Public sector contracting

[andrewb]

If they want people to be paying taxes as permies for these long-term projects, maybe they should, erm, hire permies.

[Old Greg]

If they want people to be paying taxes as permies for these long-term projects, maybe they should, erm, hire permies.

The punch line is that many of them can't because their headcount is limited by statute.

[MyUserName]

I am far from the sharpest tool in the box so can someone explain this to me, why would the below not happen?

They make these rule changes so you must enter IR35 if you are there longer than 6 months. The vast majority of contractors will not do this so they will leave, they might get some permies in but there will still be a large skill shortage ... but the work still needs to be done.

So they will have to hire in contractors ... who will leave after 6 months.

Many will leave the public sector so they will be fewer to choose from but the same pool of contractors will end up moving from role to role in the public sector every 6 months as the large, bloated, projects spin their wheels and get nowhere due to constant turnover of skilled staff. This could end up being lucrative for those with the right clearance as they will be stacks of projects desparate for skilled staff.

[BolshieBastard]

It gives me no pleasure to be correct - as it will ultimately mean a glut of contractors hitting the market pushing down rates even further.

But this was always going to be the most likely outcome. There was a glimmer of hope when the guidance released was so piss poor with more holes than a sponge, but I don't think many public sector outfits have the stomach to sidestep the underlying intention of these guidances given the current tax avoidance witchunt going on.

That guidance was a first draft so, I never held out any hope things would get better. My take on this is that if it is brought in, Government Departments will be first, next will be public sector then, finally, the private sector would be brought into line.

This is not merely a civil service thing imo. It is a wholesale attack on tax avoidance with the target being the wider contracting community.

I think a key argument is the impact this will have on continuity within projects if this creates a 6 monthly merry-go-round, and the economics suggests that it will.

It made sense to me to prevent office holders from being outside IR35. The next thing presumably will be legislation to define PSCs and try to make all contracts > 6 months outside IR35.

TBH, I dont think Government will see project continuity as the issue here. It is tax avoidance behind all this, money currently 'lost' be the Treasury would be collected swelling the Government coffers. That will be the bonus and continuity will be placed on the shoulders of HP and the like, no doubt with penalties in their contracts if they fail to deliver.

Regarding your last sentence, surely you mean define PSCs and try to make all contracts > 6 months inside IR35?

[Old Greg]

Regarding your last sentence, surely you mean define PSCs and try to make all contracts > 6 months inside IR35?

Yes! Freudian slip.

[BolshieBastard]

I am far from the sharpest tool in the box so can someone explain this to me, why would the below not happen?

They make these rule changes so you must enter IR35 if you are there longer than 6 months. The vast majority of contractors will not do this so they will leave, they might get some permies in but there will still be a large skill shortage ... but the work still needs to be done.

So they will have to hire in contractors ... who will leave after 6 months.

Many will leave the public sector so they will be fewer to choose from but the same pool of contractors will end up moving from role to role in the public sector every 6 months as the large, bloated, projects spin their wheels and get nowhere due to constant turnover of skilled staff. This could end up being lucrative for those with the right clearance as they will be stacks of projects desparate for skilled staff.

I can see two problems with what you suggest.

First, its by no means certain all or even the majority of contractors will not act as inside IR35. Those contractors operating through brollies are not that far off IR35 terms. So, when faced with IR35 work or no work, how many brolly contractors do you think wont take a Government contract over 6 months?

I think the majority of them will. I could be wrong but, so many contractors I know will sign any old contract thinking they are ok without having the contract professionally reviewed. I worked with one guy who claimed he was outside iR35 simply because he ran two businesses through his company ie contracting and retailing.

Second, when faced with no work, plenty of contractors will take the 6 month contract then move on. Despite what people may think, there wont be a shortage of people taking these contracts. I have a large civil service iT site on my doorstep. I'd love to take a 6 month contract every 12 months. It would suit me fine, work 6 months, find something else, go back for 6 months etc, etc.

In any event, ensuring continuity of projects will be the likes of hP's problem.

[MyUserName]

I can see two problems with what you suggest.

First, its by no means certain all or even the majority of contractors will not act as inside IR35. Those contractors operating through brollies are not that far off IR35 terms. So, when faced with IR35 work or no work, how many brolly contractors do you think wont take a Government contract over 6 months?
.

Ah, that is true and a 6 monther insider IR35 is better than 6 months emptying the warchest.

I could be wrong but, so many contractors I know will sign any old contract thinking they are ok without having the contract professionally reviewed.

Eeek - that could be a costly mistake!!!!

[centurian]

That guidance was a first draft so, I never held out any hope things would get better. My take on this is that if it is brought in, Government Departments will be first, next will be public sector then, finally, the private sector would be brought into line.

While that may be an objective - they will need a different weapon to achieve this. With the public sector, they can simply issue an edict telling departments not to hire contractors on a tax-avoidance friendly basis - which is pretty much what they have done.

They can't instruct the private sector to do this - they would have to pass a law, which may well be the final step.

[BA to the Stars]

While that may be an objective - they will need a different weapon to achieve this. With the public sector, they can simply issue an edict telling departments not to hire contractors on a tax-avoidance friendly basis - which is pretty much what they have done.

They can't instruct the private sector to do this - they would have to pass a law, which may well be the final step.

Which could annoy a lot of business owners i.e. contractors who in general you would expect to vote for the Tories. To suddenly isolate this group (and it has been suggested that there could be several hundred thousand of us) could be an almighty own goal.

[centurian]

Which could annoy a lot of business owners i.e. contractors who in general you would expect to vote for the Tories. To suddenly isolate this group (and it has been suggested that there could be several hundred thousand of us) could be an almighty own goal.

That hasn't stopped them so far - ask the people on the BN66 thread

But I think it's simple electoral maths. We are outnumbered by the millions who won't vote Tory if they feel they are being soft on tax avoidance.

3 terms of Labour bringing many of the middle classes into the private sector have shifted the swing votes to the left - and that's who politicians concentrate on.