back to article Auf wiedersehen, pet: UK Deutsche Bank contractors plan to leave rather than take 25% pay cut for IR35 – report

Deutsche Bank is set to lose contractors from key UK teams as it tries to force freelancers to take pay cuts in line with looming IR35 tax reforms. As many as 50 of 53 workers in Deutsche's London-based "change management" team, which specialises in financial crime, are considering leaving their positions by the end of March, …

  1. Caustic Soda

    As someone who has long been a salaried employee in an environment where freelancers have dodged taxes and ponced off taxpayers, IR35 can't come quickly enough. Other people who can go away rapidly: highly-paid hospital consultants and GPs who complain about pension taxation paid by everyone else in society.

    1. Anonymous Coward
      Anonymous Coward

      As someone who has long been a salaried employee in an environment where freelancers have dodged taxes and ponced off taxpayers, IR35 can't come quickly enough. Other people who can go away rapidly: highly-paid hospital consultants and GPs who complain about pension taxation paid by everyone else in society..."

      Enjoy the view from your somewhat bitter ivory tower but do remember that this is very likely the thin end of the wedge.

      When the companies have all finsihed their offhsore resource transfers, and they are looking around for other ways to cut their expenses, the whole umbrella model will start to look very attractive.

      After all, it does away with all those pesky workers rights and benefits. It makes the bulk of your workforce transient because they can be terminaed at no notice and you never have to worry about redunancy pay, laws, benefits yada yada yada.

      It's the curse of zero-hours contracts for people who somewhat smugly believe they're safe from all that crap.Newsflash - you aren't. You are no more important to the companies who employ you than the contractors you sit beside. The difference is, the contractors understand that.

    2. iron Silver badge

      > Other people who can go away rapidly: highly-paid hospital consultants and GPs

      I can tell you've never had anything seriously wrong with your health. Those of us who do will tell you (some of) those high paid consultants and GPs are worth their weight in gold.

      1. Caustic Soda

        And most of them already get paid their weight in gold. I don't see any GPs or consultants sticking up for nurses who get screwed over every pay review while they protect their tax breaks.

        1. Aristotles slow and dimwitted horse Silver badge

          Re : "freelancers have dodged taxes and ponced off taxpayers"

          How exactly? As we've seen repeatedly in other comments, I'm not really sure you know what you are talking about.

          "while they protect their tax breaks."

          Ahhh... that comment explains it. Jealousy is a bitch isn't it.

          1. Wilseus
            Headmaster

            "Ahhh... that comment explains it. Jealousy is a bitch isn't it."

            It's envy actually.

            1. kain preacher

              I think it;sa r\tad of both,

        2. Intractable Potsherd Silver badge

          What "tax breaks" do doctors have that you don't?

          It would also be useful to have evidence that contractors have "ponced off tax payers" if you have it. To be honest, I'll not hold my breath waiting.

          1. fwthinks
            Angel

            Ethics

            It's not tax breaks - but contractors working in limited companies have more flexibility to use tax allowances and schemes to optimize their tax than people on PAYE. Nothing wrong in principle, but I suspect some people are not 100% honest with the tax man.

            An example - if you employ your wife/partner in your limited company and they do not have another job, then they can make use of their full tax free allowance and reduce your company tax bill - overall your family will have saved a lot of tax.This is certainly allowed in the rules and there are plenty of people who are honest with this allowance.

            But there is an ethical question - If you only pretend that your partner is working for you but you pay them a salary, then legally it is tax evasion. However if you know that the tax man can never work out whether they do any work and so will unlikely to be found guilty of tax evasion - then should you still use that mechanism to lower your tax?

            That appears to the crux of the whole argument around tax - some contractors are very conservative with the allowances and only use them if they have a legitimate requirement. Other contractors are very aggressive and will try to use any allowance, even if their eligibility is questionable.

            1. MachDiamond Silver badge

              Re: Ethics

              "if you employ your wife/partner in your limited company and they do not have another job, then they can make use of their full tax free allowance and reduce your company tax bill"

              I have zero respect for politicians and the taxman, so I'm all for this sort of dodge. My number one responsibility is to my family and friends, not The Man.

              1. Neverwas

                Re: Ethics

                "I have zero respect for politicians and the taxman, so I'm all for this sort of dodge. My number one responsibility is to my family and friends, not The Man."

                Do you want the NHS to treat you and your family? The police to turn up if you or family members are assaulted? Social security in case you have a stroke tomorrow and never work again? If so don't be surprised if others think something like IR35 is needed.

      2. Michael

        Alternatively

        Some of us would like to see a reduction in the stupidly high levels of pay and an increase in the number of doctors trained. Reduce work load and increase availability of skilled staff. Also, the fact that you can't get an appointment with a consultant on the NHS, but can pay privately to see the same consultant within 2 weeks indicates that there is a clear bias to work privately and not for the NHS the further up the chain you get.

        1. spodula

          Re: Alternatively

          Personally i would prefer to see the ridiculous senior management pay cut first.

          1. Alan Brown Silver badge

            Re: Alternatively

            "Personally i would prefer to see the ridiculous senior management pay cut first."

            Today's news that one Senior manager who has a history of bouncing around NHS trusts here and AU/NZ is now wanted in Australia on corruption charges won't come as much of a surprise to a lot of people in the NHS for which the behaviour described has been "business as usual" for decades.

            Australia faced up to the painful fact that it had systemic and worsening corruption issues in the 1980s and has been trying to do something about it ever since. NZ has been in full denial mode for a long time and the UK tries to pretend it's a minor issue.

            1. Anonymous Coward
              Anonymous Coward

              Re: Alternatively

              Incompetents get bounced around because nobody wants to admit they screwed up and hired a complete waste of oxygen. There will always be another fool who thinks "this person has held lots of high-powered jobs, they must be good!" rather than asking "How come this person only stays a few months before moving on?"

              1. Anonymous Coward
                Anonymous Coward

                Re: Alternatively

                HAving hired a lot of IT contractors I can confirm that this has been the case for the majority of them. You get a good one every now and then and beg them to take a permanent role...

          2. MachDiamond Silver badge

            Re: Alternatively

            "Personally i would prefer to see the ridiculous senior management pay cut first."

            If contractors cut and run, perhaps you will. It doesn't take too many fines for poor data security or from person(s) unknown making off with large sums of money to realize that good IT people are worth good money. Companies can outsource all they like to Romania or India, but it may come back to bite them.

            I'm happy to take work that isn't very high pay to get by to not take skilled work at too low of a wage. Low skill jobs are sometimes a nice break as not too much is expected of you.

        2. Manny Bianco

          Re: Alternatively

          In the very first paragraph of this internal HMRC manual it says they will decide whether or not to pursue people:

          https://www.gov.uk/hmrc-internal-manuals/employment-status-manual/esm0117

          66

          Where it is agreed that a worker who has previously been regarded as self-employed should now be treated as employed, then you will need to consider whether to pursue the employer for NICs and tax for back years. The law and practice relating to NICs and tax is different, so you will need to consider each separately.

          For NICs, you should seek all arrears but, if you have to take enforcement action on arrears from the employer, you should limit this to the previous six years. You should only consider non-enforcement of the debt as a very last option after all other avenues have been explored and discounted. You should also ensure that the individual’s contributions record is amended accordingly. Remember that it may be possible to set Class 2 and 4 NICs paid against primary Class 1 liability.

          For tax, consider recovery for previous years in accordance with existing instructions in the Compliance Operational Guidance (COG) manual.

          99

        3. Anonymous Coward
          Anonymous Coward

          Re: Alternatively

          The problem is that the high rates of pay were needed to stop the US, which cannot train enough doctors partly due to its own ridiculous tuition fees, from simply poaching British staff. Training more doctors and reducing pay will just result in a bigger export drain as we help keep the dysfunctional US show on the road.

          It must irritate them enormously that all those Cuban doctors don't speak English and so cannot so easily be poached.

          1. A.P. Veening Silver badge

            Re: Alternatively

            And for that reason the Brits are poaching a lot of other countries, both former colonies and eastern Europe.

            1. RegGuy1 Silver badge

              Re: Alternatively

              I thought the racists that voted for Brexit had stopped all that. Wasn't that what Brexit was about, stopping fucking foreigners from coming in?

              Mind you, rather like IR35 all those old people that think Brexit will be great are the same ones that refuse to allow some of their assets be used to help fund the social care crisis. They say these old duffers are stupid -- they are so stupid that their greed to give their houses to their children, and not to the state, means their social care is shit. At least it means they have a poorer old age and will die off earlier, so that is a positive. The data shows life expectancy is falling. Who'd have thunked it?

              (Sorry, a bit off topic, but the country is jam packed full of those that think everyone else should pay tax, not them. We all should pay more tax -- all of us. Until that happens the country will remain a shithole.)

              1. Intractable Potsherd Silver badge

                Re: Alternatively

                @RegGuy1: "We all should pay more tax -- all of us."

                I've been saying the same to anyone who will listen for a long time, but no one is taking it on board. The Tory message the taxation is a bad thing, and the "libertarian" view that taxation is immoral, is too prevalent. These people want a shit hole country for reasons of their own - it keeps the peasants down (at least for now - of course, when the voiceless get pissed off, it all changes - they aren't allowed to "take back control".

                1. Alan Brown Silver badge

                  Re: Alternatively

                  > of course, when the voiceless get pissed off, it all changes - they aren't allowed to "take back control"

                  Up to the point that the rich find that welfare ALSO exists to discourage the poor from rising up and murdering them.

