Contractors: IR35 & general discussion
Discussion
egomeister said:
Let the weak go permie... more work left for those with stronger resolve!
Except it’s not your choice to decide if you are outside IR35. Only those who adapt will survive. I get it, being a contractor is about being independent, an individual.....just like everybody else!
wombleh said:
It's not so much about being a real business, a PSC (personal service company) operating inside IR35 can be a real business but with UK tax law there isn't much point running a limited company in that situation. Plenty of suppliers send resources on T&M basis to do whatever the client desires and they're still real businesses.
The PSC is a "business", but work performed within IR35 is not a B2B transaction - the PSC isn't supplying services to the client, it's supplying a worker who provides personal service to the client.In your example of suppliers sending resources to clients on a T&M basis "to do whatever the client desires", those workers are either within IR35 as above, or more likely employees of the supplying company.
wombleh said:
It's about the tax setup for certain types of business, different countries have different rules on it so it's not like there's a clear moral boundary where one side it's all good and the other side you're suddenly evading tax.
This may be true, but we're talking about the UK here, so UK (E&W, Scotland, NI) law applies. If you can make your business model work elsewhere, go for it.And then she said:
SOL111 said:
Resist..........must not go permie 
From your earlier description, your work is very clearly not within IR35. I'm not really sure why you're still posting on the thread?ETA actually I'll retract telling you to f
k off as that's a bit rude, despite you playing the thread police.Although for any avoidance of doubt, my post was in response to wombleh who mentioned that his contract was outside but he/she didn't trust the client to classify it that way. Yeah I know, humour isn't my strong suit but behind the terrible and clearly offensive (to you) post, the message was really to stick it out and wait for the outcome. After all he/she could be pleasantly surprised if the client is determined to maintain status quo by tweaking the terms and conditions to put the contract clearly outside.
The alternative is that the client puts the contract inside but may then offer a rate rise to compensate for the loss. Either way, it might be worth a little patience.
Edited by SOL111 on Saturday 27th July 00:09
Edited by SOL111 on Saturday 27th July 00:29
SOL111 said:
The alternative is that the client puts the contract inside but may then offer a rate rise to compensate for the loss. Either way, it might be worth a little patience.
I think you are deluded. Nobody’s going to compensate for your loss unless you do something quite valuable. Certainly not in IT.Edited by SOL111 on Saturday 27th July 00:09
Edited by SOL111 on Saturday 27th July 00:29
wormus said:
SOL111 said:
The alternative is that the client puts the contract inside but may then offer a rate rise to compensate for the loss. Either way, it might be worth a little patience.
I think you are deluded. Nobody’s going to compensate for your loss unless you do something quite valuable. Certainly not in IT.Edited by SOL111 on Saturday 27th July 00:09
Edited by SOL111 on Saturday 27th July 00:29
wormus said:
SOL111 said:
The alternative is that the client puts the contract inside but may then offer a rate rise to compensate for the loss. Either way, it might be worth a little patience.
I think you are deluded. Nobody’s going to compensate for your loss unless you do something quite valuable. Certainly not in IT.Edited by SOL111 on Saturday 27th July 00:09
Edited by SOL111 on Saturday 27th July 00:29
I get the sneaky suspicion, from the flavour of your posts, that you don't think contractors do anything valuable, hence your 'deluded' comment but quite obviously all contractors are different and have different levels of value.
I don't work in IT and have no idea if wombleh does either.
wormus said:
SOL111 said:
The alternative is that the client puts the contract inside but may then offer a rate rise to compensate for the loss. Either way, it might be worth a little patience.
I think you are deluded. Nobody’s going to compensate for your loss unless you do something quite valuable. Certainly not in IT.Edited by SOL111 on Saturday 27th July 00:09
Edited by SOL111 on Saturday 27th July 00:29
The reality is that initially contracts will be offered at the same rates (so contractors would receive significantly less money).Some people will move to permie work as contracting becomes less attractive. That will shrink the number of people willing to contract, and rates will rise.
For me my total benefits as a permie (in cash terms) was about 20% less than what I get as a contractor.
If I had to pay 14% more in tax on the same rate then it would be a no brainer to take a permanent role next.
I don't like being permanent though so I'm retiring.
hyphen said:
wormus said:
SOL111 said:
The alternative is that the client puts the contract inside but may then offer a rate rise to compensate for the loss. Either way, it might be worth a little patience.
I think you are deluded. Nobody’s going to compensate for your loss unless you do something quite valuable. Certainly not in IT.Edited by SOL111 on Saturday 27th July 00:09
Edited by SOL111 on Saturday 27th July 00:29
I know a number of clients who review rates on an annual basis so are the ones that are more likely to compromise, if some contractors are deemed inside.
SOL111 said:
Clearly I'm not deluded if, by your own statement, someone does something valuable for the client. So 'nobody' could be 'somebody'. Perhaps think about what you're posting before posting.
I get the sneaky suspicion, from the flavour of your posts, that you don't think contractors do anything valuable, hence your 'deluded' comment but quite obviously all contractors are different and have different levels of value.
I don't work in IT and have no idea if wombleh does either.
