Reply to: Taking the Michael - a sign of the times

[ASB]

Not sure that this is a realistic scenario in the current climate - more like it is 75k less client co has to borrow to finance the project. All the more reason that offshoring is so attractive IMO. Many Indian cos are also offing to finance the whole deal with no money up front options. Couple this with the 1000's of jobs that cost additional unemployment benefit and I see the revenue stream going to HMRC to be considerably less.

PZZ

True, but the fact remains that if the service is provided cheaper then there is more profit (or less loss), and you are also quite right to include the additional costs of UB etc. The overall figure is not a zero sum game. It's also the case that mutinationals can exploit thier operations to artificially increase their UK cost base in some circumstances and to move certain operations outside the UK so it just becomes a cost centre for neatly moving profits (though HMRC are of course looking very carefully at explotation of the transfer pricing rules where this does happen).

Overall, yes, the UK taxpayer does get shafted - but it might not be by as much as it would seem at first glance.

[pzz76077]

Now in this case client CO has an extra 75k profit on its books. Which it neatly pays about 28k in CT.

Not sure that this is a realistic scenario in the current climate - more like it is 75k less client co has to borrow to finance the project. All the more reason that offshoring is so attractive IMO. Many Indian cos are also offing to finance the whole deal with no money up front options. Couple this with the 1000's of jobs that cost additional unemployment benefit and I see the revenue stream going to HMRC to be considerably less.

PZZ

[HairyArsedBloke]

More big co's are registering outside the UK though so will pay no corp tax in the UK. Take Petrofac, a big player in oil and gas services and very successful too. They're a footsie 100 co, but registered in Jersey. I wonder how much corp tax they pay?

So is HAB Inc.

<snip />

I did have a longer post but it gave away too much detail.

[Fred Bloggs]

More big co's are registering outside the UK though so will pay no corp tax in the UK. Take Petrofac, a big player in oil and gas services and very successful too. They're a footsie 100 co, but registered in Jersey. I wonder how much corp tax they pay?

[ASB]

It will be interesting indeed now that these roles that formally went to contractors are being offshored 10,000 at a time.
None of these roles will pay any UK tax at all and the tax deficit will massively outweigh any of the recently introduced half baked schemes such as IR35 etc.

Maybe those roles won't but it doesn't mean the tax isn't collected.

Let's say you charged the company 100k a year for the job. Thats £35,000 in CT the government don't get, replaced by whatever tax you pay. Possibly 20k in corporate and personal taxes if you are efficient. So the overall tax take from you and client is 20k.

Along comes the off shorer and their bid is 25k - let's assume that they can actually deliver what you otherwise would have (possibly a big ask).

Now in this case client CO has an extra 75k profit on its books. Which it neatly pays about 28k in CT.

In this particular scenario tax revenue actually increases. (Though it is extreme). Certainly the extra 8k would pay your benefits....

I'm not trying to suggest that there isn't an impact - there is. It's just that's its probably not as big as people generally expect.

[EddieNambulous]

I reckon the agents are trying it on becuase of all the doom and gloom on this website - not had a contract for xxx months etc etc

Not sure. I think you'd need to be an exceptionally thick-skinned agent, probably with a death-wish, to read this site on a regular basis.

Agent --><-- Contractor

[pzz76077]

Blame us disguised employees for not paying the amount of tax that HMRC expect to collect. Yes, that is the very phrase that they use.

It's pretty clear: contract rate last couple of years was £650, this year it's £400, agencies will offer £125. If you won't do it for that, they have someone who will.

Now look at UK plc from No 11: green shoots strangled by profiteering disguised employees. Sod'em, the rate is £125, if business can't find anyone for that, then there is a shortage and we'll fix it by allowing visas in sufficient numbers to keep the cost to business down and get our economy back on its feet.

I'm done, I'm not even looking in the UK any more.

The real issue is that its not just the IT etc that are being offshored, its entire business process that the IT used to support. This is a one way ticket - these deals develop the IT offshore as a small part of the business process, the real savings for UK companies is that not only do they not need to develop IT systems any more, they dont have the issue of directly employed staff any more.

For IT contractors the situation is terminal - a few years ago, UK co's had no choice but to hire us for skills shortfalls. Now there are thousands of other options in the form of offshoring co's around the world, all of which will take the entire business process of the hands of UK cos in a 5-15 year deal and deliver an acceptable business solution (yes I know the IT will be crap, but they can mitigate this by employing a few hundred extra staff for next to nothing to paste over the cracks- the client doesn't care how service is maintained!).