                  1. Intractable Potsherd Silver badge

                    Re: Alternatively

                    Good point, Alan. That realisation often comes too late for both groups, though.

                2. ITGirl

                  Re: Alternatively

                  Could not agree more I want to pay more tax. Even from a selfish perspective it works, if we educate the children properly we're less likely to be victims of their future crimes and more likely to have enough decent, skille dpeople to look after us if we get old.

                  And as half of us will get cancer, we're ALL going to want a good health service.

              2. Alan Brown Silver badge

                Re: Alternatively

                "all those old people that think Brexit will be great are the same ones that refuse to allow some of their assets be used to help fund the social care crisis"

                They're going to find that changing in the next 1-2 years. There's already been a change in pensions announced which is going to nobble some and I'm fully expecting to hear announcements that couples will be paid less, as well as means testing being introduced for eligibility (ie, if you have a private pension, no state pension for you) and fuel payments/bus passes/etc being consigned to history.

                With around 3/4 of the exchequers' net tax/NI income going straight out the door again in state pensions/topups/perks and a rapid decrease happening in tax revenue, something's going to break.

                The government can't afford to cut the ~10% in other welfare payments because the lion's share of that goes to the working poor and blocking that would turn most of them into the unemployed poor (they wouldn't even cover costs of getting to work)

            2. Stork Silver badge

              Re: Alternatively

              Yes - I seem to have read that the UK never in the history of the NHS trained sufficient staff.

              Similar here in Portugal btw. The Order*) of Medicine Men (and women) work to limit how many are trained here.

              The effect is that the Coimbra region has wonderful healthcare, Lisbon good if you can pay, and the Algarve a severe shortage, even with the number of Spanish medics working here.

              *) Medics, lawyers engineers and similar organise in orders

              1. Fred Dibnah Silver badge
                Trollface

                Re: Alternatively

                I wouldn't want to work in medicine in the Algarve, either. Imagine having to deal with all the British drunks on holiday.

                1. Stork Silver badge

                  Re: Alternatively

                  I think it is more because it is seen as end of career, and getting two jobs in the sticks is difficult.

                  And then chronic underinvestment because a) funds are relative to resident population (tourists and non-registered immigrants don't count) and b) the voters plunge for the same party all the time, so the Socialists don't have to spend as they get the votes anyway, and the centre-right also not because they don't get them

          2. Fred Dibnah Silver badge

            Re: Alternatively

            I've always wondered why the NHS doesn't have have a lock-in clause, whereby you contract to work in the NHS for (say) five years after qualifying, and if you leave to take up a post abroad or in private practice you have to pay back the costs of training, on a sliding scale.

            1. ridley

              Re: Alternatively

              Most Dr's are on short term contracts that are renewed you cannot really have a lockin clause if you don't want to lock them in yourself.

          3. Anonymous Coward
            Anonymous Coward

            Re: Alternatively

            It must irritate them enormously that all those Cuban doctors don't speak English and so cannot so easily be poached.

            I don't know, the language barrier doesn't seem to be any problem with the influx of doctors from India. Then again, they've seemed quite competent at their work (at least for the ones I've been to), so I guess that trumps language. All thanks to the very ironic and inappropriately-named "Affordable" Care Act.

        4. Jon 37

          Re: Alternatively

          > the fact that you can't get an appointment with a consultant on the NHS, but can pay privately to see the same consultant within 2 weeks indicates that there is a clear bias to work privately and not for the NHS

          That's not how it works.

          The NHS has waiting lists. You start at the back, it's first-come first-served. There is some prioritising based on need, but even those with great need still have to wait.

          The reason people pay is to avoid those waiting lists. A private consultant with a huge wait isn't going to get any new business, the customers will go to a different consultant. So private waiting lists will naturally tend to be smaller than NHS.

          The way to reduce the waiting lists is to increase or reallocate the NHS budget to pay for more NHS staff.

          1. ragnar

            Re: Alternatively

            Those waiting lists would be smaller if the consultants were available 100% of the time for NHS work.

            1. Woodnag

              Not quite

              Those waiting lists would be smaller if NHS would budget and pay for 100% of the consultants time.

            2. katrinab Silver badge
              Meh

              Re: Alternatively

              Sure, but then the NHS would need to pay a full time salary rather than for about ½ day per week.

            3. jmch Silver badge

              Re: Alternatively

              "Those waiting lists would be smaller if the consultants were available 100% of the time for NHS work"

              Why? If consultants who currently do private work suddenly start dedicating 100% of their time to NHS work, those patients who previously would have seen the consultant privately would now need to see him through NHS. Although the order of seeing people might be different (it would become a true queue with no payment for jumpsies), the waiting list won't get any smaller, as long as the number of consultants and patients stays the same.

              1. Anonymous Coward
                Anonymous Coward

                Re: Alternatively

                They were trained by the state, they should work 100% for the state.

                Stuff their mouths with gold indeed. Hanging's too good for them.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: Alternatively

                  > They were trained by the state, they should work 100% for the state.

                  I'm a product of the UK education system - school and university. Does that mean I have to be a civil servant?

                  1. Mikerahl

                    Re: Alternatively

                    There's an argument to be made that, if you want to leave the country that paid for all your education, you should have to repay all the costs of that education (which, if you stayed for at least a few years, paying your taxes, would be done over that time frame).

                    1. Alan Brown Silver badge

                      Re: Alternatively

                      "if you want to leave the country that paid for all your education, you should have to repay all the costs of that education"

                      Says someone who paid £100-500/year at university and had a student allowance instead of £9000+/year and interest accruing student loans?

                    2. Scott 53

                      Re: Alternatively

                      Sounds like the plot of 1990 with Edward Woodward. That didn't look good.

                      https://www.imdb.com/title/tt0075469/?ref_=nm_flmg_act_55

                2. Stork Silver badge

                  Re: Alternatively

                  Yes, the state owns them after all. Btw, how then about all the ones trained elsewhere?

                  1. A.P. Veening Silver badge

                    Re: Alternatively

                    Btw, how then about all the ones trained elsewhere?

                    Which by now are in the majority.

                3. Alan Brown Silver badge

                  Re: Alternatively

                  "They were trained by the state, they should work 100% for the state."

                  I see this one a lot - and it's invariably from older folk who were handed just about everything on a silver platter most of their lives

                  Medics graduate today with student debt hovering around £80-100,000

                  Arguments about a bond period might hold water if they were paid reasonably well AND had their costs covered during training, but the fact is, they aren't, nor are costs of subsequent training (and they don't get paid when on training courses unless fulltime employees - which the NHS discourages, etc)

                  It's going to get worse as the current crop of professionals age out. Anyone under 45 is carrying substantially more student debt, which means they have to charge more/demand higher wages to service that debt. If they don't, they'll go where they can get it.

                  It's a replay of the same corrosion that happened in New Zealand after high fees were introduced in the 1980s - resulting in STEM degrees being gutted and an unhealthy focus on "cheap" degrees such as "Business Studies". You end up with a society unable to actually being able to do the fundamentals to maintain its infrastructure without importing people and we're seeing that here already

            4. LyingMan

              Re: Alternatively

              Did you hear about the consultants who are reducing their contractual working hours because of an IR35-eque law asking for more tax if they work over a threshold?

        5. jigr1969
          FAIL

          Re: Alternatively

          I'd like to see the majority of NHS staff become clinically trained. (A number of years ago, the number of non-clinically trained staff, out-numbered the clinically trained.) It's akin to having a garage with more admin people than actual mechanics. Only in the public sector would such a business model stay afloat.

          1. Mr Sceptical
            Headmaster

            Re: Alternatively

            There's a bit of an issue there - you're assuming the highly paid 'management' are actually capable of attaining the level of knowledge to be considered 'clinincally trained' - unless you just mean getting them to mop the floors? They'd probably get the hang of it after a few months...

            They'd be sitting in the corner with the Dunce hat on -->

          2. BebopWeBop Silver badge

            Re: Alternatively

            So dates and numbers please.....

          3. leenex

            Re: Alternatively

            Trumpcare to the rescue. We have the best care. Smart people. Smart doctors. The nurses are really smart, too, and good looking. You can't go wrong with Trumpcare. Ditch your socialism and sign up now at the unbeatable price of 999.99 per month.

          4. jmch Silver badge

            Re: Alternatively

            "A number of years ago, the number of non-clinically trained staff, out-numbered the clinically trained"

            Non-clinically trained isn't only management, though. Receptionists, janitors and other cleaning staff, technicians maintaining hospital infrastructure and equipment etc would all count as Non-clinically trained.

            Either way though, I agree there should be more caregivers and less paper-pushers

            1. Alan Brown Silver badge

              Re: Alternatively

              "Non-clinically trained isn't only management, though. Receptionists, janitors and other cleaning staff, technicians maintaining hospital infrastructure and equipment etc would all count as Non-clinically trained."

              Agreed: However what you find in healthcare in particular is a preponderance of unnecessary management who believe they're indispensible, have egos bigger than some of the doctors and set their own vastly inflated salaries. That's not what managers are for.

            2. A.P. Veening Silver badge

              Re: Alternatively

              Receptionists should be clinically trained as they are very often the first to see a patient walking in and should have at least enough training to know when to escalate quickly (having someone with a COVID-19 infection sitting for a couple of hours in the waiting room is a disaster, it won't even wait to happen).

