back to article Sir John Redwood backs IR35 campaign, notes review would have to start 'immediately' before new off-payroll working rules kick in

The Right Honourable Sir John Redwood is supporting contractors in their battle to overturn IR35 tax rules before they hit the private sector, demanding the new Tory government meets its pledge to review the legislation. Redwood, MP for Wokingham for the past 32 years, who has been periodically referred to as a Vulcan due to …

  1. Anonymous Coward
    Anonymous Coward

    I think most normal employees are sick to the teeth of grossly expensive (usually twice the cost as an employee per day worked) contractors doing the same job as them, and seemingly never leaving that role either, and then listening to all the whinging about holiday and sick pay (but you're earning twice as much, and there's no apparent risk with your 'full time contract' is there!) and IR35 rules.

    Contractors should be hired for a well defined job, do that job, then go back on the market.

    If the job is large enough to have standard employees do it in a team, then there's no need for contractors as well.

    1. Efer Brick

      Who's fault is that though?

      Also, those people are not really the norm.

    2. Andy 73

      What a surprise. This sort of comment crops up whenever IR35 or contractor rates are mentioned.

      If, as a permanent employee you are earning half that of the contractor next to you, you should ask why that is the case. No-one is forcing your company to engage that person, and no-one is forcing you to stay as a permanent employee.

      Don't underestimate the 'disguised cost' you place on your company - all those benefits, employee rights and cost of an inflexible workforce add up.

      Given HMRC's antagonism towards contractors over the last few years, I've taken the path to permanent employment. I'm paid less, pay less tax and offer much less flexibility to my employer - but I don't have to jump through hoops to prove I have a right to exist and I have more stability in my life. No need to complain about the guy sitting next to me - if they earn more than me, perhaps it's because they're worth it to the boss.

      1. Chris G Silver badge

        @Andy 73

        "Given HMRC's antagonism towards contractors over the last few years"

        'The last few years' dates back to the '60s (at least) and the Construction Industry 714 exemption certificates. the Inland revenue as it was has always wanted everyone to be either a full on registered business or a PAYE employee, they have no interest in, nor understanding of, why contractors may be useful to commerce in general, they just seem to think contractors are getting away with something even if they don't know exactly what it is.

    3. AMBxx Silver badge

      Only twice? I'm closer to 4x when working in the public sector. However, they get a highly skilled, flexible resource. I don't claim sick pay, holiday or need duvet days. Nor do I need to attend all the BS training course beloved by the public sector.

      This morning I did 1 hour for a public sector client - costs them about £100, but still much cheaper than employing someone full time and what I did works.

      1. big_D Silver badge

        Duvet time? That is a new one on me. Been away from the UK for too long.

        1. BebopWeBop Silver badge

          Maybe you just took a nap?

      2. cynic56

        I don't know if you're half as good as you seem to think you are - but you sound like a complete arse anyway. Doubt many employers or colleagues would want to be with you for more than an hour anyway.

    4. Anonymous Coward
      Anonymous Coward

      What you've described is a temp rather than a contractor. It's probably what the IR35 nonsense is targeted at, but will lead to tax revenues going down (even if HMRC do get the NI contributions back, they'll lose a lot more in the tax rate if the temp is taken on as a permanent employee at 1x salary rather than 2x).

      The problem is that contractors who do a well defined job and then move on are also being hit by the new IR35 regime. Firms are dumping everything into the IR35 bracket rather than take a risk on HMRC being competent at assessing their own regulations. Most likely outcome is that a lot of this work will go off shore where IR35 doesn't apply, and HMRC will lose that slice of the pie altogether.

      Doing everything in-house is all well and good, but it's wasteful to train staff with skills that they won't need in the long term.

      1. Steve Button

        Not only will they get less in tax on the lower salary, don't forget they'll get NOTHING back in VAT.

        1. Radio Ballet Shoes

          Yep, the whole IR35 saga could well earn itself a chapter in a new edition of "Blunders of our Governments" . Throwing away VAT on a larger number against PAYE contributions on a smaller number hasn't been worked out. Then there's Corp tax and any pension contributions will ultimately get taxed when drawn.

          1. AMBxx Silver badge

            Nothing to do with VAT - my customers all reclaim the VAT I charge. It's just a cashflow thing for businesses.

            1. Velv
              Headmaster

              Fair enough if your customers can reclaim the VAT and it’s all part of cash flow.

