Opinions on IR35 and its impact on contractors?
Discussion
HannsG said:
Fairly shocked at the responses here. I pay enough tax as it is.
I take the risks of being on the bench, no security..... What makes you think I avoid tax?
time and effort should be better spent chasing the likes of lewis Hamilton rather than one man bands like me.
My concern is that I will be seen as a permanent employee whilst being on a project for a finite amount of time.
Typical response from permies who think all contractors are minted. Apologies if some of you felt your were entitled to more in life.
Get of your arse and go take some risks then..
Lol OPI take the risks of being on the bench, no security..... What makes you think I avoid tax?
time and effort should be better spent chasing the likes of lewis Hamilton rather than one man bands like me.
My concern is that I will be seen as a permanent employee whilst being on a project for a finite amount of time.
Typical response from permies who think all contractors are minted. Apologies if some of you felt your were entitled to more in life.
Get of your arse and go take some risks then..
Perhaos to earn the money you feel you deserve without avoiding tax, you should upskill or change more. Or become a permanent member of staff.
mcg_ said:
Lol OP
Perhaos to earn the money you feel you deserve without avoiding tax,
You do realise that everyone who is liable for Inheritance Tax is avoiding paying it whilst they are alive, yes? Tax avoidance is not paying tax that you are not legally obligated to pay.Perhaos to earn the money you feel you deserve without avoiding tax,
If you're a PAYE employee and your pay slip shows that you've overpaid tax, what are you going to to? Claim it back, or say "oh well never mind. I don't mind paying more tax"?
mcg_ said:
Lol OP
Perhaos to earn the money you feel you deserve without avoiding tax, you should upskill or change more. Or become a permanent member of staff.
Obviously I work for free and to provide for the state. How did I forget to mention this eh? Perhaos to earn the money you feel you deserve without avoiding tax, you should upskill or change more. Or become a permanent member of staff.
I was offered two perm positions in current role.
I laughed at the offer put forward and they admitted they were desperate and thought they would chance it. I am suitably skilled I reckon, qualified in accounting, finance and projects etc.
The offer was a very good offer in the eyes of some or maybe the majority of people in the West mids. But it's all relative I suppose.
It's not just about the money. Working at places as a contractor you actually realise you would never ever entertain the idea of perm there. You look around, see the attrition, the politics, poor management, poor guidance for projects. And I won't even go on about the incessant moaning from permies about how it used to be. While they sit there doing sweet FA or bare minimum hours and moaning about the world around them.
I could go on and on.
I prefer being challenged. I've been senior level at perm level, to me it was not worth the hassle and I quit without a job to go to as I hated it that much.
Come to think about it. When I was a permie I had an M3, now that I'm contracting I'm happy driving a 2006 Panda 100HP.
HannsG said:
I don't think pistonheads realises how fundamental contractors are to delivering projects and getting em over the line.
Permanent staff are not capable. I see this day in day out
I think they *are* capable - it's a little inflammatory to say otherwise. But the thing that makes contractors so attractive is being able to buy in specialist knowledge and experience at short notice. And they generally hit the ground running rather than needing several months to get their feet under the desk and settled in. That flexibility is incredibly important to many IT projects.Permanent staff are not capable. I see this day in day out
HannsG said:
mcg_ said:
Lol OP
Perhaos to earn the money you feel you deserve without avoiding tax, you should upskill or change more. Or become a permanent member of staff.
Obviously I work for free and to provide for the state. How did I forget to mention this eh? Perhaos to earn the money you feel you deserve without avoiding tax, you should upskill or change more. Or become a permanent member of staff.
I was offered two perm positions in current role.
I laughed at the offer put forward and they admitted they were desperate and thought they would chance it. I am suitably skilled I reckon, qualified in accounting, finance and projects etc.
The offer was a very good offer in the eyes of some or maybe the majority of people in the West mids. But it's all relative I suppose.
It's not just about the money. Working at places as a contractor you actually realise you would never ever entertain the idea of perm there. You look around, see the attrition, the politics, poor management, poor guidance for projects. And I won't even go on about the incessant moaning from permies about how it used to be. While they sit there doing sweet FA or bare minimum hours and moaning about the world around them.
I could go on and on.
I prefer being challenged. I've been senior level at perm level, to me it was not worth the hassle and I quit without a job to go to as I hated it that much.
