Contractors: IR35 & general discussion

[anonymous-user]

snake_oil said:

Going back to an older post in this thread. Simply put, in a client > agency > contractor ltd co > contractor type relationship (which I'm sure is what most contractors operate under) who is classed as the employer?

Does the client have any responsibility to manage anything with the new rules or can they simply point to the agency?

The end client is accountable for assessing employment status in all cases. We pass that status onto the agency who deduct tax at source from the contractor. Everything is recorded for audit ability.

Edited by anonymous-user on Friday 20th September 06:44

[deebs]

I work as a project manager in change /IT, last few years as a contractor, in the Edinburgh area. Been on the look out for a new contract for a while but appears the market is very very slow.

Is anyone else looking? What's your experience?

[98elise]

deebs said:

I work as a project manager in change /IT, last few years as a contractor, in the Edinburgh area. Been on the look out for a new contract for a while but appears the market is very very slow.

Is anyone else looking? What's your experience?

I'm not looking but am on a Project where a few people have ended recently. 3 PM's all went straight into new contracts, a PMO and a Data Analyst were months looking for work.

I'm retiring ahead of the IR35 rollout.

[Gecko1978]

deebs said:

I work as a project manager in change /IT, last few years as a contractor, in the Edinburgh area. Been on the look out for a new contract for a while but appears the market is very very slow.

Is anyone else looking? What's your experience?

same usally takes 6 months to find work or more and so I end up looking well before a contract finishes, the level of uncertainty I think shows clearly how we are (as contractors) not perm employees but HMRC see it differently.

[anonymous-user]

anonymous said:

[redacted]

In most cases it doesn’t and this is the issue. The HMRC guidance we’ve received means 95% of our contractors are now inside and will be treated as such cone renewal time. There’s no way around it although if you really are running a small business, you have nothing to fear.

It will be interesting to see how the market reacts.

Contractors may go perm = less need for contractors = fall in demand. = lower day rates.

Or

Contractor pool shrinks = higher daily rates for those who are left.

Either way, I think the market will be very different in 12m time.

[Countdown]

wormus said:

snake_oil said:

Going back to an older post in this thread. Simply put, in a client > agency > contractor ltd co > contractor type relationship (which I'm sure is what most contractors operate under) who is classed as the employer?

Does the client have any responsibility to manage anything with the new rules or can they simply point to the agency?

The end client is accountable for assessing employment status in all cases. We pass that status onto the agency who deduct tax at source from the contractor. Everything is recorded for audit ability.

Edited by wormus on Friday 20th September 06:44

Similar here. We get written assurances from the Agency that the Contractor/temp is PAYE on their books.

[deebs]

wormus said:

In most cases it doesn’t and this is the issue. The HMRC guidance we’ve received means 95% of our contractors are now inside and will be treated as such cone renewal time. There’s no way around it although if you really are running a small business, you have nothing to fear.

It will be interesting to see how the market reacts.

Contractors may go perm = less need for contractors = fall in demand. = lower day rates.

Or

Contractor pool shrinks = higher daily rates for those who are left.

Either way, I think the market will be very different in 12m time.

I've read your contributions to this thread and they provide good food for thought, thanks for posting them.

I'm personally not a 'career contractor', only been doing it for a few years and rather than the financials it's actually the flexibility I value. As I said above, I'm a project manager, so I tend to join places for a specific , interesting project , then leave once it's done. I often get offers to stay on and do something else but usually another organisation is doing something more interesting so I jump ship.

With this in mind I don't have any objection to the concept of working within IR35, or on FTC , but what I'm seeing currently (from a very, very narrow perspective) seeing is the market has shut up shop, there's very few opportunities of any working practice being advertised.

As I say, extremely narrow perspective of one role type in one very small city but it's usually jumping, given the amount of financial services, fintech etc that is in the area. Is this the deep breath whilst everyone works out how they react ?

[anonymous-user]

deebs said:

I've read your contributions to this thread and they provide good food for thought, thanks for posting them.

I'm personally not a 'career contractor', only been doing it for a few years and rather than the financials it's actually the flexibility I value. As I said above, I'm a project manager, so I tend to join places for a specific , interesting project , then leave once it's done. I often get offers to stay on and do something else but usually another organisation is doing something more interesting so I jump ship.

With this in mind I don't have any objection to the concept of working within IR35, or on FTC , but what I'm seeing currently (from a very, very narrow perspective) seeing is the market has shut up shop, there's very few opportunities of any working practice being advertised.

As I say, extremely narrow perspective of one role type in one very small city but it's usually jumping, given the amount of financial services, fintech etc that is in the area. Is this the deep breath whilst everyone works out how they react ?

No problem, trying to help where I can. Having devoted a lot of time to it on behalf of my employer, I hope it proves useful to somebody!

To answer your question - I think you also need to consider the market as demand for contractors isn’t determined directly by IR35. It just means the contracts offered are more likely to be inside IR35. It’s up to the contractor if he/she wants to accept it.

I blame Brexit and lack of confidence/investment for any fall in demand.

[CzechItOut]

wormus said:

I blame Brexit and lack of confidence/investment for any fall in demand.

Anecdotally, companies do seem to be sitting on their hands until the outcomes of Brexit become clearer. This month I've spoken to two companies who a few months ago were about to pull the trigger on multi-million pound projects and yet are still about to pull the trigger now.

[hyphen]

CzechItOut said:

wormus said:

I blame Brexit and lack of confidence/investment for any fall in demand.

Anecdotally, companies do seem to be sitting on their hands until the outcomes of Brexit become clearer. This month I've spoken to two companies who a few months ago were about to pull the trigger on multi-million pound projects and yet are still about to pull the trigger now.

