Contractors: IR35 & general discussion

[Deep Thought]

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.

+1

I fall in to the bring specialist skillset upon a specific subject for a limited duration category. Usually big projects for global companies, part of a project team, deliver a global system, build and help recruit a BAU team, handover, move on.

I've known of people stay with the same company long term, but move from project to project and thus overall be there for an extended time. Has never been the case for me as a work on one specific system so once its built thats it, but PMs, Business Change Managers, etc could easily move to another project.

Conversely i've heard of people doing one role for an extended time, for whatever reason.

[robinessex]

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.

Used to happen in the aircraft industry for stress engineers especially. 2-year contract, learn the system and company methodology. Next aircraft comes along, you move onto that. Hit the ground running as far as the company were concerned. The next contract/aircraft was never certain, so a team of contractors could be dumped if required cost-free.

[theboss]

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.

It’s quite common for that “specialist skill set needed for a limited duration” scenario to roll over. That person’s skills need to be retained and may not be readily attainable in the employment market.

If it looks/smells like an employee / employer relationship it’s deemed so by the manner in which it’s conducted, not it’s duration.

Granted, 17 years as a “full time worker” for one client makes you part and parcel of their business and I doubt anyone is going to succeed in an IR35 investigation in that situation.

[Countdown]

robinessex said:

Used to happen in the aircraft industry for stress engineers especially. 2-year contract, learn the system and company methodology. Next aircraft comes along, you move onto that. Hit the ground running as far as the company were concerned. The next contract/aircraft was never certain, so a team of contractors could be dumped if required cost-free.

What's the difference between this team of Contractors and a team of Employees on a Fixed Term Contract?

[Dog Star]

T5R+ said:

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’ve had one that was over five years (it’s also how I met Mrs DS - I originally had designs on her sister who was my boss, but ended up with her). I actually refused a renewal and went somewhere else, but one of my contractor colleagues went 17 years. He left because he retired.

Biggest bummer was having a contract terminated (company finances) one week into a year long extension (going into my fourth year). On the upside they actually did pay out on all of the Penalty clauses.

[Clockwork Cupcake]

Dog Star said:

I originally had designs on her sister who was my boss, but ended up with her

I presume she doesn't read PH?

[Gad-Westy]

A while ago, back in my permie days I appointed a couple of engineers who had come from a large construction machinery company, Both had been contractors. Both 15 years+ in the same company. To all intents and purposes, contractors by terms of employment only. It used to seem quite common.

But when I got into contracting a couple of years back (great timing, I know!!) the biggest appeal was always the short term, transient nature of contracting. I love parachuting into projects, getting the headline task done and then moving onto the next. To me it was the main reason for doing it in the first place.

[Gazzab]

I know someone who has been in the same contract since about 1986. He worked for an insurer as a pensions systems expert, they outsourced the system in 2007 (he went with it), it moved suppliers 10 years later (he went with it again).
He was worth his £600 a day v the perm people. No one else would be able to understand the system, the pensions regulations/products/actuarial calcs etc.... in the 2 or 3 years they might commit to the system/role. Any of the perms willing to commit for a long time weren’t good enough.

[98elise]

Gazzab said:

I know someone who has been in the same contract since about 1986. He worked for an insurer as a pensions systems expert, they outsourced the system in 2007 (he went with it), it moved suppliers 10 years later (he went with it again).
He was worth his £600 a day v the perm people. No one else would be able to understand the system, the pensions regulations/products/actuarial calcs etc.... in the 2 or 3 years they might commit to the system/role. Any of the perms willing to commit for a long time weren’t good enough.

Similarly I know a contractor who worked for the same company for 20+ years. Originally implemented a system, then supported it, then implemented its replacement, then multiple system mergers, then a new replacement. He just had all the in depth knowledge of the people, processes and technology.