Come to think about it. When I was a permie I had an M3, now that I'm contracting I'm happy driving a 2006 Panda 100HP.
anonymous said:
[redacted]
Oh, for sure. But motorists always see the worst cyclists, whilst cyclists always see the worst motorists. It is always the extremes that stand out.I think it's fair to say that you are more likely to see a complacent "keep your head down and do the minimum" permie than contractor though, as the latter are usually more continually judged and evaluated for "can we get rid of them?". Deadwood contractors rarely hang around for long.
paul789 said:
Agree with this. In many ways, I admire permies. I think I’d find it absolutely suffocating to be a permanent employee. Having a fixed place of work, having to seek approval for a holiday, being subject to things like company policies which dictate how long you may grieve for, politics and just the general sense that they own you 24/7 just doesn’t work for me. I’m sure it’s a great safety net though.
Totally agree 
Also, moonlighting. Such a concept doesn't even exist for freelancers, apart from conflict of interest. I can't imagine being so owned by an employer that I would have to ask their permission to contribute to an Open Source project. I have a real problem with the whole permission thing in general, to be honest. Feels like being back at school.
jammy-git said:
768 said:
jammy-git said:
However I also don't agree with the number of contractors that are clearly evading tax by pretending to be outside IR35 when they obviously are not.
When it comes to IR35 little is clear or obvious.Clockwork Cupcake said:
HannsG said:
I don't think pistonheads realises how fundamental contractors are to delivering projects and getting em over the line.
Permanent staff are not capable. I see this day in day out
I think they *are* capable - it's a little inflammatory to say otherwise. But the thing that makes contractors so attractive is being able to buy in specialist knowledge and experience at short notice. And they generally hit the ground running rather than needing several months to get their feet under the desk and settled in. That flexibility is incredibly important to many IT projects.Permanent staff are not capable. I see this day in day out
The things that I find most surprising though are:
1) When I've had contractors have been surprised when I've drawn clear distinctions between benefits for permies and those for contractors; and
2) More notably, when (after a fair number of extensions) they have been told that we like their output but need them to consider a generous permanent package if they want to be with us long term and then properly take the hump when they realise we were serious that they can't stay indefinitely as contractors... I knew a good number of IT contractors back in the 90s/00s that had accrued many years with a single "client" but am surprised that contractors think that private companies will entertain this today.
The mood does however seem to be changing and we're seeing more conversions from contractor to permanent, but not sure how much of that is due to wanting to be involved long term vs any change in the market. I am intrigued though as to whether the pace picks up here but think it will take a couple of cases of "contractors" getting stung by HMRC before it materially does so.
Spent over 15 years contracting, some work was inside IR35, some wasn’t. In all my time I’d say 90% of the contractors I met claimed they were legitimately outside yet most blatantly weren’t! Even operating inside IR35 for some contracts I was still paid significantly more than my permanent counterparts. Despite all the reasons people dish out for why they are contracting, let's face it money is the main one! I’d say suck it up and be realistic, if you’re any good then you will still be earning decent money whatever happens.
LooneyTunes said:
2) More notably, when (after a fair number of extensions) they have been told that we like their output but need them to consider a generous permanent package if they want to be with us long term and then properly take the hump when they realise we were serious that they can't stay indefinitely as contractors... I knew a good number of IT contractors back in the 90s/00s that had accrued many years with a single "client" but am surprised that contractors think that private companies will entertain this today.
Generally speaking the conversation goes like this :-Company :- "we really like what you do, would you consider a permanent role here on a generous package?"
Contractor :- "Erm, well I hadn't really thought about going perm, but i'd listen to an offer"
Company :- "Great, we'd like to offer you (what usually amounts to a third or half of what said contractor is getting as a contractor). What do you think?"
Contractor :- "Sorry, no. I'd prefer to stay contracting"
Company (now miffed) :- "Oh. Right, well we cant afford to keep you as a contractor".
Any offer to make a contractor perm rarely ends well as it usually results in said company being irked at the contractor refusing their kind and generous offer.
I don't get involved. I shut down any tentative conversations with a "Sorry, no I'm not interested in going perm". I'm currently negotiating my fourth extension where I am which would take me through to the end of next May and i'll cheerfully walk away when they no longer need me but not in any way getting involved with a "fixed term contract" or permanent role as it would (as a contractor colleague found out) be on 1/3 of what i'm earning currently.
LooneyTunes said:
The mood does however seem to be changing and we're seeing more conversions from contractor to permanent, but not sure how much of that is due to wanting to be involved long term vs any change in the market.
I think there are element of contractors who will now listen to perm offers as they fear for what the market might look like in a years time. I've a contractor colleague (mentioned above as being offered 1/3 of what hes on to stay as a perm) whos actively looking for perm work but its at really high end specialist / SME type work for a defence company to get anywhere near the right ballpark. That's being driven by the fact hes single so theres added insecurity if hes "on the bench" and that hes looking for a decent pension package.LooneyTunes said:
I am intrigued though as to whether the pace picks up here but think it will take a couple of cases of "contractors" getting stung by HMRC before it materially does so.