Whats the reason?

Are the benefits of the projects themselves reduced due to a hard brexit, or they feel they need to keep the cash as reserves to protect against Brexit problems.

[Autopilot]

wormus said:

In most cases it doesn’t and this is the issue. The HMRC guidance we’ve received means 95% of our contractors are now inside and will be treated as such cone renewal time. There’s no way around it although if you really are running a small business, you have nothing to fear.

It will be interesting to see how the market reacts.

Contractors may go perm = less need for contractors = fall in demand. = lower day rates.

Or

Contractor pool shrinks = higher daily rates for those who are left.

Either way, I think the market will be very different in 12m time.

What is the guidance HMRC give?

Where I'm based at the moment, the end client has engaged with another company who are using the IR35 Shield tool to assist with employment status. One of my fellow contractors has had her assessment already stating her engagement is deemed inside IR35. She asked for advice regarding substitution and was told that while her contract allows for it, this is a site where everybody has to have SC, so practically speaking, how would she substitute, so while she can, practically speaking she wouldn't be able to so has put this as one of her responses. I believe this is why she's had a quick determination as she's ultimately closed the door on being outside.

I was asked the same question but gave a very different answer. My contract allows for it therefore I can and WILL substitute if the need arises. There is no practically speaking about it, if it's allowed then I can, it's as simple as that. I do feel she was led up the path a little bit to put her role inside. I was asked what would happen if my hiring manager didn't approve, so said while I'd bring somebody in with the right skill set, experience and clearances etc and do this with my hiring manager, but their opinion doesn't overrule what a legally binding contract states so it's kind of tough, it's my company and it send out resources like any other, are they fit for purpose or not.

[Olivera]

wormus said:

In most cases it doesn’t and this is the issue. The HMRC guidance we’ve received means 95% of our contractors are now inside and will be treated as such cone renewal time. There’s no way around it although if you really are running a small business, you have nothing to fear.

What's your secret HMRC IR35 guidance? The CEST tool in many or even most cases cannot determine IR35 status.

I would encourage all contractors to challenge blanket inside IR35 decisions, going legal if necessary.

[Countdown]

Olivera said:

The CEST tool in many or even most cases cannot determine IR35 status.

Define "most" cases? How do you know that it hasn't determined the status correctly? Every time I've used it it's come out with a reasonable answer.

[Welshbeef]

I liked contracting when I did it - but I elected to do it through circumstance not choice ie I didn’t resign a perm job for it rather the office was shut and relocated so we were redundant.

The freedom of being able to take as much time off as and when you like always appealed - however I ended up never taking leave due to wanting a bigger and bigger £ buffer and thinking I’m paying for this holiday plus it’s costing me day rates argh.

I did it for 3 odd years then in one role decided to go perm as the rate offered was a step on from my day rate. Add in career age pension bonus 25 paid leave redundancy hard to ignore.

[rsbmw]

My take on IR35, speaking as a guy who works in IT and has done contracting (though not currently) is that the whole B2B thing is utter bullst. Regardless of how hard you work to make it appear that you are a business providing a service, you are ultimately a guy hired for his personal skillset just like employees. Substitution particularly I find funny, embedded in every "outside" contract but in reality if you were to try to invoke it the contract would be terminated and they would find another contractor they wanted to use. Exception to this rule being the contractor/consultant that genuinely has several clients at any one time, rather than just moves from one "job" to another.

That said, given that contractors are giving up all of the employment protections, I think it's absolutely fair that rates are higher than a permanent employee. I don't know what the solution is, as if you make it a business to freelance employee relationship without employment protections and employers NI, companies will start forcing every role into that bracket.

[CzechItOut]

hyphen said:

Whats the reason?

Are the benefits of the projects themselves reduced due to a hard brexit, or they feel they need to keep the cash as reserves to protect against Brexit problems.

I think it is purely a concern about Brexit having a negative impact and them having committed to spending a lot on projects which might have to be pulled if things get really bad.

At the end of the day, a "wait and see" attitude isn't going to materially damage the company and might give them some more flexibility if Brexit causes everything to go to st.

[zippy3x]

rsbmw said:

Regardless of how hard you work to make it appear that you are a business providing a service, you are ultimately a guy hired for his personal skillset just like employees.

So just like a plumber, or chippy or plasterer?

[Gecko1978]

anonymous said:

[redacted]

The point I was alluding to as a perm or FTC which gives a level of security which as a contractor I do not have. My role relates to project delivery so when it completes or is cancelled so am I. As a perm or and FTC that is not the case, Perm staff do not have to constantly look for work to keep the cash coming in. As I run a business like a plumber I have to continually look for work. So a limited company means my company earns money when it's asset (me) brings in fees but it then pays its employees (me a salary). If o were inside ir35 my company gets the net fee and can't spread the income over the year to soften the risk of uncertainty.

Out side IR35 is a way of managing your companies risk. If not then you get all the down side (lack of security) none of the upside ability to release company income over the year to protect against that.

[Countdown]

Gecko - If it's a BAU role then the "Contractor" isn't constantly looking for work so would you agree that these types of roles are within the scope of IR35?

[Gecko1978]

zippy3x said:

rsbmw said:

Regardless of how hard you work to make it appear that you are a business providing a service, you are ultimately a guy hired for his personal skillset just like employees.

So just like a plumber, or chippy or plasterer?

oh I also have more than 1 client at one time its fking tiring to be honest but if that is what it takes to add to the outside IR35 status happy to.

I hear alot of this perm rates comparable, I don't know where the industry is where this is the case but I see perm roles at the 60 to 90k range v my day rate at around twice that. I just don't see it as comparable where I get 55% of 90k or say 50% of 180k