              A substantial number of the companies who engage huge numbers of contractors are banks and financial services organisations who provide VAT Exempt or Zero Rated products, and they cannot reclaim any VAT they are charged. So while VAT and IR35 are not directly linked, the additional NI and Income Tax is offset to a reduced VAT take.

        2. d3vy Silver badge

          "Not only will they get less in tax on the lower salary, don't forget they'll get NOTHING back in VAT."

          Yep, I was looking at my first IR35 role yesterday - something better came up so it's not happening now but the income tax (&NI) increase for me was around 700 a month (8400 per year) this is less than I pay in Corp tax... And when I pay Corp tax I generally have some income tax and NI to pay as well.

      2. Doctor Syntax Silver badge

        "Doing everything in-house is all well and good, but it's wasteful to train staff with skills that they won't need in the long term."

        Doing everything in house also brings in a choice of two other penalties: miss out on some things from time to time by not having enough staff or increase cost by being over-staffed most of the time so as to be able to catch the peaks.

      3. Anonymous Coward
        Anonymous Coward

        Less tax back, but with a public sector role the government is spending less so still a win.

    5. Harry Kiri

      Try contracting before commenting on it.

      I've heard so many employees think IR35 is good (taking contractors down a peg) as they have overpaid rates. The simple fact is its a dumb arbitrary rule to extort cash from small businesses. You go to somewhere like NATS where contractors work identically to say Leidos staff (but contracted in to NATS and answering to NATS staff) workers. Do the revenue bust Leidos' day-rate? Of course they don't. Why not? Explain that little conundrum.

      The day the Revenue chase PwC, Fujitsu, Leidos, BT or any other big subby that puts someone on a desk doing what is an employee role, then we can chat.

      Contracting is a completely different mind-set and set of skills to being an employee. Remember, contractors are there because your company cannot cope without them. The moment they can, we're off.

      1. Velv

        Re: Try contracting before commenting on it.

        “ The day the Revenue chase PwC, Fujitsu, Leidos, BT or any other big subby that puts someone on a desk doing what is an employee role, then we can chat.”

        IR35 applies to all medium and large companies. If PwC et al are putting third party contractors on desks then PwC are on the hook for ensuring the IR35 status. Doesn’t matter how many layers of intermediaries, it’s turtles all the way down.

        If they are putting employees on desks then those employees will already be paying employee PAYE tax and NI, but PwC are making a massive profit on the day rate. Now what possible incentive could there be for the large Consultancies who write reports for HMRC to represent a position which would penalise the small business competition...

    6. SimonC

      Yawn, why don't they do it as well, oh that's right they have 2 kids, a mortgage, and no marketable skills having been doing the same job for 14 years and never studying anything else. They can't afford to be out of work a week nevermind 6 months or fired on the spot from a sudden budget pull.

      But they're happy to moan while they eat the cake the company gave them on their birthday and take a few days off when they have the sniffles until their employer Daddy Corp Ltd. gives them a hug and welcomes them back to work.

      1. Intractable Potsherd Silver badge

        That is a truly awful thing to say. Different skills and risk-aversion do not make one better or worse than someone else. You sound like more of a problem than a solution, since your attitude probably spills over into your working life.

        1. SimonC

          Some people prefer an easy normal 9-5 working life without any particular risk or danger. Which is totally fine, I never said it makes them better or worse... until the same people turn around and start moaning about it being unfair. Very easy to sit in your reinforced pleiglass house and throw stones at people

          As easy as passing judgement on a person's character based on two paragraphs of text, it would seem.

          1. Intractable Potsherd Silver badge

            You still sound like you have a chip on your shoulder about permanent workers. You will see from my posting record that I am against IR35 as a disproportionate and unfair scheme, and that I am have been both a contractor and a permie at various times. I can see both sides of the argument. Most permanent workers don't have a clue about contractors ways of working, but have been told that contractors cheat the system by successive governments. By their nature, contractors are in a poor position to counter the arguments, so don't blame permanent workers for "moaning about it being unfair".

    7. big_D Silver badge

      Having worked both sides of the fence, a contractor is not "earning twice as much", he is billing twice what your paid, but they have to pay taxes, health insurance, liability insurance, pension, accountant and tax advisor etc. and they don't get paid for the days they aren't working.

      So you go on holiday for 2 weeks, your employer keeps paying you. A consultant goes on holiday for 2 weeks, he doesn't earn a penny.