If they're wrongly declaring themselves outside of IR35 then i'd say the chances of a retrospective investigation are very very low. I'd say they're more likely to get "stung" by being put in to an inside IR35 contract whereby you lose a great deal of the financial benefit of being a contractor to the point where some may feel "why bother?"
md4776 said:
Has any one man band contractor ever sent a "substitute with suitable skills" to a client instead of turning up themselves, given this is one of the clauses of most contracts as a means of demonstrating the that the contract is the right side of IR35
As a contractor you don't have to be able to, just that the receiving company has to be willing to accept it if you offered one. I heard the whole IR35 legislation was written around the construction industry, hence substitution meant usually supplying another digger driver or the clause around "using your own tools" or whatever it is was like having to bring your own JCB on site.
Which then means you're in to a different level of interpretation in say, IT.
Bikerjon said:
Spent over 15 years contracting, some work was inside IR35, some wasn’t. In all my time I’d say 90% of the contractors I met claimed they were legitimately outside yet most blatantly weren’t! Even operating inside IR35 for some contracts I was still paid significantly more than my permanent counterparts. Despite all the reasons people dish out for why they are contracting, let's face it money is the main one! I’d say suck it up and be realistic, if you’re any good then you will still be earning decent money whatever happens.
That's my view on it at the end of the day. I'm inside IR35 as the local authority I am with deemed everyone inside with a blanket approach.I renegotiated upwards and now WFH part of the week so its all pretty good and i'm probably on twice what i'd otherwise get even after travel expenses. Getting good experience too in this one so happy to stay in the meantime.
Money and not having to deal with the office politics are the primary drivers for me. I love doing the work I do, and its great not having to get involved in the positioning and alliances that happens with the permie staff. Also, when you're a perm doing a great job usually gets "rewarded" with extra work and extra responsibility and maybe a miniscule pay increase if you're lucky. Sod that.
The reason I went contracting, was because it was the only way I could find work in an economic downturn. When things turned better, I stayed contracting. Why? Because of the disgustingly poor salaries being prevalent in my industry. The funny thing was, doing exactly the same job, for the same company , but located on the continent, would easily double your income, permies or contract. Amazing!!
JPJPJP said:
If those advantages are taken away and the work needs doing, another solution will emerge
Either a contracting organisation that charges more, to cover the impact of the tax or someone on payroll
If it costs the organisation more to get the work done and or the people doing the work earn less, hey ho. Life will likely go on
Yes, life does go on, however heres an example of the impact of said "solutions" you're talking about.Either a contracting organisation that charges more, to cover the impact of the tax or someone on payroll
If it costs the organisation more to get the work done and or the people doing the work earn less, hey ho. Life will likely go on
I'm contracting in a local government authority who decided that any engagement with contractors must be deemed inside IR35 as a blanket approach. That was an HR decision. End of.
So, the impact.
=> 60% of contractors upped and left at the end of March along the lines of "Adios Amigos!". Huge amount of projects canned, general turmoil, delivery of some projects set back months if not years.
=> 30% renegotiated their rate. 25%+ higher as a min.
=> 10% said no, I will only work here if I am outside IR35 as I am outside IR35.
So what they did with those 10%....? they "allowed" them to work through third party suppliers. So those £600 a day contractors now get their £600 a day in an outside IR35 position, work through another established supplier who now charge £1,000 a day for the same person in to the same organisation
Not seeing too many winners in those "solutions".
daemon said:
JPJPJP said:
If those advantages are taken away and the work needs doing, another solution will emerge
Either a contracting organisation that charges more, to cover the impact of the tax or someone on payroll
If it costs the organisation more to get the work done and or the people doing the work earn less, hey ho. Life will likely go on
Yes, life does go on, however heres an example of the impact of said "solutions" you're talking about.Either a contracting organisation that charges more, to cover the impact of the tax or someone on payroll
If it costs the organisation more to get the work done and or the people doing the work earn less, hey ho. Life will likely go on
I'm contracting in a local government authority who decided that any engagement with contractors must be deemed inside IR35 as a blanket approach. That was an HR decision. End of.
So, the impact.
=> 60% of contractors upped and left at the end of March along the lines of "Adios Amigos!". Huge amount of projects canned, general turmoil, delivery of some projects set back months if not years.
=> 30% renegotiated their rate. 25%+ higher as a min.
=> 10% said no, I will only work here if I am outside IR35 as I am outside IR35.
So what they did with those 10%....? they "allowed" them to work through third party suppliers. So those £600 a day contractors now get their £600 a day in an outside IR35 position, work through another established supplier who now charge £1,000 a day for the same person in to the same organisation
Not seeing too many winners in those "solutions".
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