            3. Cuddles Silver badge

              Re: Alternatively

              "Non-clinically trained isn't only management, though. Receptionists, janitors and other cleaning staff, technicians maintaining hospital infrastructure and equipment etc would all count as Non-clinically trained."

              Exactly, it's like complaining that the air force has more support staff than pilots. The pilots, doctors and nurses might be the ones at the pointy end of things, but if you don't employ anyone else they won't actually get anything done. The exact numbers needed in various areas can always be up for debate, and there are very organisations you can point at that couldn't function perfectly well with a hefty reduction in middle management, but the idea that simply having more support staff than doctors must be inherently bad is just silly.

          5. Alan Brown Silver badge

            Re: Alternatively

            "A number of years ago, the number of non-clinically trained staff, out-numbered the clinically trained"

            See the recent case of the NHS manager now wanted in Australia on nepotism charges.

            The more people you have working under you, the higher your seniority, therefore the better your pay - classic civil service mentality - we used to call it "featherbedding" when I was a civil servant and we actively HATED it because it resulted in an inability to get anything done - when the department I worked in (In New Zealand) slimmed down dramatically things actually sped up by 75% due to the things NOT passing through so many hands and at least 200% because we were able to computerise most of what was previously done by hand - coming to the UK the first time was a shock to see how bass-ackwards things still were and how computers were used, but not taken advantage of (ie: still highly manually intensive - and 20 years later, still is)

        6. gurugeorge

          Re: Alternatively

          As a doctor myself I don’t think you understand doctors pay in the UK. Even after 20 years working as a specialist registrar in the UK, a great Ormond Street hospital my cousin who’s in his 40s still earns about £45k. He’s still considered a junior doctor. He lives in London sharing a flat with four nurses and barely survives. He’ll be a consultant next year so he’ll be on 75k. But his son took his first year post law school job and earns more than 75K, and my nephew made 200k inc bonuses at blackrock in his first year after university. You may say it’s not a fair comparison but it is, doctors are 1 in 400. Unless you go into GP a typical junior doctor takes at LEAST 10 years AFTER medical school to become a consultant. On average it’s about 15, and you also need a promotion (called ACRP) every year - One missing piece of paper and you can lose a year. If one person says anything slightly negative about you you can loose a year, or worse get kicked off the training program and then you lose 10 years. That’s a of on calls nights and weekends. There’s a carrot at the end of the stick, but the average consultant makes about 100 K You start on 75. It goes up quite gradually, so by the end of your career you might be on 120. There are some that make more doing private services but that’s very rare and you have to be famous. Compare our salaries to the states or Oz and actually lifetime earnings there are about four or five times as much. Personally I now have five years experience after finishing medicine (2nd career after IT), and I earn in 30s, less than I did 10 years ago in IT. To do my chosen route dermatology, I would have to apply for IMT1, next year, do three years of core medical training, then apply again for dermatology and do three or four years more of that. So it’s eight years of nights and weekends Earning 30-40k ie Close to minimum-wage when you count tax to get 75k at the end of this. We don’t do this for the money.

          1. Intractable Potsherd Silver badge

            Re: Alternatively

            "... his son took his first year post law school job and earns more than 75K,"

            I'm law lecturer, and I have to say this is incredibly rare. It shouldn't be taken as any sort of benchmark at all.

            "... and my nephew made 200k inc bonuses at blackrock in his first year after university. "

            Again so rare as to be hen's teeth.

          2. Alan Brown Silver badge

            Re: Alternatively

            "As a doctor myself I don’t think you understand doctors pay in the UK. "

            What you describe is like pilots. Years of hard slog at mediocre pay so that a few hundred can end up on rock star pay

            The criticism is mostly being directed at NHS _management_ though, not the medics

        7. FriendlyDutch

          Re: Alternatively

          Unfortunately that was the compromise made when the UK NHS was set up. I understand that in NZ its the other way around.

    3. Manny Bianco

      "As someone who has long been a salaried employee in an environment where freelancers have dodged taxes..."

      What taxes have we "dodged"? We apply the rules as the law states. If I run a limited company I can take a salary to make use of my personal allowance, and dividends to make up the rest. Okay, they're taxed at a lower rate, but when you add professional insurances, accountancy fees etc., we take home just as much as you do. Also, my accountant - a massive company with thousands of clients across multiple sectors - recommends taking a minimum salary to minimise my tax. That's what any sane person would do!

      My last permanent job in 2017 got me £60k pa. As a contractor I currently collect £24k VAT, pay £20k Corporation Tax and £7k Income Tax & Dividend Tax. That's £51k of tax going to the Treasury (£27k of which comes out of profits). Even if I could get £60k again perm, that's only £23,755.34 total tax (and all Ee and Er NICs). And remember, as a permie I don't need to spend that £2k/year on an accountant, or that £500 on insurances, so the profits of those businesses drop and their tax liabilities drop, and they can't afford to employ as many people, so income tax and Er NICs fall, too.

      The Limited company route is a viable and legally-allowed means of structuring your work. I often have two or three clients at a time, and whilst this most definitely puts me outside IR35 and so you might think I'm not affected, the point is that companies are now reticent to use us at all regardless of our true IR35 status, because the IR35 legislation is so dumb and ridiculous.

      This is a shitshow, and I hope it backfires on BoJo. I truly hope it brings down this government, a la the Poll Tax.

      1. Aristotles slow and dimwitted horse Silver badge

        Well said.

        I think most of it is based on jealousy and two misguided beliefs, these being that (A) that all NI contributions go solely and directly to supporting social security, rather then being what it actually is, which is just another tax to be misappropriated as our "leaders" see fit; and (B) that most contractors pay all NI contributions that they are required to do so under law anyway.

        In my own personal case, I pay for private medical care, and have no intention of collecting any form of state pension due to the fact that when I retire in 10 years, it'll be utterly worthless anyway in terms of supporting any quality of life.

        As for me paying more tax or NI than I have to, not a chance.

        1. leenex

          Simply jealous

          People only want democracy because they're jealous of the dictator. If you work hard, torture and kill a lot of dissidents, then one day, you too can become a dictator.

      2. DavCrav Silver badge

        "The Limited company route is a viable and legally-allowed means of structuring your work."

        I agree that it is legally allowed. Well, if you ignore IR35, which says that it often won't be legally allowed. Apple's Double Dutch Irish sandwich was also allowed, until perhaps it isn't any more (appeal pending). EBTs were allowed, until they weren't (shitshow pending).

        "because the IR35 legislation is so dumb and ridiculous."

        The reason IR35, and any attempt to close loopholes, exists, is because a collection of people see a method of reducing their tax burden from what is expected to happen to something smaller. While a few people do this it's not much problem. Once hundred of millions or billions is avoided this way it becomes an issue, and rules are set up to stop it.

        The problem is when you are trying to stop a very specific type of behaviour that is close to what you actually want to happen. Then you have to try to write a rule that does what you want, rather than what you say. It's much like trying to program a computer to do something nebulous.

        Of course, the best way to deal with this entire thing is to do the following:

        Merge ER NI, EE NI, income tax, capital gains tax, dividend tax, etc., into one tax. Call it income tax. If you receive money, you pay tax on it. No distinctions, nothing. Earned and unearned income will be treated exactly the same.

        We will then look at what is and is not an allowable expense, but the first step is to remove the previous distinctions. Much of the benefit of running services through a company would be eliminated with the equalizing of all tax rates.

        1. katrinab Silver badge
          Alert

          There's some problems with that:

          First, our tax/social security treaties with other countries would all need to be rewritten, and agreed with the respective countries; and they have all these different types of taxes. These cover things like, if you work across borders, who gets what. What benefits does it entitle you to.

          Second, it would mean pensioners pay more tax. That's not really a vote winner.

          1. DavCrav Silver badge

            "First, our tax/social security treaties with other countries would all need to be rewritten, and agreed with the respective countries; and they have all these different types of taxes. These cover things like, if you work across borders, who gets what. What benefits does it entitle you to."

            Of course, I might be wrong about this, but since NI is the only benefit-related tax, we could, if you wish, call it all NI. There can be a distinction between earned and unearned income under the hood, as long as the actual tax rates are equalized.

            "Second, it would mean pensioners pay more tax. That's not really a vote winner."

            Pensioners already have a separate tax-free allowance, so there are already different rules for them.

            1. katrinab Silver badge
              Alert

              Suppose I live in Ireland, and commute to Northern Ireland for work. Lots of people do this, as in more than every other EU border put together.

              The tax treaty says that my employer deducts the relevant taxes from my salary applicable in Northern Ireland. I declare it on my Irish tax return as offshore income, and I can deduct the UK tax already paid from my Irish tax bill. If my employer only deducted NI, I wouldn't get any deduction at all from my Irish tax bill. Either way, I don't have to pay any Irish PRSI and the UK NI contributions count towards any Irish benefits I'm entitled to in the same way that deductions from an Irish employer would.

              1. CRConrad

                Other way around.

                DavCrav:...we could, if you wish, call it all NI.

                katrinab:If my employer only deducted NI, I wouldn't get any deduction at all from my Irish tax bill

                Yes you would, if that "NI" was as much as the total you paid before. Which is what DavCrav suggested.

                You'd only get a heck of a lot of NI booked in Ireland.

          2. ArthurMow
            Childcatcher

            Pensioners need to pay more tax..

            This: "Second, it would mean pensioners pay more tax. That's not really a vote winner."