      Likewise, at my first job, I was there for so long, I qualified for 6 months of sick pay - one year I needed 3 months of it. A contractor ill for 3 months doesn't get a penny, it comes out of what he already earned.

      If things are slow, the contractor is out on his ear and has to find a new gig. In the meantime, he isn't earning a penny.

      They can earn good money, but the headline figure he is invoicing the company for is a loooong way from what they actually earn. And what you actually earn is just a fraction of what it costs the company to employ you.

      1. Dr. Mouse Silver badge

        I know it's being pedantic, but you've kind of contradicted yourself. I think what you meant was "A consultant goes on holiday for 2 weeks, his company doesn't bill a penny": his company will (probably) still be paying him from reserves.

        1. Anonymous Coward
          Anonymous Coward

          This is the problem, there is a subset of contractors who do not or cannot differentiate between themselves as a person and their company. They are why IR35 exists.

    8. Steve Medway

      You get all the lovely benefits, we don't so quit you're harping.

      Your employer also pays things that you never actually see in your wage packet too so an increased cost per hour is perfectly reasonable for us contractors.

    9. Anonymous Coward
      Anonymous Coward

      I'm just going to address this on a per point basis as some is correct and some is not:

      I think most normal employees are sick to the teeth of grossly expensive (usually twice the cost as an employee per day worked) contractors doing the same job as them,

      - Unfortunately daily rate and your pay divided by number of days work is not the cost of employing someone contractors are cheaper to hire for a variety of reasons.

      contractors doing the same job as them

      - I always found I was not doing the same job as the permanent staff, I was usually called in to advise permanent staff as I had skills they lacked.

      and seemingly never leaving that role either

      - yes this annoyed me, my average time in a role was 6 months to 1 year and then I either moved on or the project was done, I did do 2 years once but that was my limit, I didn't want to stay longer, anyone doing the 5 - 10 year thing isn't really contracting.

      and then listening to all the whinging about holiday and sick pay,

      - A contractor should not whinge, we are running a business and the sick pay and holiday pay is something we should plan for, this is why our daily rate is higher and also why its not our wage as some permanent members of staff mistakenly believe, this would annoy me also.

      Quick point, I developed a very bad illness, I had to cancel all my contracts and live off of savings for about 8 months with no income at all in that time, there was no sick pay and I happened not to have insurance. I didn't moan about this I pre-planned for such an eventuality, this is also why my rate is not my pay as I had put aside money in the business for such a day so I could pay myself and my bills should this happen.

      and there's no apparent risk with your 'full time contract' is there!

      - Envy much ? Sorry dude but I've been called into a room and teminated on the spot with no comeback just told "leave". This couldn't happen to you there is no such thing as no risk. Thats the point.

      Contractors should be hired for a well defined job, do that job, then go back on the market.

      - Couldn't agree more, unfortunately a lot of clients want to use us as temps, thats not what we are.

      If the job is large enough to have standard employees do it in a team, then there's no need for contractors as well.

      - No sorry we often have knowledge and experience you simply don't, this isn't something you've done wrong we've been around more usually worked on more projects and generally train ourselves or we cannot stay competative, so many permantent members of staff coast and become substandard. That said there are a lot of brilliant permies and bad contractors.

      Your post reads like an envious permanent member of staff you are the sort of person I avoid because working with you is unpleasant. What we bill is not our wage, there is considerable risk working as a contractor and we can be terminated usually immediately, after the project ends the company doesn't have to give us any more work and usually we are let go (this is how its meant to be).

      Another point when permanent members of staff think we are being difficult by refusing to work on other projects, well thats not what we were brought in to do, a correct contract as you say should limit the scope of work, and I'm not there to do anything else, and as the contract states you have no right to insist I do.

      1. Anonymous Coward
        Anonymous Coward

        "unfortunately a lot of clients want to use us as temps, thats not what we are."

        What is actually wrong with this?

        My view is there needs to be three types of engagement defined:

        1. Long-term - an integral part of the organisation - singing the company song.

        2. Short-term - project resource or BAU cover during times of uncertainty or transition.

        3. Specialist - only three people in the world who can do this thing.

        Some might say that option 2 should be employed but why should I get three P45's every year and 21 company pensions by the time I retire?