I would agree that the UK contracting marked is dead and will never recover to the extent of the gravy train of late 90's/early 2k's.

This is one of the reasons that I have not worked in the UK since 98. Strangely, the UK offshore or die mentality has not manifested in mainland Europe as yet.
Agencies have recognized this and it is the main reason why so many UK agents have expanded into Europe in the past few years and there are many more Euro contracts on sites like Jobswerve these days.


PZZ

[expat]

I'm afraid this is just another fine example of how New lie bore have successfully managed to destroy this country. Britain will be left on it's knees when whoever actually manage to win the election.

I wonder if Gordo' has get out clause for this on his "British Jobs for British Workers", like he did with the other Brownism regarding Oil Refinery workers?

I think that when Blair effed off and said to Gordo "You can run the country now", Gordo thought that he had mis-spelled "ruin".

[HairyArsedBloke]

I'm done, I'm not even looking in the UK any more.

Wise. Take the country for whatever you can get and frak off - I did.

It's still illegal, if it can be proven that this is taken place can the company not be prosecuted? It would be interesting to know if the PCG is looking at this, think i might have a look.

Edit: Just had a look on the forums and the PCG were the ones who brought this to the attention of the BBC, and they are providing evidence of the practice to the UK Borders Agency. Seems to be extremly common from what i've read, hopefully this will be taken seriously, but i'm not holding my breath.

The PCG are a waste of space. This has been going on for nearly ten years and in all that time they have not achieved anything in their petty attempts to protest.

I think it is all too late for the UK.

[cykophysh39]

I'm afraid this is just another fine example of how New lie bore have successfully managed to destroy this country. Britain will be left on it's knees when whoever actually manage to win the election.

I wonder if Gordo' has get out clause for this on his "British Jobs for British Workers", like he did with the other Brownism regarding Oil Refinery workers?

[the_duderama]

Will UK Gov do anything to resolve the situation?? No, its too late all of these roles have gone for good and UK Plc are much the poorer in more ways than just lost tax revenue.

It's still illegal, if it can be proven that this is taken place can the company not be prosecuted? It would be interesting to know if the PCG is looking at this, think i might have a look.

Edit: Just had a look on the forums and the PCG were the ones who brought this to the attention of the BBC, and they are providing evidence of the practice to the UK Borders Agency. Seems to be extremly common from what i've read, hopefully this will be taken seriously, but i'm not holding my breath.

[expat]

It will be interesting indeed now that these roles that formally went to contractors are being offshored 10,000 at a time.
None of these roles will pay any UK tax at all and the tax deficit will massively outweigh any of the recently introduced half baked schemes such as IR35 etc.

Will UK Gov do anything to resolve the situation?? No, its too late all of these roles have gone for good and UK Plc are much the poorer in more ways than just lost tax revenue.

PZZ

Blame us disguised employees for not paying the amount of tax that HMRC expect to collect. Yes, that is the very phrase that they use.

It's pretty clear: contract rate last couple of years was £650, this year it's £400, agencies will offer £125. If you won't do it for that, they have someone who will.

Now look at UK plc from No 11: green shoots strangled by profiteering disguised employees. Sod'em, the rate is £125, if business can't find anyone for that, then there is a shortage and we'll fix it by allowing visas in sufficient numbers to keep the cost to business down and get our economy back on its feet.

I'm done, I'm not even looking in the UK any more.

[pzz76077]

It will be intresting to see, when Darling finds out the HMRC aren't collecting the much needed revenue from Contracting Scum and the dark siders, because all the Tax take has now been off shored. Who's going to finance the green shoots?

I wonder if Gordo' will staple his hands to the desk in temper on that one?

It will be interesting indeed now that these roles that formally went to contractors are being offshored 10,000 at a time.
None of these roles will pay any UK tax at all and the tax deficit will massively outweigh any of the recently introduced half baked schemes such as IR35 etc.

Will UK Gov do anything to resolve the situation?? No, its too late all of these roles have gone for good and UK Plc are much the poorer in more ways than just lost tax revenue.

PZZ

[cykophysh39]

It will be intresting to see, when Darling finds out the HMRC aren't collecting the much needed revenue from Contracting Scum and the dark siders, because all the Tax take has now been off shored. Who's going to finance the green shoots?

I wonder if Gordo' will staple his hands to the desk in temper on that one?

[pzz76077]

I wasn't aware that the UK government gave a rats-ass about contractors. If there is not a permie available to do the work, that counts as a "skills shortage", doesn't it?

They have got to be able to prove it, helps them come up with bulltulip stats.

PZZ