            May well be a vote winner now that young working age people are more likely to be in poverty than pensioners, and don't have a house or any prospect of buying one. I reckon 10 years until increased tax on the oldies is seen as the right thing to do.

            1. eldakka Silver badge

              Re: Pensioners need to pay more tax..

              now that young working age people are more likely to be in poverty than pensioners
              Agree. Interesting video in this on the Royal Institute youtube channel, that in summary shows that 'pensioners' have more wealth - on average - than the younger generations. For example, many of them have defined benefits pensions that are no longer available to younger workers, that they own their own houses which they purchased at an age that the majority of current workers can't afford at the same age. And 'pensioners' get weird benefits, for example, pensioner/senior citizen discounts on public transit, so senior citizens who are working longer, to older ages, are getting discounts on their work commute that isn't available to younger people on their work commute, so a higher-wealth wage-earning pensioner is getting financial benefits a lower-wealth wage-earning younger person isn't.

            2. katrinab Silver badge
              Unhappy

              Re: Pensioners need to pay more tax..

              Working age people are less likely to vote though, hence we have a government that looks after pensioners.

          3. Alan Brown Silver badge

            "Second, it would mean pensioners pay more tax. That's not really a vote winner."

            What's about to happen to them as a result of what they(*) voted for should be a reminder that one should be extremely careful what one wishes for, because you just might get it.

            I'm sure this will somehow turn out to be everyone else's fault though...

            (*) In terms of the 2016 referendum and what age groups dominated in the in/out camps.

      3. PerlyKing Silver badge
        Facepalm

        Re: I currently collect £24k VAT

        ...which is then reclaimed by your client. So that's £27k to HMRC, not £51k.

        I'm a contractor too and I agree with the thrust of your argument, but leave fudging the numbers to your accountant ;-)

        1. Manny Bianco

          Re: I currently collect £24k VAT

          I wasn't fudging numbers, as it undermines my argument.

          I pay MORE tax than if I were permanent, by about £4k, and not all VAT is reclaimed. I did say I collect £24k VAT, not pay it.

          Also, don't ignore the money I spend on accountants etc. Permanent employees don't pay that.

          The fact is, I make more money for the Treasury as a Ltd company than I would as a permanent employee. IR35 stops this. I'm one person. Multiply it by the many thousands who will close their companies and either retire, work abroad or go PAYE. The Treasury will get less money. IR35 is not fit for purpose.

          1. flibble

            Re: I currently collect £24k VAT

            You compared £51k of tax going to the Treasury in the contractor situation to £23,755.34 in the permie, whereas the correct comparison is £27,000 vs £23,755.34 due to the treasury paying the £24K in VAT back to the client.

            There's then the harder question of whether that comparison is valid at all, given I believe it's compared an employee on £60K with a contractor billing £120K+VAT. The tax take from the employee is 40% of income (£23755.34 divided by £60,000) whereas for the contractor it is 22.5%. Many people would say that means the contractor is playing less tax.

            1. LyingMan

              Re: I currently collect £24k VAT

              Compare apples and apples. If he is working as a permie, he won't get 120k. He would get 60k. That is the argument.

            2. NeilPost Bronze badge

              Re: I currently collect £24k VAT

              Don’t forget the repayment of Child Benefit. That’s an immediate £1,800 taxed out of my salaried earnings for 2x children (or not payed as benefits if you choose).

            3. austrianbanker

              Re: I currently collect £24k VAT

              You are quite an expert in VAT aren't you.

              Did it occur to you that the HMRC will not be paying back any VAT to a VAT exempt business.

              Such as NHS and Financial Services.

              So do tell us now who had the correct calculation?

              Hint: it wasn't you.

          2. Alan Brown Silver badge

            Re: I currently collect £24k VAT

            "Also, don't ignore the money I spend on accountants etc."

            If you have decent book keeping software your accountant bill should be VERY low.

            What they absolutely HATE is clients who turn up with the year's accounts in a shoebox. That's hundreds of hours work and charged accordingly. Using a decent book keeping program setup by your accountant and outputting in a format compatible with his/her software can bring that down to a few hundred quid per year

        2. Velv Silver badge
          Headmaster

          Re: I currently collect £24k VAT

          "..which is then reclaimed by your client."

          VAT is not reclaimable if your core business is VAT exempt products, such as banking. HMRC is going to lose all that VAT from every contractor being forced down the PAYE route in the Financial Services sector, a substantial proportion of all contractors if the government figures are to be believed. From my own experience that VAT is more than the Tax and NI I would pay if I was PAYE. Net loss to HMRC.

      4. NeilPost Bronze badge

        You are citing £24K VAT as ‘paying taxes’. LOL. That’s just some arithmetic on an invoice and paying it to HMRC.

        Most companies will just claim that back - appreciate rules vary for financial institutions.

        1. austrianbanker

          What's the point to say that when this is an article about Deutsche Bank?

          A VAT exempt entity, which cannot reclaim VAT.

          Or NHS, which is also VAT exempt.

          Do you pay VAT on top of the fee paid to your GP when you see him?

          No. You pay no fee and no VAT. EXEMPT.

      5. Anonymous Coward
        Anonymous Coward

        The VAT is totally irrelevant - you may charge it and hand it over, but your customer will reclaim it and receive it all back.

    4. Doctor Syntax Silver badge

      As someone who has long been a salaried employee not been prepared to risk going into business in my own right I object to those who have been prepared being treated like businesses.

      FTFY

      1. Anonymous Coward
        Anonymous Coward

        Risk? What risk? You're a contractor, not an entrepreneur.

        1. Sir Runcible Spoon Silver badge

          @AC - you can look at this entire situation and say 'what risk?' - wow.

        2. Dr. Mouse Silver badge

          "Risk? What risk? You're a contractor, not an entrepreneur."

          We can be let go at a moment's notice.

          We can be held financially liable for mistakes or bad work.

          Market conditions can change, benching us for months at a time.

          If we are sick, we get nothing.

          Clients can decide not to pay us.

          Clients can go bust, leaving us unpaid.

          Agents can decide not to pay us.

          Agents can go bust, leaving us unpaid.

          That's just a few off the top of my head. I can list more if you want.

          1. flibble

            "We can be let go at a moment's notice."

            So can employees (albeit with notice pay, but many contractors have notice periods in their contracts too - though some contractors no longer include them in contracts due to concerns about IR35).

            "We can be held financially liable for mistakes or bad work."

            So can employees. It's very rare that either are actually sued, and the majority of contractors are insured against the risk so there's no actual risk.

            "Market conditions can change, benching us for months at a time."

            This happens to employees too.

            "If we are sick, we get nothing."

            Statutory sick pay is £94.25 per week - or annually less than £5K. It's better than nothing, but nowhere near enough to live on. Both employees and contractors are generally advised to insure against getting sick. (Some employers do pay full pay to employees off sick, though usually only for a strictly limited period of a few weeks a year.)

            "Clients can decide not to pay us."

            Happens to employees too. In both the contractor and the employee case it rarely happens.

            "Clients can go bust, leaving us unpaid."

            Happens to employees too. (They can usually reclaim some money from the Insolvency Service, though anyone on over £28K will not get the payments capped as if they only earned £28K.)

            "Agents can decide not to pay us."

            "Agents can go bust, leaving us unpaid."

            I'll give you those two. They're relatively rare though, and not all contractors work through agencies.

            1. Dr. Mouse Silver badge

              Wrt being let go at short notice: "So can employees (albeit with notice pay, but many contractors have notice periods in their contracts too)"

              Under employment law or is very difficult to get rid of someone for no reason. The employee has various avenues to deal with this. Also, contractor notice periods are meaningless as a client has no obligation to provide any work during the notice period: they can give, say, 2 weeks notice then provide no work for those 2 weeks. No work = no pay.

              Wrt liability for mistakes: "So can employees. It's very rare that either are actually sued"

              The bar is much higher for being able to sue an employee, basically requiring gross negligence or criminal behaviour. However, I know a few contractors whose previous client has demanded they come back and fix a bug, free of charge, after their contract has ended. This has left them out of pocket, but they are contractually obliged to do so.

              "the majority of contractors are insured against the risk so there's no actual risk."

              As stated below, that is a mitigation of the risk not a removal of it. I have car insurance to cover me in case my car is stolen. That doesn't remove the risk, it mitigates it.

              Wrt changing market conditions benching us: "This happens to employees too."

              Again, it is much more difficult to get rid of an employee. In this case, it would be redundancy, which would give a payout and stop them hiring someone else to fill that role in the near future. Most firms will keep an employee on if they only expect a month or 2 without work for them (they'll find something for them, but they are not really needed to cover the workload), sometimes longer. A contractor who is no longer needed is gone.

              Wrt client deciding not to pay: "Happens to employees too. In both the contractor and the employee case it rarely happens."

              Again, there are strong protections against this happening to employees, and it happens more often than you are aware to contractors. I've had a invoices paid over a month late at times, and I know more than one contractor who has had to end a contract due to non payment and ended up having worked for free for over a month.

              As for a client going bust, employees are top of the list when it comes to getting paid on insolvency. Contractors are at the bottom with all the other suppliers. It is likely that an employee will get paid, it is unlikely that a contractor will.

        3. Nial

          "Risk? What risk? You're a contractor, not an entrepreneur."

          I had emergency surgery last year and wasn't able to work for a month.

          No work = No pay).

