Contractors: IR35 & general discussion
Discussion
Gazzab said:
Back in the mid to late 90s, before the millennium bubble, contractors were generally top draw.
Project management is the best example of dross contractors. They get made redundant somewhere and so go contracting despite being totally rubbish. But because the client management are also so rubbish they keep working.
Those were the good old days indeed - rates were as high or higher than they are today, lot more tax loopholes and there were a hell of a lot (almost none) of what I’d term IT “hangers on”. That was a general thing in IT though - the contract market has just mirrored the perm market. Project management is the best example of dross contractors. They get made redundant somewhere and so go contracting despite being totally rubbish. But because the client management are also so rubbish they keep working.
Ahhhhh five year contracts, set of expensive wheels for the car, company conference in New York etc etc. These days you’ve got some geezer trying to convince the tax man that he’s different from a permie because he wears a t shirt with his logo on. Desperate times.
SarlechS said:
I don't think the contracting market in IT will die a death when IR35 comes in April (even though i think it will be delayed again). There will always be a requirement for specialists or consultants to come in and deliver projects.
If the employers don't uplift the pay with the extra NI / Tax we pay (call it 20%) then all the decent contractors will flip back into a perm job and participate back in the corporate rat race only with more experience to take on the existing perms that are already there. only with the advantage that they are likely to have more experience (if they've been a career contractor). All the low level contractors will remain contracting with the 20% pay cut! - no holidays, no sick pay, no pension, shares, dental etc seems like a bad deal to me...they won't be providing any expertise or experience to the employer so its a lose lose situation for them.
Pay peanuts get monkeys!
Some of the decent contractors will just stay contractors, mopping up the bona fide outside IR35 work on higher rates and shorter deliverable based orders than the old “bum on seat” permtractor gigs.If the employers don't uplift the pay with the extra NI / Tax we pay (call it 20%) then all the decent contractors will flip back into a perm job and participate back in the corporate rat race only with more experience to take on the existing perms that are already there. only with the advantage that they are likely to have more experience (if they've been a career contractor). All the low level contractors will remain contracting with the 20% pay cut! - no holidays, no sick pay, no pension, shares, dental etc seems like a bad deal to me...they won't be providing any expertise or experience to the employer so its a lose lose situation for them.
Pay peanuts get monkeys!
There are opportunities for those who are inclined to structure their engagements in such a manner, but it requires a greater appetite for risk than the old model. All part of being in business on one’s own account, of course...
Edited by theboss on Friday 4th December 18:08
theboss said:
Some of the decent contractors will just stay contractors, mopping up the bona fide outside IR35 work on higher rates and shorter deliverable based orders than the old “bum on seat” permtractor gigs.
There are opportunities for those who are inclined to structure their engagements in such a manner, but it requires a greater appetite for risk than the old model. All part of being in business on one’s own account, of course...
I really hope so, I’ve not done extensive reading on the exact criteria of ir35 (what is deemed outside and inside etc.) but from the conversations I’ve had with recruiters, I get the impression 80-90% of jobs will be inside. There are opportunities for those who are inclined to structure their engagements in such a manner, but it requires a greater appetite for risk than the old model. All part of being in business on one’s own account, of course...
Edited by theboss on Friday 4th December 18:08
It would be a great shame if the contractor market dies a death. My prediction is that some or most inside IR35 roles will have end clients paying an uplift in day rate to offset the extra taxes contractors will pay. If the end client doesn’t uplift then maybe the recruiter (or employer in ir35 roles) will lower their cut on day rates to sweeten the deal.
I do agree with you though, the outside ir35 roles will be fierce with competition!
theboss said:
Some of the decent contractors will just stay contractors, mopping up the bona fide outside IR35 work on higher rates and shorter deliverable based orders than the old “bum on seat” permtractor gigs.
How is it possible to 'mop up the bona fide outside IR35 work' when most big clients have a blanket ban on PSC engagement, and will only engage with those on an approved list of large service providers? This is the reality for many of us.SarlechS said:
My prediction is that some or most inside IR35 roles will have end clients paying an uplift in day rate to offset the extra taxes contractors will pay. If the end client doesn’t uplift then maybe the recruiter (or employer in ir35 roles) will lower their cut on day rates to sweeten the deal.
I do agree with you though, the outside ir35 roles will be fierce with competition!
I thought Contractors paid broadly the same level of tax as PAYE.....? I do agree with you though, the outside ir35 roles will be fierce with competition!
I'm not sure if Employers will be too keen on raising the daily rates given that they are now going to have to pay Ers NI. The fact that the Contractor is now paying more tax isn't their issue.
The thing is - it's a free market. Employers will offer whatever they need to attract the necessary people. That might be more than current rates, it might be less. It all depends on supply and demand.
Countdown said:
I thought Contractors paid broadly the same level of tax as PAYE.....?
I'm not sure if Employers will be too keen on raising the daily rates given that they are now going to have to pay Ers NI. The fact that the Contractor is now paying more tax isn't their issue.