[Clockwork Cupcake]

Regardless of whether or not length of contract is indicative of disguised employment, it's certainly true that the longer you are in a contract, the juicier a target you are for HMRC since they have to contest an individual engagement rather than your whole business. A longer contract will potentially yield a bigger retrospective tax bill than a shorter one (all other things being equal).

[Gazzab]

Clockwork Cupcake said:

Regardless of whether or not length of contract is indicative of disguised employment, it's certainly true that the longer you are in a contract, the juicier a target you are for HMRC since they have to contest an individual engagement rather than your whole business. A longer contract will potentially yield a bigger retrospective tax bill than a shorter one (all other things being equal).

My accountant has always advised me that a key piece of data for HMRC is how much money you have in your co account. Thankfully I’ve always been good at spending.

[Deep Thought]

Gazzab said:

My accountant has always advised me that a key piece of data for HMRC is how much money you have in your co account. Thankfully I’ve always been good at spending.

Its also a risk v reward model for them. It costs something like £20,000 for them to do a full investigation and they will want many times that back in recovered revenue and they have limited resources. Each team is targeted on how much tax revenue they recover per quarter IIRC.

[Clockwork Cupcake]

Deep Thought said:

Its also a risk v reward model for them. It costs something like £20,000 for them to do a full investigation and they will want many times that back in recovered revenue and they have limited resources. Each team is targeted on how much tax revenue they recover per quarter IIRC.

Exactly. So I was suggesting that the longer the contract, the bigger the potential reward. A contract that has run for the full 7 years that HMRC can go back (I think it is) is going to be potentially worth more than a 2 month contract

[Deep Thought]

Clockwork Cupcake said:

Deep Thought said:

Its also a risk v reward model for them. It costs something like £20,000 for them to do a full investigation and they will want many times that back in recovered revenue and they have limited resources. Each team is targeted on how much tax revenue they recover per quarter IIRC.

Exactly. So I was suggesting that the longer the contract, the bigger the potential reward. A contract that has run for the full 7 years that HMRC can go back (I think it is) is going to be potentially worth more than a 2 month contract

Yes. Assuming they have sight of how long you have been in contract. Not hard to find out if they're interested if they were to ask the end clients.

[Gazzab]

Deep Thought said:

Clockwork Cupcake said:

Deep Thought said:

Its also a risk v reward model for them. It costs something like £20,000 for them to do a full investigation and they will want many times that back in recovered revenue and they have limited resources. Each team is targeted on how much tax revenue they recover per quarter IIRC.

Exactly. So I was suggesting that the longer the contract, the bigger the potential reward. A contract that has run for the full 7 years that HMRC can go back (I think it is) is going to be potentially worth more than a 2 month contract

Yes. Assuming they have sight of how long you have been in contract. Not hard to find out if they're interested if they were to ask the end clients.

Clients have to report it (this is a relatively new thing afaik).

[Pit Pony]

Deep Thought said:

Clockwork Cupcake said:

Deep Thought said:

Its also a risk v reward model for them. It costs something like £20,000 for them to do a full investigation and they will want many times that back in recovered revenue and they have limited resources. Each team is targeted on how much tax revenue they recover per quarter IIRC.

Exactly. So I was suggesting that the longer the contract, the bigger the potential reward. A contract that has run for the full 7 years that HMRC can go back (I think it is) is going to be potentially worth more than a 2 month contract

Yes. Assuming they have sight of how long you have been in contract. Not hard to find out if they're interested if they were to ask the end clients.

There is nothing in the information that the accountant submits that tells the HMRC who my clients are, and how long I've had them.as clients.
Only if there is an investigation into the LTD company would they get to see that detail.
I have seen one contractor go "down the office"
The design office in question had 30% of the desks for Staff of risk and revenue sharing partners (suppliers who have put investment into a project). He worked 12 months for the main company then, moved to a supplier in the same office, for 6 months, then back to the main company but a different hiring manger, then another supplier for 9 months and finally a third supplier for 6 months.
I worked for one hiring manager for 2 years, moved to another in a completely different role for 6 months, doing something I had spotted wasn't being done and needed to be done. Then went somewhere else for 6 months, back in to the same office for 12 months. I get bored after 12 months usually.