          That sort of risk.

          1. Tom 38 Silver badge

            I had emergency surgery last year and wasn't able to work for a month.

            No work = No pay).

            That sort of risk.

            Then your boss (you) sucks for not paying you sick pay. You can't just take the pros and complain about the cons, your contracting rate should include cover for when you're unable to work, holidays etc. If you think permies have a better deal, then why be a contractor?

            1. Dr. Mouse Silver badge

              "your contracting rate should include cover for when you're unable to work, holidays etc"

              It does, but this is still a risk which we must account for.

              Similarly, I build in some extra to cover me in case my client refused to pay my invoice, which mitigates that risk. I build in the costs of professional indemnity insurance, to mitigate the risk of being sued for making a mistake.

              The fact that we do something to mitigate these risks does not mean they are not risks. It is up to us to plan and budget for them, but they still exist.

            2. Sir Runcible Spoon Silver badge

              "your contracting rate should include cover for when you're unable to work, holidays etc."

              Within reason, yes. At the end of the day whilst we are employed by our own company, the company funds are based on us extracting day rates from clients - if we aren't (if we are sick) then the coffers are ---> £0

              So yes, we should be covering our own holiday and sick pay, but it has limits.

              1. NeilPost Bronze badge

                “So yes, we should be covering our own holiday and sick pay, but it has limits.”

                That’s where you need to consider sickness insurance. Cover is out there from various places. As a permie I have it from Canada Life as part of my **additional employment benefits I have to fund** via Sodexo Benefits. 12 months at 75% salary equivalent if on long term sick.

            3. NeilPost Bronze badge

              -holiday pay fund

              - holiday fund

              - pension fund

              - PHI/dental fund

              - sickness insurance funding

              or

              - Porsche Macan fund.

              Hmm......

              1. Sweatbubble

                Sums it up perfectly

              2. Nial

                You're mistaking us all for some of those in finance who get paid £££/ Hr.

                I'm an engineer and there's not much difference in what I take home and what one of the permies here takes home (especially when you take pensions into account).

                There's only a Volvo on my drive.

            4. Nial

              "Then your boss (you) sucks for not paying you sick pay. You can't just take the pros and complain about the cons"

              I have money in the company to cover this sort of eventuality and can't see where I complained about it.

              I was just pointing out there is risk when you're working for yourself.

              1. Nial

                And yes, I have long term sickness cover (and PI etc), that only kicks in after a few months.

    5. Androgynous Cupboard Silver badge

      Caustic indeed

    6. Dr. Mouse Silver badge

      "As someone who has long been a salaried employee in an environment where freelancers have dodged taxes and ponced off taxpayers, IR35 can't come quickly enough"

      Are you aware that IR35 already exists? Even before the public sector reforms, the rules were there and they are not changing in terms of who is inside or outside.

      The only change to the rules coming in is that it becomes the end client's responsibility to determine a contractor's IR35 status, and their liability for taxes if they get it wrong. However, a contractor who is outside IR35 now will still be outside after.

      If HMRC think that someone is incorrectly operating outside IR35, they can always investigate... Oh, wait, they do that and consistently get proved wrong in court (or even before court).

      These regulations will not just have the effect of stopping "fake" contractors. It will have the effect of denying real contractors from being able to operate as real contractors, and force them to pay more tax than they legally owe. It is no different to what the situation would be if your employer continued to tax your wage on an "emergency" tax code in spite of them having the docs to show what you should be on, except that there is no real right to appeal and no way to claim back the extra tax you've been forced to pay over what you should.

    7. steviebuk Silver badge

      Having worked IT in the NHS its all the middle management and directors you need to moan about, not the doctors. All the middle management that sort out "Jobs for the boys" and "What title do you want?" And "I need to leave early so I can play golf" none in the hospitals, all based at Trust HQs, all rinsing the purse until the next government comes in and changes everything. At which point they try to move to another department and continue in their bullshit, not required but everyone is too blind to see it, over paid management role.

    8. NeilPost Bronze badge

      Quite agree.

      Instead, the bank will only work with contractors who join the payroll of its outsourcer, Resource Solutions, with an effective 25 per cent pay cut.”

      So by joining the payroll of the outsourcer you are an employee of them gain the entitlements they belly-ache about. Holiday, sickness, pension. So the ‘effective 25% cut’ is a misrepresentation of numbers.

      Paying tax, NI, Repaying Child Benefit tax, accruing holiday’s, private healthcare/childcare schemes and other benefits is what normal people do instead of using the money to buy a Fucking Porsche Macan.

      1. Dr. Mouse Silver badge

        "what normal people do instead of using the money to buy a Fucking Porsche Macan"

        You really have a chip on your shoulder about the Porsche Macan, don't you? I'm guessing you want one by how much you mention it, but you really don't like those who have one, do you?

        A contractor is running their own company. As with other people who run their own company, it is their choice how they run it. If they (unwisely IMHO) choose not to put any money aside to cover unexpected occurrences, they'll go out of business when they happen, no longer be paid, and loose their Porsche Macan (along with their house). However, this is up to the business owner. It is their responsibility to prepare for unexpected changes in circumstances, and their choice how or whether they do so. This is no different to someone betting their Macan on a game of roulette: It's their choice to do so, and they must live with the consequences if they loose.

        An employee has all this responsibility taken care of for them by their employer.

  2. Pascal Monett Silver badge

    "the bank will only work with contractors [..] of its outsourcer, Resource Solutions"

    And take a 25% pay cut. This whole thing is seriously starting to look like an orchestrated plan to diminish costs on the back of a specific category of workers who can do nothing about it.

    1. Robert Helpmann?? Silver badge

      Re: "the bank will only work with contractors [..] of its outsourcer, Resource Solutions"

      This whole thing is seriously starting to look like an orchestrated plan to diminish costs...

      Starting?

    2. Peter Gathercole Silver badge

      Re: "the bank will only work with contractors [..] of its outsourcer, Resource Solutions"

      It's not really a pay cut, more a loss of tax-free expenses and national insurance. I'm sure that the cost to the end client will be the same.

      One of the important things that is not being commented on, which is exercising the minds of the contractors working through limited companies is the possibility of HMRC deciding to retrospectively re-define the IR35 status for previous years for contractors who go umbrella in the same role. After all, "if it is under IR35 now, surely it must have been under IR35 in previous years, yes?"

      It may be that the contractors leaving all of these companies are prepared to work under the new tax regime, but want to isolate themselves from any blanket request/demand by HMRC to pay NI/taxes for previous years in the same role. That is certainly how many of my colleagues are thinking.

      Nobody trusts HMRC not to engage in retrospectively chasing contractors. The statements they have made so far have contained weasel words to give them a way of sounding like they won't, but still allow cases where they can.

      1. Sir Runcible Spoon Silver badge

        Re: "the bank will only work with contractors [..] of its outsourcer, Resource Solutions"

        I'm pretty sure HMRC have already stated they will view new inside-ir35 roles in that light.

    3. Someone Else Silver badge

      Re: "the bank will only work with contractors [..] of its outsourcer, Resource Solutions"

      This whole thing is seriously starting to look like an orchestrated plan to diminish costs on the back of a specific category of workers who can do nothing about it.

      Acutally,that sounds like a plan that Donald Dump Trump might come up with1. How would BoJo2 possibly know what Trum...oh, wait....

      1Well, Trump isn't smart enough to come up with any kind of a plan on his own that has more than 1 step in it, so to be fair, such a plan would have to come from one of his minions, like Steve Miller or the like.

      2Love the moniker!

    4. James Anderson Silver badge

      Re: "the bank will only work with contractors [..] of its outsourcer, Resource Solutions"

      As other big players such as Barclays have mad similar announcements, it looks suspiciously like a collaborative policy. (We've been here before with Libor, but this time its probably legal).

      Given that most of these contractors will be specialists in installing and configuring KYC, Anti-Money Laundering and regulatory Reporting packages where are they going to go after they let thier contracts run out?

  3. Moldskred

    Drop in quality

    > Another person familiar with Deutsche's processes said it was normal for the bank to start projects in its main offices before moving them to lower-cost offices overseas. The source added that it would not result in a drop in quality.

    It's already atrocious?

    1. A.P. Veening Silver badge

      Re: Drop in quality

      It's already atrocious?

      Only if you are extremely generous in your judgment.

    2. sal II

      Re: Drop in quality

      There is only one way from the bottom.

      Or so they think...

      1. A.P. Veening Silver badge

        Re: Drop in quality

        They always fail to take into account they are already digging the hole deeper and deeper.

    3. Jellied Eel Silver badge

      Re: Drop in quality

      It's already atrocious?

      If you enjoy books about financial crimes (allegedly), I recommend this-

      Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction by David Enrich

      Trump's in there as an example of outside foreign interference in US politics, proof of the old adage that "If you owe the bank $100k, you're in trouble, if you owe $2-3bn, the bank's in trouble". Or it's just marketing. Private Eye regularly reported on Trump's curious relationship with his bankers, long before he ran for President.

      It's one of those fun aspects of the whole EU fiasco, and what might happen when DB finally implodes. Or the impact of the ECB's QE program, Basel-3 etc etc. Also would be kinda hard (or handy for fees) to tap the London markets for rescue packages, as happened during the last run of bad banks if the EU can't trade with London, and Frankfurt would kind of implode. And any oopsies with DB's off-shored IT projects might make the situation worse. Or provide a convenient scapegoat.

