Worst case scenario

[jamesbrown]

What I don't see in this debate yet is reaction from the clients.

Understandably, there's been a lot of reaction from representatives of the recruiters (APSCo, REC etc.). Perhaps there's been some reaction from larger clients, but I haven't seen it. Until now, clients haven't needed to worry about IR35 and, as we know, the majority of them don't understand it (for good reason). Thus, I wouldn't expect a rapid or coordinated reaction, and smaller clients will probably remain blissfully unaware; I expect the larger firms will slowly engage, once they understand the commercial risk.

[expat]

Understandably, there's been a lot of reaction from representatives of the recruiters (APSCo, REC etc.). Perhaps there's been some reaction from larger clients, but I haven't seen it. Until now, clients haven't needed to worry about IR35 and, as we know, the majority of them don't understand it (for good reason). Thus, I wouldn't expect a rapid or coordinated reaction, and smaller clients will probably remain blissfully unaware; I expect the larger firms will slowly engage, once they understand the commercial risk.

What is the commercial risk, that you might expect them to understand?

That they have to pay more for contractors? I doubt it. Rates will stay as they are, or even drop once Payroll, Legal, and HR get into it. If contractors won't work for those rates any more, what do we have then? A skills shortage. Can we fix that? Yes, we can.

[jamesbrown]

What is the commercial risk, that you might expect them to understand?

That they have to pay more for contractors? I doubt it. Rates will stay as they are, or even drop once Payroll, Legal, and HR get into it. If contractors won't work for those rates any more, what do we have then? A skills shortage. Can we fix that? Yes, we can.

I think they'll want to understand whether there are commercial risks (including those in relation to employment rights), how to mitigate those risks (e.g. deeming all contractors inside) and the mechanisms in place to handle the consequences of that (adding to payroll carries large costs, but I can't see how that would work anyway). In order to understand all of this, they will have to engage.

[dingdong]

No client is ever going to say they have no supervision or control over contractors working on their site. Their own HR/Legal departments would not let them ever say such a thing.
As such contractors there will be little point in being a contractor if it now involves higher tax than being an employee without any of the career security/paid holidays/training/sick pay etc.

The current proposals will lead to a huge loss in flexibility for the economy as even taking on a contractor will become a much more convoluted process for any employer

[webberg]

The end user client has considerable risk here and I would have expected them to be shouting down these proposals.

They may be liable for the tax/NI that they "should" have deducted.
They may be liable for employment benefits.
They may be liable for accidents at work?
Discrimination legislation?
Accounting reports of FTE's.
Shareholder value impacted if a workforce reduction on paper is actually because they use contractors.

On and on and on.

[LondonManc]

No client is ever going to say they have no supervision or control over contractors working on their site. Their own HR/Legal departments would not let them ever say such a thing.
As such contractors there will be little point in being a contractor if it now involves higher tax than being an employee without any of the career security/paid holidays/training/sick pay etc.

The current proposals will lead to a huge loss in flexibility for the economy as even taking on a contractor will become a much more convoluted process for any employer

£60k perm vs £120k contractor? I guess it depends what stage you're at.

[LisaContractorUmbrella]

£60k perm vs £120k contractor? I guess it depends what stage you're at.

It's not quite that simple though it is?

[fool]

Perhaps I am being naive here (I realise I am opening myself up to flaming), but articles such as the following, "IR35 proposal would be devastating, says APSCo" could also be to the advantage of true contractors. In my opinion many engagers pay little attention to IR35 as, quite frankly, there is no comeback for them if they ignore it, only for the contractor and at worst the agency.

Not flaming but I don't feel this "true contractor" sentiment is helpful to us. Even the guy whos been with the same client for 10 years is assuming the same risks as you. He has no employee benefits and if he doesn't perform tomorrow he's gone.

Attempting to seperate this into an us and them when we all running companies and assuming the same risks diminishes the argument that IR35 is something that none of us should have to worry about, which is the arugment we really want to make.

Maybe there's scope to seperate us from people barely earning the living wage, but I'd argue that anyone who wishes to incorporate should be able to do so, what exactly makes those of who do so special?

[Danglekt]

£60k perm vs £120k contractor? I guess it depends what stage you're at.

Agreed - I understand it's not that simple, but that is exactly the point of this thread - lets lay it out so we can make some informed decisions.

I know its not all decided yet, but I'd like to have a rough idea that if it all goes horribly wrong, whats the impact likely to be.

It's good to read there are still some options, even if it was all to go as badly as it could.

[ShandyDrinker]

Not flaming but I don't feel this "true contractor" sentiment is helpful to us. Even the guy whos been with the same client for 10 years is assuming the same risks as you. He has no employee benefits and if he doesn't perform tomorrow he's gone.

Attempting to seperate this into an us and them when we all running companies and assuming the same risks diminishes the argument that IR35 is something that none of us should have to worry about, which is the arugment we really want to make.

Maybe there's scope to seperate us from people barely earning the living wage, but I'd argue that anyone who wishes to incorporate should be able to do so, what exactly makes those of who do so special?

I agree that we should all be standing together on abolishing the scourge of IR35.

My use of the term true contractor was probably wrong but for want of a better phrase I couldn't find an alternative and am still struggling to do so.

While we are all undoubtedly taking risks as contractors, some do more so than others. I am no expert on IR35 but the point you make about a person being with the same client for 10 years is actually a good one. Sure, he has no employee benefits and if he doesn't perform tomorrow he's gone; however, while he may be doing a good job, he is also at risk of being seen as part and parcel of the organisation and both him and the company involved are using a tax efficient vehicle to avoid NICs, paid holidays, redundancy benefits and so on. Personally I have no issues with people being at the same client for 10 years, hell, that's probably longer than most permies last in a single company these days.

As with the introduction of IR35 in the first place and the attack on expenses, this has more to do with the politics of envy than anything else. Why should X as a contractor be able to get more of a benefit than the average man/woman on the street, it's not fair and we can earn more tax from them as they have the broadest shoulders. You only have to see the vitriol written in the Daily Wail about services provided through a limited company to see what we're up against.