        Personally I contract via an umbrella because I want the variety, extended time off between gigs and not to be "owned by the man" but I have no interest in running a business. I pay more tax than anybody else but take the hit for the lifestyle choice and the ability to sleep without nighmares involving HMRC knocking at the door. I do feel like an employee in many ways for six months then wave goodbye once the project is done. I don't want to work for a consultancy because I want to choose the projects and not be dumped in the crud because I didn't play the politics right.

        "Proper" contractors - you seem outraged but why is this so wrong?

    10. Smooth Newt Silver badge
      Stop

      normal employees "sick to the teeth"

      I think most normal employees are sick to the teeth of grossly expensive (usually twice the cost as an employee per day worked) contractors doing the same job as them, and seemingly never leaving that role either, and then listening to all the whinging about holiday and sick pay (but you're earning twice as much, and there's no apparent risk with your 'full time contract' is there!) and IR35 rules.

      So why don't you, and your fellow normal employees, become contractors? There is obviously some reason why you and your colleagues feel happier where you are, that more than offsets the lower income you get.

      I think that adequately answers the question about why contractors are paid more than you are.

    11. Anonymous Coward
      Anonymous Coward

      IR35 has nothing to do with "contractors versus permies". It's designed to deal with companies that are hiring permanent staff via service companies, so that the staff appear on the books as contractors even though they're doing a permie job. The hiring company just buys "a service", avoiding all the hassle of employment rules, NI, holidays, pensions etc. It shifts the burden of all that onto those employees and their companies, many of whom take it because it lets them pay less tax (see BBC 'celebrities' as an example).

      It's a perfectly reasonable thing to do when you bring in a temporary employee for a short-term job, but as a way of hiring permanent staff it's verging on fraud, which is why the government is telling those companies that if it decides a "contractor" is actually a disguised permie, it will require the employer to pay all the NI and tax that it would for a permie. It's not a way to increase tax collected, it's a way to stop companies gaming the system, and shortchanging the welfare funds.

      Then obvious result is that the companies who are cheating are giving those disguised staff the option of signing on as a permie, or leaving, which is exactly what the government wants. Needless to say some of those "contractors" are unhappy, no surprise there.

    12. Doctor Syntax Silver badge

      Any such employees could have joined what you obviously see as a nice safe gravy train. So could you.

      Why didn't you? Altruism? Or something else holding you back? It's odd that those who are posed that question never seem to answer. Perhaps when they stop to think what the answer might be they realise the difference.

    13. Cederic Silver badge

      Hmm. Contract rates for my skillset are around 40% higher day rate than I can get in a permanent job. Out of that 40% I'd have to match employer NI contribution, 30 days paid holiday, 6-15% pension employer's pension contribution, accountancy fees, travel costs and periods out of work.

      I mean, sure, it's a nice number when you see it written on the page, but I'm jobhunting at the moment and giving permanent roles the priority.

    14. d3vy Silver badge

      "I think most normal employees are sick to the teeth of grossly expensive (usually twice the cost as an employee per day worked) contractors doing the same job as them"

      Well, I hate to break it to you, but IR35 doesn't change how "expensive" we are to your employer.

      Also if you think contractors are not providing a service of value why do you think your employer has them? Is your company normally happy with needlessly spending money or do the owners quite like making a profit? Because I suspect it's the latter... Which means that someone somewhere in your company has done the maths and seen that there is a cost benefit to having contractors.

      Still, if you're still sick to the back teeth of it and think that contracting is all sunshine and unicorns drop me message and I'll be happy to help you get set up with a LTD company, accountant and insurance so that you too can join the dark side... Surely if it's so much more lucrative and risk free you'd be stupid not to?

    15. Tithras

      Re: Why...

      I am sick to the teeth of whining perms like you as well!

      You do actually realise that your company, you know the one you skive off for 12 days a year sick and 1 month a year on holiday (while still getting paid I might add), decided to fill the role next to you with a contractor right?

      If he or she are still there its clearly because they are doing a better job than you ;)

      P

    16. Jess

      Is this a moan against all "grossly expensive ... contractors" or just against those who whinge about holiday and sick pay?

      The latter is justified.

  2. katrinab Silver badge
    Meh

    Dear Vulcan

    We have carried out our review as promised, and have decided that no changes are required to the proposed IR35 rules.

    1. AMBxx Silver badge

      Re: Dear Vulcan

      Give Redwood his due - you may not like his politics, but he is persistent. Took best part of 20 years to get Brexit, but he kept plugging away.