  4. Steve Button

    It's not just the 25%

    If they accept roles INSIDE IR35 there is no guarantee that HMRC won't come knocking for potentially years of back dated tax. If you accept you are inside now then you pretty much accept that you were inside last month, and before that.

    1. TonyJ Silver badge

      Re: It's not just the 25%

      "...If they accept roles INSIDE IR35 there is no guarantee that HMRC won't come knocking for potentially years of back dated tax. If you accept you are inside now then you pretty much accept that you were inside last month, and before that..."

      This. Very much, this.

      Although I believe HMRC have said that they have no intention of looking at anything prior to April this year, I can probably lob a grand piano further than you could take their word for anything.

      1. Neil Barnes Silver badge

        Re: It's not just the 25%

        To be fair, grand pianos are notoriously easy to lob. Or am I thinking of tennis balls?

        1. jake Silver badge

          Re: It's not just the 25%

          No, you were thinking of pianos.

          It's a philosophy of life thing.

          1. Anonymous Coward
            Anonymous Coward

            Re: It's not just the 25%

            No, you were thinking of pianos.

            It's a philosophy of life thing.

            I often wished I lived in Cicely. At least I'd get to see a doctor at a moment's notice rather than wait 2 months (Oxfordshire). Yep I'm working through the boxed set and really it would be like heaven living there compared to living on a god damn building site (Bicester).

        2. Jellied Eel Silver badge

          Re: It's not just the 25%

          To be fair, grand pianos are notoriously easy to lob.

          Wonder if there's contract work in the siege engine sector? Flog flat-pack trebuchets via Amazon or Ikea. Then again, grand pianos are rather dangerous on account of having brittle cast iron frames strung together with high tension wires. Apparently one of the more hazardous things to move due to the potential of turning into a bunch of flying cast iron lumps and cheese wires.

      2. MountainBob

        Re: It's not just the 25%

        You are referring to an HMRC factsheet, something a lot of fellow consultants have brandished whenever I have warned them of the danger. Indeed, an HMRC spokesperson was recently quoted as saying:

        "The change does not affect people who are self-employed under existing employment status tests and will ensure that tax that was always due is paid. Contractors who are complying with the existing rules will feel little impact.”

        This strongly suggests they may well decide to do clawback. What is to stop them? A factsheet doesn't equate to law and when the income they have promised the treasury falls well short, I would fully expect them to come a knocking.

        1. katrinab Silver badge
          Alert

          Re: It's not just the 25%

          "The change does not affect people who are self-employed under existing employment status tests"

          means:

          "The change does affect people who are not self-employed under existing employment status tests"

          And they will argue that you can't possibly have been self-employed this year, otherwise you would have still have your limited company invoicing the client.

          1. tea junkie

            Re: It's not just the 25%

            If your a company director, your not self employed. Your an employee of your company, who can draw a salary and receive dividends. Self employment is for sole traders or people in ordinary partnerships.

            ps I do this part of tax law for a living.

            1. Richard 12 Silver badge
              Devil

              Re: It's not just the 25%

              If your current client decides to negate their risk by arbitrarily putting you inside IR35 after April 6th while still performing the same function, then HMRC are absolutely certain to declare that you were always inside IR35 and demand at least 6 years back taxes.

              You'll have to go to court to try to prove them wrong.

              The tax lawyers are going to do very well out of this, everyone else is going to suffer horrifically.

              The really stupid part of IR35 is that it separates rights from responsibilities.

              If the client, HMRC or a court decides that you have to be taxed as an employee, then any sane person would accept that they must also treat you as an employee too - holiday pay, redundancy and all the other rights.

              IR35 doesn't do that. It allows a client to dump all the tax burden onto you while refusing to give you any of the associated rights.

            2. katrinab Silver badge
              Headmaster

              Re: It's not just the 25%

              If you are a company director, you are an office holder of the company, and you may or may not also be an employee depending on circumstances.

            3. Dr. Mouse Silver badge

              Re: It's not just the 25%

              This jumped out at me when I read their spiel, too.

              Self employed generally means a sole trader*. A Ltd contractor is outside that classification. Therefore of course the IR35 won't affect the genuinely self-employed, as the IR35 legislation (old or new) does not impact sole traders at all.

              * Or, as you say, those in partnerships

  5. Flak

    The bank has paid $18.3bn in regulatory fines since 2008

    The cost of doing business...

    Wouldn't it be much more prudent to have some proper governance?

    1. Pascal

      Re: The bank has paid $18.3bn in regulatory fines since 2008

      One thing you can rely on bankers for is the ability to maximise profit.

      If they paid 18b in fines over the year and still don't have proper governance, there is only one existing fact that can explain it: allowing money laundering and other financial crimes to continue is at least a good deal more profitable than the fines.

      1. James Anderson Silver badge

        Re: The bank has paid $18.3bn in regulatory fines since 2008

        Actually the one thing you can rely on bankers for is to lose vast amounts of money.

        The history of banking goes like this:

        Bankers make foolish investments, lose their customers money and cause financial crisis

        Government bails them out and introduces regulations to stop them being so stupid next time

        Bankers find a way to circumvent regulations and take enormous risks for small profits and larger bonuses.

        Back to step 1

      2. Richard 12 Silver badge

        Re: The bank has paid $18.3bn in regulatory fines since 2008

        Bankers make short term profit.

        Once the bonus is paid, they don't care whether it's going to half sink the bank in five years time.

        There are innumerable examples of this kind of short-termism - PPI, the 2007 financial crash, millions of individual fines for various breaches of money-laundering regulations...

  6. Dogface

    https://norightsemployee.uk/

  7. IGotOut Silver badge

    I do wonder..m

    How much is bluster from the freelancers and how much is fact.

    If you go by how *say* they are going to quit and how many *actually* do are two very different things. We all do it one way or another.

    According to the spokes people, there are going to be a LOT of people with zero income from this change. Principles are all well and good, until you find your house being repossessed.

    For some they may see it as an opportunity for a life and career change, many will just have to live with the change and very, few will stick at it on principle.

    1. A.P. Veening Silver badge

      Re: I do wonder..m

      But those who will have to live with it aren't usually the very best, as those can afford to stick at it on principle. On the other hand, about half of those who see it as an opportunity for a life and career change were in the wrong career anyway.

    2. Franco Silver badge

      Re: I do wonder..m

      I can only speak for myself, I wasn't extended at a public sector role when the changes came in there (they let all contractors go) and went back several months later with a much more tightly defined contract scope but doing exactly the same projects. I know a lot of people in the same situation then, and it meant that the public sector quickly got their ducks in a row and stopped blanket classifications like the banks are doing because they couldn't get any projects moving without contractors, again exactly as the banks are going to find.

      I won't accept an inside IR35 role unless it's pretty much on my doorstep and there is no other choice available, becuase to me it isn't worth the risk. I'm certainly not going to travel the distance I would for a contract for the same rate as a permie with none of their benefits.

    3. Sir Runcible Spoon Silver badge

      Re: I do wonder..m

      Well, there are two contractors in my team (along with a bunch of people from one of the large consultancy agencies who are exempt from this shit-show for some reason - oh yeah - *they're* running a business) and we've both been deemed 'inside' based on a bunch of incorrect answers to their cookie-cutter questions that we had no input to.

      Guess what, we're both leaving in March. Also guess what? - The team is going to really struggle as whilst the others are ok at their jobs, we are always going the extra mile and making a difference to project deliveries.

      That's 100% of the contractors in my team, and I'm aware of others elsewhere in the business going too.

    4. eionmac

      Re: I do wonder..m

      I walked away.

    5. Dr. Mouse Silver badge

      Re: I do wonder..m

      If the market conditions mean it is no longer tenable for me to work as a compliant Outside IR35 contractor, I will have to consider alternatives. These include inside IR35 contractor, umbrella contractor, FTC and permie.

      However, I will not do so with my current client, or any recent client. The risk of a tax investigation (even one I'm sure I'd win) is too great. I wouldn't even consider it if they offered a large rate rise because of this. I would look for an alternative gig elsewhere.

      This means the company involved lose any experience and knowledge I had of the project. If contractor do this en masse, the government may achieve their obvious aim of eradicating Ltd contractors and forcing all of them on to PAYE, but the companies involved will be damaged. The more contractors they lose, the more damage they will suffer.

      Many predict that the outcome of these regulations will actually be lower total tax receipts to the treasury, when you consider contractors retiring (only pension income to tax, if that), contractors going perm (on lower salaries than their rates), companies damaged by loss of contractors (lower corp tax), accountancies going out of business (contractor accountancy is big business), and many others.

      1. LyingMan

        Re: I do wonder..m

        Exactly this is what BoJo meant when he said 'Fsck Business!'

    6. julian_n

      Re: I do wonder..m

      OK. I said I would leave and I now work in Switzerland.

      If you're keeping tabs that's 1 - 0

      1. Anonymous Coward
        Anonymous Coward

        Re: I do wonder..m

        > OK. I said I would leave and I now work in Switzerland.

        The pay is five times your previous rate and you still can't afford pizza once a week... ;-)

        1. Muscleguy Silver badge

          Re: I do wonder..m

          You can make your own you know. You can even buy prepared bases if that part is a problem for you. Cartons of passatta are also available not far from the mozzarella.