The thing is - it's a free market. Employers will offer whatever they need to attract the necessary people. That might be more than current rates, it might be less. It all depends on supply and demand.
We will pay extra taxes as we can't keep profits in the business bank now I'm not sure if Employers will be too keen on raising the daily rates given that they are now going to have to pay Ers NI. The fact that the Contractor is now paying more tax isn't their issue.
The thing is - it's a free market. Employers will offer whatever they need to attract the necessary people. That might be more than current rates, it might be less. It all depends on supply and demand.
Countdown said:
SarlechS said:
My prediction is that some or most inside IR35 roles will have end clients paying an uplift in day rate to offset the extra taxes contractors will pay. If the end client doesn’t uplift then maybe the recruiter (or employer in ir35 roles) will lower their cut on day rates to sweeten the deal.
I do agree with you though, the outside ir35 roles will be fierce with competition!
I thought Contractors paid broadly the same level of tax as PAYE.....? I do agree with you though, the outside ir35 roles will be fierce with competition!
I'm not sure if Employers will be too keen on raising the daily rates given that they are now going to have to pay Ers NI. The fact that the Contractor is now paying more tax isn't their issue.
The thing is - it's a free market. Employers will offer whatever they need to attract the necessary people. That might be more than current rates, it might be less. It all depends on supply and demand.
Given the state of the economy and the market, that can only be a good sign.
Olivera said:
theboss said:
Some of the decent contractors will just stay contractors, mopping up the bona fide outside IR35 work on higher rates and shorter deliverable based orders than the old “bum on seat” permtractor gigs.
How is it possible to 'mop up the bona fide outside IR35 work' when most big clients have a blanket ban on PSC engagement, and will only engage with those on an approved list of large service providers? This is the reality for many of us.I've worked for at least 3 clients in the last month (two tier-1 banks and a major asset manager to be precise) whose 'staff' contractors in the UK will have been forced PAYE / inside / perm.
That's before you even look at the 'fixed term' contracts which are deemed to be outside - a lot of gov / MOD ones are.
I appreciate there won't be loads of this work, but people who want to stay in outside IR35 PSC setups will have the option of competing for it.
Those with established networks of clients in the PS channel and who are comfortable pitching for short term projects without any security of income will clean up.
From what I've seen so far most contractors are grumbling (rightfully - I don't support the reform whatsoever) but would rather go perm or take the PAYE option for an easy life, than do what I've done.
I've also done a lot more work for offshore clients this year than usual. The benefits of remote working cut both ways - instead of all the jobs going offshore a lot of new work is coming into this country. There are a lot of very experienced workers in this country who aren't the most expensive compared to other developed markets, are well placed timezone-wise and speak the right language. I've spent most of the year working for a major US client in addition to all the other bits and pieces mentioned above. My experience certainly runs very contrary to all the doom mongering.
Edited by theboss on Friday 4th December 21:07
theboss said:
The big clients will still engage consultancies / resellers / integrators / vendors for professional services on a B2B basis and a lot of that work will trickle down to outside IR35 workers often in the form of short term engagements on a strictly defined deliverable basis.
You're describing exactly the working arrangement that I previously had which is no longer possible: My PSC -> Consultancy -> Client (large bank).It's no longer possible because of a client PSC ban, that's not just direct contractors, but anywhere in the supply chain, applicable to any number of intermediaries.
I think that, after a while (a few years, probably), then we will reach a new equilibrium and the market will stabilise in one form or another.
It'll be a rough few years whilst it happens though.
I literally do not know what the future holds for me. I'm too young to retire, but too bloody-minded to go perm.
It'll be a rough few years whilst it happens though.
I literally do not know what the future holds for me. I'm too young to retire, but too bloody-minded to go perm.
Blown2CV said:
surely rates are pretty volatile right now and the outcomes you may be experiencing right now is very variable dependent upon industry and career specialism? Some industries are in hibernation and some booming, both due to COVID.
True. Signwriting seems to have been a boom area.Also, my most recent client makes sewing machines and embroidery machines.
Funny old world.
Edited by Clockwork Cupcake on Saturday 5th December 00:51
Olivera said:
You're describing exactly the working arrangement that I previously had which is no longer possible: My PSC -> Consultancy -> Client (large bank).
It's no longer possible because of a client PSC ban, that's not just direct contractors, but anywhere in the supply chain, applicable to any number of intermediaries.
We’re you a “worker” though with a badge and a login and an expectation that you’d be onsite Monday to Friday? I’ve had countless contracts like this with PSC —> Consultancy / Sys integrator —> end client. That’s absolutely not what I’m talking about. And yes these arrangements are largely ending.It's no longer possible because of a client PSC ban, that's not just direct contractors, but anywhere in the supply chain, applicable to any number of intermediaries.
theboss said:
We’re you a “worker” though with a badge and a login and an expectation that you’d be onsite Monday to Friday? I’ve had countless contracts like this with PSC —> Consultancy / Sys integrator —> end client. That’s absolutely not what I’m talking about. And yes these arrangements are largely ending.