[Olivera]

Pit Pony said:

There is nothing in the information that the accountant submits that tells the HMRC who my clients are, and how long I've had them.as clients.

If you work via an agency then they must report client, engagement and payment information to HMRC every 3 momths:

https://www.gov.uk/government/publications/employm...

[Pit Pony]

Olivera said:

Pit Pony said:

There is nothing in the information that the accountant submits that tells the HMRC who my clients are, and how long I've had them.as clients.

If you work via an agency then they must report client, engagement and payment information to HMRC every 3 momths:

https://www.gov.uk/government/publications/employm...

I knew that, and forgot it. Doh.

There is no middle man between my LTD company and my current client.

Thanks for that link. I need to check my obligations again. First time I've had a contract with no agency.

[Dog Star]

Gazzab said:

I know someone who has been in the same contract since about 1986. He worked for an insurer as a pensions systems expert, they outsourced the system in 2007 (he went with it), it moved suppliers 10 years later (he went with it again).
He was worth his £600 a day v the perm people. No one else would be able to understand the system, the pensions regulations/products/actuarial calcs etc.... in the 2 or 3 years they might commit to the system/role. Any of the perms willing to commit for a long time weren’t good enough.

It's not because permanent staff "aren't good enough" Up until quite recently I was still going back to the client I was at for five years in the early 90s to do upgrades etc and similarly for a leasing company I first worked at in '91 - I was there a total of four times up until 8 years ago.

It wasn't because the perms "weren't good enough" - and I suspect that it wasn't the case in Gazzab's example - there's a lot of old legacy stuff in pensions and insurance.

It's because after 20 years these are legacy systems written in some 3GL and the old hand will know it backwards. I made a lot of money back in the day on Vax Cobol and Unix stuff. Then a decent wedge going back many years later to do upgrades on my same software.

I'm a permie now (my current employer made me an offer I couldn't refuse to ge perm and I reckon I've got the best job ever) and I can fully understand why a perm wouldn't want to be doing some old dead end legacy stuff. I wouldn't. And it's not because I or any other perm techie here isn't good enough - I work with some seriously talented people - but why would someone want to do work on an ancient system which would probably end up being their responsibility forever more?

[Gazzab]

Dog Star said:

Gazzab said:

I know someone who has been in the same contract since about 1986. He worked for an insurer as a pensions systems expert, they outsourced the system in 2007 (he went with it), it moved suppliers 10 years later (he went with it again).
He was worth his £600 a day v the perm people. No one else would be able to understand the system, the pensions regulations/products/actuarial calcs etc.... in the 2 or 3 years they might commit to the system/role. Any of the perms willing to commit for a long time weren’t good enough.

It's not because permanent staff "aren't good enough" Up until quite recently I was still going back to the client I was at for five years in the early 90s to do upgrades etc and similarly for a leasing company I first worked at in '91 - I was there a total of four times up until 8 years ago.

It wasn't because the perms "weren't good enough" - and I suspect that it wasn't the case in Gazzab's example - there's a lot of old legacy stuff in pensions and insurance.

It's because after 20 years these are legacy systems written in some 3GL and the old hand will know it backwards. I made a lot of money back in the day on Vax Cobol and Unix stuff. Then a decent wedge going back many years later to do upgrades on my same software.

I'm a permie now (my current employer made me an offer I couldn't refuse to ge perm and I reckon I've got the best job ever) and I can fully understand why a perm wouldn't want to be doing some old dead end legacy stuff. I wouldn't. And it's not because I or any other perm techie here isn't good enough - I work with some seriously talented people - but why would someone want to do work on an ancient system which would probably end up being their responsibility forever more?

I ran the area and was deeply involved. The perms in this instance weren’t good enough. It was less about the tech and more about the knowledge and capability.