          I’m gluten intolerant (since 1990 so genuine) and I made myself one recently. The base and tom sauce recipe are from the River Cottage GF Cookbook. It had pepperoni, ‘shrooms, sweetcorn and from halfway through baking anchovies. It was divine, though the pepperoni were too big. That experiment was a failure, back to the smaller slices next time.

          Yes I know pizza is supposed to fast but it doesn’t have to be. I don’t even have a stone before you ask and my pizza peel is a baking tray. I do own a pizza wheel, bought brand new from the charity shop I volunteer in (someone donated it) for about 99p.

  8. Anonymous Coward
    Anonymous Coward

    Everyone leaving... and going where?

    If all the contractors are leaving, this seems to pose a question no-one has asked or answered yet: where are they all going?

    If they're bailing from one bank or corporate surely they'll hit the same problem at all the other banks and corporates they then approach for work ? I'm guessing those other banks and corporates are obviously not putting their contractor rates up to compensate and make working there attractive if they're also losing their own existing contractors due to the same issues? Vote: frying pan or fire?

    Anonymous UK Tax Payer.

    1. A.P. Veening Silver badge

      Re: Everyone leaving... and going where?

      Some contractors will just take a holiday for a couple of months until the remuneration is acceptable again, some will just retire a bit earlier than originally planned, some will go abroad and some will join HMRC, where they will be IR35 exempt, no matter what. (HMRC already had the problem of contractors walking out and couldn't handle that.)

      1. Manny Bianco

        Re: Everyone leaving... and going where?

        And, hilariously, I believe 18 contractors working on the (flawed) CEST (Check Employment Status for Tax) tool for HMRC walked out when the public sector IR35 reforms came in in 2017.

        1. A.P. Veening Silver badge

          Re: Everyone leaving... and going where?

          Yup, and HMRC was hemorrhaging contractors at the time, so HMRC is (mostly) IR35 exempt by now.

      2. Anonymous Coward
        Anonymous Coward

        Re: Everyone leaving... and going where?

        I recently applied for, and won, a new outside IR35 role to start in March.

        Speaking with the agency, within an hour of posting, he'd had 54 applications. Normally, he would expect about 10% of that.

        I suspect that the truth is that it breaks down into the usual lines:

        Those who will bluster and threaten, but when it comes down to it, will let inertia govern their actions (i.e. stay where they are, even under an umbrella and take their chances);

        Those who will work up to the deadline and then just take some time off, head abroad while they still can, or simply retire;

        Those, like me, who began actively lookig at the start of February and into March and who will either take an outside role, or if it must be inside and via an umbrella, at least somewhere not in any way related to any places previously worked at.

        Those who leave it until March may find they are up against an awful lot of competition for roles, on the one hand, but also may find that there are now plenty of umbrella-only ones suddenly available.

  9. Anonymous Coward
    Anonymous Coward

    Hmm, I remain deeply deeply sceptical.

    If there was such an exodus, you'd have thought there would be a hiring drive going on at DB.

    Which there isn't.

    The facts don't support the interpretation.

    1. Manny Bianco

      Re: Hmm, I remain deeply deeply sceptical.

      If there is an exodus, then it will be at the time the reforms come in by April 6th. DB aren't bothering to hire HERE in the UK. They are already offshoring the work. So, you have the double whammy of people being forced to find other employment to avoid investigations by HMRC, and other companies not engaging with PSC contractors.

      I'm one of those affected, but at a different company. I'm working on a very important project of massive commercial value to that company. I'll be leaving on March 31st IF I'm deemed inside IR35 (despite my most recent status being confirmed as outside). I cannot go permanent at that company as they won't pay the agency's finder's fee payable when a contractor they introduce switches to a permanent role. They'll lose my expertise, experience and knowledge of their systems - and the systems I have built for them - and will try to backfill with a new permanent person or will offshore it, which is of no help to the UK.

      This is also going to be seen as a way for companies to reduce their costs. They force potential workers to go through a specific umbrella company, where they get paid less, and the company doesn't have to pay Employer's NI or provide benefits like sick pay, holiday, maternity/paternity pay, pensions etc.

    2. Sir Runcible Spoon Silver badge

      Re: Hmm, I remain deeply deeply sceptical.

      Since contractors (&now NRE's) are paid for out of different budgets, they don't count towards headcount.

      Losing 10 contractors from projects does not automatically result in 10 new permie vacancies.

  10. Doctor Syntax Silver badge

    "Like other companies across the UK, we are engaged with contractors to ensure we are prepared for IR35."

    I.e. prepared to dump their contractors into it with predictable consequences.

  11. onemark03

    Deutsche Bank UK contractors & IR35

    How long will it be before DB et al. realise that the quality of work in India and Rumania is not as good as that of British contractors?

    And what will DB et al. do then?

    1. Anonymous Coward
      Anonymous Coward

      Re: Deutsche Bank UK contractors & IR35

      1) They already know

      2) Why should they do anything ? What's the downside ? As HSBC et al have shown, there's fuck all repercussions for bad service to customers. Well, repercussions for bosses, that is.

    2. happy but not clappy
      Alert

      Re: Deutsche Bank UK contractors & IR35

      Well both DB and HSBC are in a world of poo already, so software issues might come as a blessed relief to the endless rounds of shrinkage and headcount reductions. Their entire business model looks like it is broken, held up only by the inertia of their customers.

      Also both fired their CEO's in the last year or two, so there is at least a small degree of accountability, though with the usual golden parachutes to soften the blow.

      On topic, banks don't do much that is creative, to be honest, with most work being to paper over the cracks. I guess they can probably just stop all the projects and keep trundling along on the same mainframe packages they've relied on for over 50 years.

      1. A.P. Veening Silver badge

        Re: Deutsche Bank UK contractors & IR35

        I guess they can probably just stop all the projects and keep trundling along on the same mainframe packages they've relied on for over 50 years.

        They probably could if governments didn't change the relevant legislation every once in a while. I was a contractor (not in the UK) at a pretty large bank and about half of all the projects were changes required by changed laws. And another quarter of the work were the annual SWIFT updates, mostly caused (again) by changes in laws, some of them in countries the bank didn't even deal with.

  12. James 47

    Where are they all going to go? Bluffers

    1. Dr. Mouse Silver badge

      Most will have a decent sized "war chest", so will be able to take a bit of time off. I know many who are looking at overseas work, or retirement.

      Myself, I would take a couple of months looking for something outside IR35 and, if I couldn't find anything, would look at alternatives. I would not, however, touch an inside/umbrella/perm role with my current client with a barge pole, nor one with a recent client, due to the risk of this being seen as an admission that I should've been inside all along.

      So, no, they/we are not bluffing. Few will stay on in current roles in a non-outside-IR35 status.

  13. Anonymous Coward
    Anonymous Coward

    Change Manglement

    I have never worked at DB, but at other banks, Change Management is the very definition of a BS job.

    1. Anonymous Coward
      Anonymous Coward

      Re: Change Manglement

      The real take homes of this story are that they've been allowed to build up that many contractors in that group, and change management thinking that projects are going to fall apart without them.

    2. James R Grinter

      Re: Change Manglement

      It isn’t the usual description of IT Infrastructure Change Management, but who knows how the “business” IT has chosen to use the term.

  14. Ian Johnston Silver badge

    When your morals are demonstrably worse than those of a merchant bank (for Christ's sake) it really is time to shut the fuck up and pay your fucking taxes.

    1. Aristotles slow and dimwitted horse Silver badge

      If you actually had any experience of what you were talking about, other than just making overly emotional and baseless comments that themselves are founded on unsubstantiated "facts", I think you'll find that all contractors pay all of the taxes that are due under law; and I would also suggest that most pay a whole lot more than you do.

  15. Richard 15

    Same Quality?

    If the quality was the same, they would not be doing it in-house at all.

    Way back when,when I did contracting I'd been asked more than once to "fix" something that was offshored.

    Now obviously there are some guys that are perfectly competent, but those are not the ones they want fixed.

    In almost every case I told them it would be simpler to scrap it and start over rather than use the code they

    were trying to get fixed. Some of the code was copied verbatim from samples on the net, including the comments.

  16. clintos

    Every contractor get out

    Teach these idiots who grab as much as they can for their own pockets a big lesson. It's about time the people of this country took back control of themselves. Teach these legislators a massive lesson, gov idiots who couldn't regulate a cup of coffee. I worked for the NHS as a contractor. I gave out 100% all the time. I remember a consultant stating, if I get my way in here, I would get rid of all the full time staff and employ in contractors only. As contractors get the work done. Now we are all f*****.

  17. Anonymous Coward
    Anonymous Coward

    If I was still a contractor (I haven't been for 19 years, I'm truly self employed) I'd be leaving whatever role I'm in and going off to work somewhere else to ensure I couldn't be chased for back tax/ni if someone in HMRC decides I should have been inside IR35, life is just too short to take that risk regardless of whether you think you are right or may eventually win the battle. May be leaving self employed soon for an easier life, not sure whether I will go contracting.

    "In some cases, staff will move to become full-time employees. Others may move to PAYE."

    Isn't a full-time employee on PAYE then?

    God there are some jealous people out there, nothing has changed, I had the same issue with a 'posh' car when I was contracting, about 30 years ago,got it on the 1st August, I was deemed too young to have such a flash car and was advised by the head of IT I had to park it at the bottom of the car park rather than in the 'contractors' carpark (actually it was just first come first served) so people couldn't see it. It was on contract hire. I drove hundreds of miles every weekend to get home and back, it was my bit of luxury to make up for the 5 or 6 hour drive each way. My whole life was judged on the basis of that car, despite the fact I had a small house, in a cheap area and didn't take expensive holidays, wasn't married, didn't have kids etc etc. If I'd spent that extra money on my mortgage or holidays to far flung places or even just had a cheap work car no one would have moaned.