The key word in my statement is “if” which you’ve acknowledged.I get the sneaky suspicion, from the flavour of your posts, that you don't think contractors do anything valuable, hence your 'deluded' comment but quite obviously all contractors are different and have different levels of value.
I don't work in IT and have no idea if wombleh does either.
I value all my contractors but my loyalty is my employer and making sure all our workforce are compliant with IR35 and HMRC tax guidelines. One thing I can assure you we won’t be doing is giving everyone a rate increase to compensate for their “losses”.
wormus said:
One thing I can assure you we won’t be doing is giving everyone a rate increase to compensate for their “losses”.
That's fine if you can bare loosing them, there's a market out there and whilst there's still a hole in my arse I'll do my best to make sure that my skills and experience are renumerated at the level the market sets.Whilst cutting the take home pay of hundreds of thousands of people at the same time as increasing the cost base of a lot of large corporate businesses might seem like a quick earner for the revenue I doubt anyone in their right mind in government thinks its a long term solution to a decelerating economy and looming recession. Well I hope not.
FredClogs said:
Whilst cutting the take home pay of hundreds of thousands of people at the same time as increasing the cost base of a lot of large corporate businesses might seem like a quick earner for the revenue I doubt anyone in their right mind in government thinks its a long term solution to a decelerating economy and looming recession. Well I hope not.
It's about making sure that "disguised employees" pay the same amount of tax as PAYE employees. Genuine contractors shouldn't have anything to worry about. The fact that so many do appear to be worried suggests that they know there is some ambiguity about their status but, even then, it comes back to the same thing. if they are genuine contractors they have the ability to take up contracts which fall outside of IR35. After all, flexibility, short term contracts, being mobile etc are all part and parcel of what being a Contractor isFredClogs said:
That's fine if you can bare loosing them, there's a market out there and whilst there's still a hole in my arse I'll do my best to make sure that my skills and experience are renumerated at the level the market sets.
That very much depends on whether you consider contractors to be uniquely valuable with skills that are otherwise unobtainable - or a convenient way to flex parts of the organisation that have a temporary need for additional hands.In my experience (having been a contractor for roughly half of my 20 years in IT) - contractors think they're the former, your clients think you're the latter. The reality, as with most things, is probably somewhere in the middle.
The real issue of course is the dimwitted clients that have knowingly worked with agents to offer 'outside' IR35 contracts to contractors and are now shafting them by openly acknowledging that they've not had a clue all along.
As a result they can either lose the resource that they clearly felt were valuable or pay up for their own incompetence.
Some may, some might not but if not then they'll have to have some contingency in place for the potential fallout.
As a result they can either lose the resource that they clearly felt were valuable or pay up for their own incompetence.
Some may, some might not but if not then they'll have to have some contingency in place for the potential fallout.
FredClogs said:
there's a market out there and whilst there's still a hole in my arse I'll do my best to make sure that my skills and experience are renumerated at the level the market sets.
Of course, that's what you do already but that doesn't mean you get to set a higher rate. My gut feel is we will see more contractors inside IR35 as most large companies decide it's too difficult to justify keeping them outside and the risk of a fine/tax liability from HMRC is too great. This will lead to less take home pay for many who will probably decide to go perm or retire. The reality is there will be a smaller market for contractors unless they choose to be inside IR35FredClogs said:
Whilst cutting the take home pay of hundreds of thousands of people at the same time as increasing the cost base of a lot of large corporate businesses might seem like a quick earner for the revenue I doubt anyone in their right mind in government thinks its a long term solution to a decelerating economy and looming recession. Well I hope not.
But it survived several changes of government and economic cycles since it came into force 19 years ago although it's been largely ignored. It's now being rigidly enforced in the public sector. I'm not sure a decelerating economy has much to do with it. Countdown said:
It's about making sure that "disguised employees" pay the same amount of tax as PAYE employees. Genuine contractors shouldn't have anything to worry about. The fact that so many do appear to be worried suggests that they know there is some ambiguity about their status but, even then, it comes back to the same thing. if they are genuine contractors they have the ability to take up contracts which fall outside of IR35. After all, flexibility, short term contracts, being mobile etc are all part and parcel of what being a Contractor is
I think we've been through this to some extent before but it's the lack of confidence in clients that's causing the concern.Your company has clearly brought you in to manage this and from previous post, you sound like you're taking a professional approach to it. However I'm almost certain that some don't even know what IR35 is so will just be spooked by the new legislation. Some on here have already alluded to clients dropping contractors altogether so the response to this seems to be variable.
I think it's a normal reaction to be concerned.
As before, contractors have been taken to court by HMRC despite their own IR35 status being deemed outside by legal professionals. The fact that HMRC have then lost in court shows that the system is hardly working.
I've just renegotiated a contract extension on improved day rates, but as the hiring coming didn't have much wiggle room I put it on the agency, managed to squeeze them a little as I was aware that their charge rate allowed some improvement, so while we are all talking about how hiring companies may not improve the day rate to accommodate IR35 changes, at least half of the 'losses' can potentially be negated by skimming some of the margin from the agency. Why should they get £60/70 a day for me, for the duration of my contract?
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