

89 months

Thursday 21st November 2019
quotequote all
Alex said:
Countdown said:
He meets all the criteria set out in CEST so he will get paid gross.
The off-payroll reforms are not law yet, so it's still up to the contractor to determine his status, not you (unless your organisation is public sector). For now.

Also, CEST is not accurate, and even though HMRC say they will stand by the results, HMRC cannot be trusted. They will stand by the result if it says "inside IR35"...
New CEST tool is due out in December.

A lot of companies have postponed their assessments of existing contractors untill it's released.

Gazzab

21,062 posts

281 months

Thursday 21st November 2019
quotequote all
Countdown said:
Gazzab said:
I won’t debate the evasion statement as assume you are referring to those take the pee out of IR35 determination. But the tax income aspect is an interesting point. It seems that the implementation of IR35 will reduce tax income for hmrc.
it won't. As Wormus mentioned in an earlier post the tax that Contractors were "paying" will simply be paid by somebody else instead because somebody else will get to earn it or keep it.
Many contractors are unable to secure roles as a direct result of the IR35 changes (eg clients reducing the number of hires). Many clients will off-shore or use consultancies more frequently. This reduces hmrc tax income. The changes are driving down rates too.

worsy

5,777 posts

174 months

Thursday 21st November 2019
quotequote all
Gazzab said:
Countdown said:
Gazzab said:
I won’t debate the evasion statement as assume you are referring to those take the pee out of IR35 determination. But the tax income aspect is an interesting point. It seems that the implementation of IR35 will reduce tax income for hmrc.
it won't. As Wormus mentioned in an earlier post the tax that Contractors were "paying" will simply be paid by somebody else instead because somebody else will get to earn it or keep it.
Many contractors are unable to secure roles as a direct result of the IR35 changes (eg clients reducing the number of hires). Many clients will off-shore or use consultancies more frequently. This reduces hmrc tax income. The changes are driving down rates too.
I think some rates are going down because of other factors as well.

Brexit
The election
General slowdown for end of year
Delusional clients
Delusional agents
Greedy agents


Guvernator

13,109 posts

164 months

Thursday 21st November 2019
quotequote all
Countdown said:
Employers aren't "against" Contractors / "For" permies It's not employers that are imposing IR35, it's the Government. And they're not doing ot because they hate Contractors, it's because they see some Contractors pretending to be Contractors primarily for the tax benefits.

We've just employed a Contractor for a Project. He meets all the criteria set out in CEST so he will get paid gross. IR35 isn't going to be the end of people who are genuinely contractors. It is going to be the end of people who are basically "In-House IT project staff" who are pretending to be self-employed because of the tax benefits.
The CEST tool is heavily biased towards giving an inside assessment, some of the questions are ridiculous, I don't know any contractor who isn't under some form of SDC for instance. It's designed to cast as wide a net as possible so yes for 90% of people, contracting is finished. Even when the CEST tool gives an outside assessment, there is zero guarantee that HMRC will stick by it.

Alex

9,975 posts

283 months

Thursday 21st November 2019
quotequote all
Sambucket said:
So we do annoying things like insist contractors take on other clients and not work full time for us. Which is a pain, but it saves loads of money and keeps things clear re IR35.
This has very little bearing on IR35. Each contract should be assessed individually.