  18. Anonymous Coward
    Anonymous Coward

    Moan moan moan

    Contractors are only contractors for the money.

    They bleat about no holiday pay, no pension, no sick pay etc - yet still contract. I wonder why ? Maybe it’s because they generally earn £100k+ and pay little overall tax on that amount and so are better off despite not having these benefits. Despite claiming otherwise.

    No sick pay - I get paid sick pay but am hardly ever sick, so so what. If I was a contractor I would factor in the fact I may need to go sick at some point in my daily rate.

    Same as holiday pay - factored in.

    May be out of work for a few months at a time. Again, factor it in to your daily rate. A permanent employee who loses their job couldn’t afford to do this, plus how many contractors do you know who are out of work ?

    Having to pay accountants, pay for insurance etc - that’s your choice based on the way you want to work. Pensions - most people have to contribute to their pensions - if you have to pay more to a private pension as your employer isn’t contributing that’s directly related to your choice of being a contractor and not a reason to bleat. Plus it’s tax deductible, which is something contractors love.

    If contracting is as bad as contractors make out, why do you all do it ?

    1. Aristotles slow and dimwitted horse Silver badge
      FAIL

      Re: Moan moan moan

      Brilliant. Well done for totally missing the point.

    2. Mike 137 Silver badge

      Re: Moan moan moan

      I contract because I provide highly specialised services to solve specific problems as a subject matter expert. Once the problem is solved, I'm not needed any more by that client so I have to move on to the next. For this reason, contracts typically last no longer than a year, often less. That means, just for example, as an employee I wouldn't get a corporate pension anyway, and for the client the cost of recruiting on a contract of service would be proportionally very high, so nobody gains if I'm taken on as an employee of the client.

      The higher rate my company charges the client covers the statutory obligations my company has to me as its employee to provide the contract of service benefits (e.g. the employer's NI and pension contributions). I can't see why this is too complicated an idea to be grasped by anyone.

    3. Anonymous Coward
      Anonymous Coward

      Re: Moan moan moan

      As a contractor I do it for the variation in work, No daily grind of doing the same thing every day and wondering if anyone would actually notice if you did nothing at all.

      Also most of the work I do tends to be one-off jobs that take a couple of months and are then unlikely to be touched again for a decade so it would make no sense at all to become an employee of the company having the work done (by the time they had supplied everything needed for me to work I would be handing in my notice).

      Some company types I have worked with.... Office furniture manufacturer, adult toy sales, childrens nurseries, nursing agency, civil engineers (road building), Plumbing suppliers, Country House Hotels, Theme Parks and many more.

    4. TonyJ Silver badge

      Re: Moan moan moan

      "...Contractors are only contractors for the money..."

      Based on that logic, you presumably work for free?

  19. Anonymous Coward
    Anonymous Coward

    Its all about money and risk

    HMRC have had a bad time with IR35. The amount of money they spend taking contractors to court is often less than the amount of money they recover. So in terms of benefit realisation it has not had the desired result. When first launched in the late 1990's there was a lot hysteria but agencies, contractors and clients were able to adjust the terms of the contracts - making the relationships more B2B.

    So HMRC are changing their strategy. They have done so by painting a target on the back of organisations that use contractors. These organisations now see a risk - financial and potentially reputational - and have decided that all their contractors are inside IR35 to mitigate the risk.

    Like all mitigating actions there is a residual risk. I think a lot of contractors will accept roles inside IR35, most likely with new clients as they mitigate the risk tof HMRC going back to questions previous engagements with the client who has now deemed them to be inside IR35. This will generate a cost to business as knowledge and experience has to be paid for again! A real and hidden cost to business.

    Over time I suspect that some clients will organise themselves; much as the public sector has done, and realise that there is a business benefit in having roles outside of IR35 to attract people to travel further increasing the talent catchment area. Those that insist on maintaining everyone inside IR35 will start to have a declining pool of talent and will either have to do IR35 properly or pay more.

    HMRC will see an increase in the money coming in but this will be temporary. They will see an increase in income tax and NI but in very short order a drop in corporation tax receipts - not from the contractors but from the organisations using contractors that are paying the price of HMRC's decision through increased costs, more frequent outages. After all businesses use contractors to exploit a financial benefit - the financial benefit generates additional profits which are taxed.

    As always there is no such thing as a small change and every change always has unintended consequences and the government are experts in creating unintended consequences that we all end up paying for in the end.

  20. Muscleguy Silver badge

    A 25% pay cut you say? par for the course. Remember all the public service cleaning and catering staff who all got ‘transferred’ to the private sector on lower pay and conditions?

    They think you have no options and will come to heel rather than some other option. They are offshoring control of money laundering to countries where people are prey to influence and pressure from organised crime. I want to launder some ill gotten games and I have organised crime connections. I will suborn or blackmail/threaten workers in this area in order to subvert the systems to my advantage.

    It will all end in tears. Anyone remember NatWest and the great TITSUP because they fired all the old hands who knew how their antiquated systems worked and the languages used to code them in favour of Indians who lied on their CV’s and thus cocked up when left to do normal business because they were winging it. NatWest had to hire back the old hands at high rates as contractors to sort the shit out.

  21. Mike 137 Silver badge

    ' "your contracting rate should include cover for when you're unable to work, holidays etc" '

    Our contracting rate would cover this if we were free to negotiate our contracts and rates with the end user of our services. From the position of a limited company contractor this is feasible, if not always achievable. From the position of a contractor via an umbrella company or under IR35, it's impossible, as one is considered for rate and tax purposes as being on a contract of service to the umbrella company or end user, that nevertheless is not obliged to provide the benefits that legally accrue from a contract of service. Nor is the contractor absolved from the (often expensive) obligations that accrue from being on a contract for services (insurances, liability, accounting fees &c.). That's the entire problem, and it's crashingly obvious, so I can't understand how so many folks seem not to have grasped it.

    Furthermore, the distinction between a company and a personal service company on the (vague) basis of either how many people are directors or (or is it "and") whether the directors perform the service to the client is entirely arbitrary and has no basis in company law. Nobody (including HMRC) objects to a director of a large corporate receiving a substantial proportion of their income as dividend, and it's done all the time, to significant financial advantage. However as soon as there's only one director in the company it's suddenly a sin.

    This needs to be challenged urgently. The House of Lords public call for evidence on this closes on 25th February, so let's get on with stating the case in the strongest possible terms that not just the extension of IR35 to the private sector but IR35 in its entirety is abusive, discriminatory and unconstitutional and that it's demonstrably detrimental to the commercial life of the UK.

    1. Anonymous Coward
      Anonymous Coward

      Re: ' "your contracting rate should include cover for when you're unable to work, holidays etc" '

      or, just get a job and pay your taxes

  22. ITGirl

    This article describes IR35 as a pay-cut which is patently not the case, it just means that these people will be required to pay tax, as everyone else is, and as they should have been all along.

    There are children and elderly going hungry in this country, if everyone just mans up and pays their fair share, so much more could be done to improve things for all of us.

    1. Sir Runcible Spoon Silver badge

      If you are interested in HMRC getting more tax with which to do things, why do you expect this new legislation to generate that?

      There are several avenues that contractors can go down as a result of this recent fiasco, and almost all of them end up with the taxman getting less money (as well as the contractor).

      Unless this is about putting the boot in to contractors (in which case, it's a job well done) ir35 simply doesn't generate more tax.

  23. Henry Wertz 1 Gold badge

    Businesses gleefully paid the lower rates

    "This article describes IR35 as a pay-cut which is patently not the case, it just means that these people will be required to pay tax, as everyone else is, and as they should have been all along."

    Effectively it IS a paycut; whether these people have been dodging paying taxes, or (as one poster put it) used their "flexibility to use tax allowances and schemes to optimize their tax", either way these businesses have been gleefully paying the (somewhat) lower rates for contractors because of their lower tax burden. Guess what? If the businesses don't pay more, it IS a paycut; and, as the business is free to lay off their contractors at any time, the contractors are also free to leave at any time, and are simply exercising that option.

    It sounds like in this case, it may have been a LITERAL pay cut -- I may be misunderstanding, but it sounds like Deutsche was expecting everyone to work through a specific outsourcing agency, who take a cut of the pay.

    These agencies are honestly a big drain on the economy in the US -- especially temp agencies, I worked through one years ago and was shocked to find out I was getting $12/hour but they were getting paid $20/hour by the employer. This is for almost nothing... it's not the 1950s so they don't have a payroll office or anything, computers do it all; so basically the 33% was going towards paying 1 low-paid temp in an office (it doesn't go towards taxes, that all comes out of the remaining 66%, when I made $12/hour I was getting about $7/hour after tax.)

  24. This post has been deleted by its author

  25. MachDiamond Silver badge

    Good at it

    There are a few things I'm very good at. This lets me take cash jobs where my pay is buried in the books. With this arrangement, I'll give some allowance since the company won't be able to write the money off. If it's a cash business, it's often easy to pay contractors for smallish jobs in cash and have the money never show up on the books. This is why the "elite" keep pushing for a cashless economy. I hope that doesn't come to pass in my lifetime. There are too many downsides to not having cash.

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