      1. monty75

        Re: Dear Vulcan

        Just imagine what he could have achieved if he'd been doing something worthwhile all that time. He could have fixed global warming or something.

        1. Peter X

          Re: Dear Vulcan

          ...or if he'd simply focused completely on IR35 and then we wouldn't be where we are.

    2. macjules Silver badge

      Re: Dear Vulcan

      According to my accountants the cost to implement IR35 for 2020 tax year is expected to be around £1.3Bn against over 650,000 PSC. In 1999 the Inland Revenue estimated £300m per annum revenue from closing the IR35 loophole but between 2000 and 2007 the total revenue they raised was just £9.2m. It might take them anything up to 10 years to investigate if someone lied on the CEST form and was categorised as ‘outside’ IR35.

  3. NerryTutkins

    let the shafting begin

    It's a well established tradition that the days immediately after a major vote are dominated by the winner rolling back all their promises, and generally blaming the public for believing them "it was an aspiration, a suggestion, not a promise" (the 350m for the NHS being a classic example).

    Has Boris Johnson published that report on Russian interference, the one he blocked before the election but promised would be released afterwards? I must have missed it. Maybe Dominic Cummings' russian handlers decided best to keep it under wraps.

    1. monty75

      Re: let the shafting begin

      Has Boris Johnson published that report on Russian interference, the one he blocked before the election but promised would be released afterwards? I must have missed it. Maybe Dominic Cummings' russian handlers decided best to keep it under wraps.

      It was approved for release almost immediately after the election - odd that isn't it? We still have to wait for the technicality of the appropriate committee being reconstituted before we get to see what has been allowed out unredacted.

      1. NerryTutkins

        Re: let the shafting begin

        But the select committee already cleared it, as did the intelligence services. It was the PM who blocked it. So why the further delay if number 10 has now OKed it for release?

        It's because reconstituting the committee is an excuse; a wheeze to insert another delay. They'll no doubt rewrite things, and so what will eventually be released won't be the same report.

        Of course, they will release 'a' report. It just won't be 'the' report.

        You only need to see what Trump's AG's edited highlights of the Mueller investigation looked like in comparison to what the actual version looked like, to see where this is going.

        1. BebopWeBop Silver badge

          Re: let the shafting begin

          Hmm - a large number of West ponders downvoting this morning.

      2. NerryTutkins

        Re: let the shafting begin

        Followed an old link and back here 3 months later.

        Still no russian interference report. So much for being approved for release almost immediately after the election, eh? What's the hold up?

        You starting to feel a teeny weeny bit like you've been lied to yet?

    2. james_smith Silver badge

      Re: let the shafting begin

      Doubt we'll be seeing that report, since the Conservative Party is so dependent on dodgy Russian oligarch cash. The party treasurer is a British-Israeli "art dealer" with very close ties to lots of Russian oligarchs and organised crime figures who have donated large sums through offshore entities.

      See Ehud Sheleg's Wikipedia page and Private Eye for the details.

      1. Anonymous Coward
        Holmes

        Re: let the shafting begin

        Sheleg's mafia launders plenty of middle-eastern money, too. Funding the tories is in effect a laundry tax.

        The latest Private Eye notes that a lot of hedge funds who've benefited from brexit volatility expressed their gratitude in the lead up to the election. But I think they're still a distant second to Sheleg's laundry.

        Oh, and also in Private Eye, Sheleg isn't listed as treasurer with the electoral commission (a subtle technicality, as he's listed elsewhere including by the Party itself). So if they ever take action, he's not the one in the firing line.

        (and I speak as a strong supporter of Thatcher in her time. RIP the party of competence over ideology, even before the Stalinist purge of the moderates a couple of months ago).

      2. MrMerrymaker Bronze badge

        Re: let the shafting begin

        Good man for the Private Eye shout out! The Tory treasurer is dodgy, having been in a business with a man described as "Putin's wallet", by... Their third business partner!

        Ask if you're happy that the Treasurer of the government's party is.

        1) not a British national (doesn't bother me personally, but some might take umbrage)

        2) Not in any sense elected (this one is not good)

        3) hired to drum up funds when he has proven in court links to Russia

        Naturally, he's already been knighted.

        1. Anonymous Coward
          Anonymous Coward

          Re: let the shafting begin

          And then I read comments from people saying how the UK "needs to free itself from the corrupt EU"!