In my case I've never been onsite on even a single occasion for the end client.My point is more general: many large clients now won't accept a PSC contractor anywhere in the supply chain, via any intermediary, regardless of the nature of the work. As of April 20201, even if the work is obviously outside of IR35, the end client must still conduct due diligence via status assessments, reviews and ultimately carrying the can for tax liability.
Edited by Olivera on Saturday 5th December 01:14
Dog Star said:
SarlechS said:
Average U.K. perm worker changes their job every 5 years. Average contractor will change 6-12 months. If they’ve been a a good career contractor you would expect them to have worked back to back for 10-20+ years. Having delivered many more projects in different industries/ sectors with more technologies with more processes. So by virtue your would expect them to have acquired more experience..I think that’s a given. You’re right just because a person works a perm job doesn’t mean they can’t be a better than a contractor. I said the career contractor is likely to have more experience than the average perm at the same level.
A lot of the top flight contractors (ex colleagues and friends) who flip back perm normally go on to excel. As mentioned the bad contractors will remain contracting for -20% pay.
Hope you didn’t take offence
No. I just think you're talking rubbish. A lot of the top flight contractors (ex colleagues and friends) who flip back perm normally go on to excel. As mentioned the bad contractors will remain contracting for -20% pay.
Hope you didn’t take offence
Changing every six to twelve months is not a good thing, by the way. It indicates a lack of continuity or full end to end project dev.
However if you want to rock into companies thinking that you're better than the perm staff in there then knock yourself out. Certainly not an arrogant approach I'd have taken, I did it for the money - certainly not something that's worth doing it for anymore.
I've never thought I was better, than any permie, just a wider industry view. I love not knowing
anything on day one. Asking lots of stupid questions
Blown2CV said:
surely rates are pretty volatile right now and the outcomes you may be experiencing right now is very variable dependent upon industry and career specialism? Some industries are in hibernation and some booming, both due to COVID.
Rates in engineering are all over the place. There are some agents/clients that are clearly trying to take the piss at present. I've seen rates as low as £20/hr for inside roles. Some of these roles list off a long list of requirements that mean they need someone with a fair few years of industry experience. That's basically expecting experienced people to work for less than graduate salaries but with none of the perks. I realise if someone is depserate enough, they will find someone but how committed is that contractor going to be? To me it is utterly short sighted but I guess some will get away with it for a short while. There are still reasonable rates available and roles are out there but the sheer number of applicants is making for tricky times for contactors. I've been told a number of times that many roles are getting 500+ applicants. Many of these applicants will be totally unsuitable but it's a big task to just get through the arbitrary filtering stages. I've been keywording CV's for specific roles, writing cover letters and making follow up calls in a way that I've simply not had to in the past. I've always done this to an extent but it seems at present it's really the only way to even have half a chance. All just to try to get CV in front of a client. And some of these roles have been quite specialised where there cannot be more than a handful of people available who can do them and even when you have the right experience, if you don't push very hard you can get binned at the first hurdle. Many agents are really not covering themselves with glory at present.
I've also found it extremely frustrating just how long some clients are taking to make decisions. I'm getting the odd email now for roles that I stuck my name in for 12 weeks ago.
Oh and one maddening conversation with an agent. He was concerned that I'd jumped around a lot and his client wouldn't like that. Jumping around in this case was 2 contacts in 2 years! What do they f'ing expect?!
This whole "jumping" around amazes me.
Either you move regularly as are in fact a true contractor who is retained to problem solve something (big bucks and expensive) or fix a short term gap (until hire someone permanent) or bring speciast skillset upon a specific subject for a limited duration.
Have never understood how contractors can be in the same business/site/department for eg 2,5, 10 and best one yet 17 years? I must be missing something.
Either you move regularly as are in fact a true contractor who is retained to problem solve something (big bucks and expensive) or fix a short term gap (until hire someone permanent) or bring speciast skillset upon a specific subject for a limited duration.
Have never understood how contractors can be in the same business/site/department for eg 2,5, 10 and best one yet 17 years? I must be missing something.
Gad-Westy said:
Oh and one maddening conversation with an agent. He was concerned that I'd jumped around a lot and his client wouldn't like that. Jumping around in this case was 2 contacts in 2 years! What do they f'ing expect?!
That's the thinking of an agent who is used to dealing with permies, I would imagine. Just shows how utterly clueless some of them are. Little better than Estate Agents.
T5R+ said:
This whole "jumping" around amazes me.
Either you move regularly as are in fact a true contractor who is retained to problem solve something (big bucks and expensive) or fix a short term gap (until hire someone permanent) or bring speciast skillset upon a specific subject for a limited duration.
Have never understood how contractors can be in the same business/site/department for eg 2,5, 10 and best one yet 17 years? I must be missing something.
I’m glad somebody else understands! Either you move regularly as are in fact a true contractor who is retained to problem solve something (big bucks and expensive) or fix a short term gap (until hire someone permanent) or bring speciast skillset upon a specific subject for a limited duration.
Have never understood how contractors can be in the same business/site/department for eg 2,5, 10 and best one yet 17 years? I must be missing something.
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