  4. Franco Silver badge

    Speaking from my own experience (I was contracting in the public sector when the changes came in there) there is actually one good thing about the IR35 changes. It's very popular round these parts for trolling ACs to criticise contractors for taking the piss, but the changes led (IME) to much more tightly defined contract scopes which prevented some engagers from treating their contractors as BAU rather than project resources.

    Even the proposed changes would not be an issue if HMRC were A: to provide clear documentation on what they are proposing and B: didn't change their minds about their own rules when they go to court. One could of course cynically argue that the lack of point A is a deliberate choice to facilitate point B....

  5. OurManInX
    Alien

    John Redwood

    If he is for it, I am against it. Doesn't matter what it is. That guy is always wrong

    1. james_smith Silver badge

      Re: John Redwood

      Yup, Redwood is strange. Very strange. Boss at my first job had him as his local MP, and went to see him about a constituency matter. He said that up close Redwood looks like an orange version of the Mekon.

      1. Doctor Syntax Silver badge

        Re: John Redwood

        "close Redwood looks like an orange version of the Mekon"

        Sitting on a floating loo?

      2. FlossyThePig

        Re: John Redwood

        ...an orange version of the Mekon...

        Oh how the mind plays awful tricks! I think the real Mekon now heads up No. 10, Not BJ but DC.

  6. BebopWeBop Silver badge

    Do election promises mean anything?

    I assume that is a rhetorical question.........

    And coincidentally having just written the above, but in the edit window, in the Queens Speech, the minimum wage may not quite go through if the economy does not improve by some unspecified amount (sorry for everyone outside of the UK, but it is a wee internal niggle about our failing state).

    1. MrMerrymaker Bronze badge

      Ah yes, punish the poor.

      1. Intractable Potsherd Silver badge

        That's what Tories always do. All those fucking idiots that voted for them in deprived areas will come to regret it very quickly (and deny they ever voted for the blue rosette bastards).

  7. Just Enough

    none of these things

    "The Right Honourable Sir John Redwood"

    That's a whole lot of name that manages to be offensive on just about every step of the way. Is it sarcasm?

    1. MrMerrymaker Bronze badge

      Re: none of these things

      Offensive indeed!

      The = oh so he's definitive?

      Right = Wrong more like.

      Honourable = lol

      Sir = that's just wrong morally.

      John = ruining it for Johns everywhere.

      Redwood = a tree I usually like!

  8. Aristotles slow and dimwitted horse Silver badge

    Jealous... much?

    "I think most normal employees are sick to the teeth of grossly expensive (usually twice the cost as an employee per day worked) contractors"

    What I think is that your statement above was not the only thing completely wrong about your post. You seem utterly misinformed, and I suspect, hugely jealous. I'm not sure you have any more idea about what "normal" employees actually think, than I do.

    But at least my 20 years of experience in being a freelance supplier to other businesses of Technical, Project and Programme delivery and leadership skills in the ERP space is informed by practical observation, and that leads me to believe that a lot of the permanent employees actually like having someone of my experience around when things invariably go wrong - or because I'm usually the first to get the beers in when they go right. Or perhaps, because I have lots of experience of working in lots of different client companies, they seem to like being exposed to other approaches and methods, or newer ways of working that may improve their own existing skills. Or again, because I'm solely there to get a specific job done, I'm quite good at avoiding the normal office bullshit and working and support them - to help me get that job done.

    As I said, your post is seemingly dripping with envy, and possibly insecurity about your own overall position in life. Sorry for that, but it is your problem to resolve, not mine.

  9. Erik4872

    Interesting discussion

    If this is mainly about employers being denied the ability to have a permatemp disposable workforce, I'm all for it. Here in the US we have similar situations...you're not supposed to treat contractors as employees but it happens all the time. I have no problem with contractors parachuting in for a single task that the permanent staff doesn't have time or expertise to do, but when companies use this to create an underclass of employees with different rules, that's not good.

    I've been told by many people that I'm better off contracting, but there are lots of risks that people don't consider. I have a spouse that works but I really don't want to be constantly hustling for my next job and like the stability of being paid, having vacations I'm not guilty about taking, etc. Contractors also have to deal with collections, more difficult tax filing, marketing/sales, etc. It just seems like even though I'd be paid more and have a more "flexible" work life, the added headaches of running a business while doing a mentally taxing job don't seem worth it. I'm horrible at selling and networking and it seems you would have to do that a lot going from gig to gig every few months.

    1. d3vy Silver badge

      Re: Interesting discussion

      I think you've inadvertently stumbled upon the whole reason contractors have an issue with IR35.

      No it doesn't stop companies hiring us, or even put any more restrictions on them doing so, what it means is we (contractors) will be taxed more but won't be eligible for any normal employment benefits.

      Basically we get all.of the downsides of contracting with fewer of the upsides and we get to pay more tax in the process.

      Many people like contracting, I decided to do it 5 years ago because I like the flexibility, the extra money is Handy too, but it was mainly flexibility, I have two kids and don't want to beg a boss for time off when it's needed if we fancy a day out or they're ill.

    2. Doctor Syntax Silver badge

      Re: Interesting discussion

      " I have no problem with contractors parachuting in for a single task that the permanent staff doesn't have time or expertise to do"

      I've been parachuted in for the perfectly reasonable reason that their permie left and they hadn't yet been able to recruit a replacement. They continued to not be able to recruit a replacement. What they did do, eventually, was to recruit a couple of juniors and keep me on for about 18 months under the heading of various extensions until they had experience to take over.

      Did that make me a permatemp or did it make my company a "real business"? And when you consider that question also consider another. Do "real businesses" ditch customers because they've been customers for too long?

    3. anonymous boring coward Silver badge

      Re: Interesting discussion

      "If this is mainly about employers being denied the ability to have a permatemp disposable workforce, I'm all for it. "

      Doubt it's about that. Employee protection is very poor already in the UK. It's probably more about maximising tax take, and making it simpler for the IRS to track the money (going all digital any time soon now).

  10. 2+2=5 Silver badge
    Joke

    Oh, stop complaining...

    Oh stop complaining about IR35. If HMRC really had it in for you they'd be commissioning Fujitsu to adapt their Post Office Horizon system to do your bookkeeping.

  11. Doctor Syntax Silver badge

    An MP not suffering from amnesia. Plenty of others are probably struggling to remember all the promises they made.

  12. quattroprorocked

    Wait until they hear about California

    The rules have basically outlawed even actual real very short term contracting.

  13. Anonymous Coward
    Anonymous Coward

    Wake up peeps

    I've been a contractor and a permie (currently a permie) and I the biased sweeping views in these comments are shocking - two example gems;

    - ALL permies are somehow lacking in skills, lazy and take sick days all the time? Er, no

    - ALL contractors are tax Dodgers who earn too much for doing the same job as a permie. Again, no

    Worse still is trying to justify one of the above opinions based on "there was this one permie/contractor I worked with who was.... ". Just shut the **** up with all that rubbish.

    Wake up people - there are good and bad people in both types of role so get over your ridiculous biases. UK PLC thrives on a skilled workforce that needs both contractors and permies, and the different situations fit different people at different times in their lives. We need a sensible tax system that properly recognises each type of 'employment' as legitimate - you can read into that "Dont let HMRC define the tax system as they are clearly complete imbeciles"

    1. Doctor Syntax Silver badge

      Re: Wake up peeps

      "ALL permies are somehow lacking in skills, lazy and take sick days all the time?"

      It's not so much that as some of the wingers* lack self-awareness.

      As a permie I was aware that although it rewarded risk taking freelance wouldn't work for me at that particular time of life and that I probably lacked the experience. It wasn't a matter of complaining of being unfairly treated (I had enough experience of that in other ways earlier on), just of understanding the situation. In due course I was able to take advantage of changes of personal circumstances and experience.

      The real issue with some of the posts here is that the posters stop at "rewarded". Obviously they intuitively realise it's not for them, otherwise they'd go ahead and freelance themselves. But they don't grasp that it's a risk/reward situation; that they've come down on one side and need to accept the disadvantages in terms of reward are tied to what they see as advantages; that both modes are equally justifiable; that from the employer/client side** the two are complementary; and that the effect of IR35 is to unbalance the risk/reward structure to nobody's overall advantage.

      * Some are just trolling.

      ** I've been on the client management side so I know that there are occasions when extra help has to be brought in on a short-term basis and that that isn't going to happen by bringing in short termers on the payroll. In fact, if short term becomes a feature of the payroll the next step is that there aren't any long term roles and where does that leave the wingers?

    2. thepeopleschamp

      Re: Wake up peeps

      Completely agree with your post. I've worked with both good and bad contractor/permanent workers and won't judge an entire workforce on just a few bad experiences.

  14. Anonymous Coward
    Anonymous Coward

    I'm currently contracting with a large US based Multi-National company, assisting with a world wide ERP rollout.

    They are not worried* about the IR35 changes. They are just laying off every single one of their UK based contractors. No exceptions. Problem solved.

    Not sure if that's going to increase HMRC's tax take though. And it sure doesn't help me.

    But I'm sure the large Consultancy companies will kindly step in and assist.

    Total Clusterf*ck.

    * Not strictly true. They are worried that HMRC might start reviewing prior contract periods, and that they could be on the hook if HMRC decides those periods should have been inside IR35. HMRC have said they wont - but there is nothing to stop them if they change their minds. Hence laying everyone off.

    1. Anonymous Coward
      Anonymous Coward

      So are you claiming by laying off the UK contractors that will stop the tax take increasing?

      If so you are also claiming those contractors won’t get another job. By being laid off they can get a UK based job that they pay tax on.

      We get the same crap about the rich leaving the country. If the job they do is so important someone else will fill it and pay the taxes they were paying (or avoid the same ones as the case may be)

      1. Richard 12 Silver badge
        Facepalm

        Nope. If the non-UK company stops engaging UK contractors, then the money that was coming into the UK stops doing so and goes somewhere else instead.

        Aside from that, if they do take permanent jobs instead then the corporation, NI + income tax the former contractor is responsible for is likely to fall as their taxable "fees" will drop considerably.

  15. Mike 137 Silver badge

    The real problem

    The real "root cause" problem is the totally arbitrary definition of the "personal service company". It seems to be based on an assumption that a sole director can essentially rifle the company bank account any time they want and call it personal income. This is not the case at all. Quite apart from statutory obligations for governance under employment and company law, there are significant costs in running a contracting company - professional indemnity and public liability insurance (and now tax investigation insurance), provision for holiday and sickness pay, accounting costs, advertising costs, communications costs, stationery, to name just the most obvious. No employee incurs these costs, so being obliged to foot the bill for them while being considered "an employee for tax purposes" is an offence against common sense. Contracting can also be highly uncertain - for a specialist contractor or interim the gaps between assignments can be quite long and unpredictable, so a substantial float is typically needed to tide over.

    An obvious solution would be to [a] make dividend tax chargeable at the same rates as income tax (big corporate directors would resist this tooth and nail), [b] subsume "national insurance" into income tax, and [c] eliminate the discrepancy between employment law and tax law that allowed this abusive anomaly to be perpetrated in the first place. The IR35 could be scrapped entirely, allowing a flexible workforce of expert specialists to serve the economy economically.

    1. Anonymous Coward
      Anonymous Coward

      Re: The real problem

      You start off well, even state no employee is responsible, but then fuck it all up. The contractor is an employee of their own service company. The contractor is not responsible for all these costs either. The company is. They are not their company. It is this lack of distinction, which you seem to be able to at least partial make, that leads to some contractors treating the company as a piggy bank.

  16. NogginTheNog
    Devil

    Reg Xmas Trolling!

    "The Right Honourable Sir John Redwood"

  17. anonymous boring coward Silver badge

    As self employed are taxed at a level comparable to employees, I don't see why there should ever be a test on whether they are employees or not?

    So what if a freelancer can't find other clients at times? Why should the authorities start messing things up for him and his current client?

    1. Franco Silver badge

      My suspicion has been for some time that there is very heavy lobbying in Whitehall from the large outsourcing companies against the one-man band companies (like my own), largely because of the reputation those same outsourcing companies have amongst IT professionals who have ever had the misfortune to deal with them.

      Ironically all of these companies are multinationals, so HMRC will lose even more tax if they pick up all of the contracting work that "PSC"s can't or won't, as they will have tax arrangements very similar to Amazon, Apple, Facebook et al.

      1. The Onymous Coward

        IR35 originally came about because Arthur Anderson (remember them?) lobbied the government to implement something that would stop one man band consultancies undercutting them while providing a better service.

  18. The Onymous Coward

    KISS

    Of course HMRC could achieve all of the stated aims of IR35 review without the uncertainty and opacity by implementing one simple rule. Company directors may only take 25% (or whatever) of sales as a dividend in any one year.

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