Reply to: HMRC Double Standards

[LandRover]

Yes I agree. I have seen a drop off in good quality technical engineers since around 2012, a lot of the highly qualified and experienced engineers have gone to be replaced with cheaper Southern European Engineers - who are happy to come to the UK as they have few job prospects where they live.
So two affects causing good engineers to leave; one is rates dropped due to European influx and two government crackdown on limited companies.
Their replacements are inferior - in language and technical ability, this will have a detrimental effect on Engineeeing in the UK and I have seen examples already.
Personally speaking I have started the process to move abroad (and I am permanent staff) as the quality I am dealing with day to day is worsening.

Complete agreement. The language is a problem and potentially health & Safety issue, I experience similar problems daily.

The young are not getting training either, company managers are simply thinking cheap EU workers are good enough, reality is different. How the young in this country think staying in EU is any good for them is beyond me. They are literally signing away their prospects by voting to not to leave.

[creativity]

Speaking from own experience:

1. Blissful unawareness and increasing blind reliance on outsourcing (with little regard for quality)

2. The stronger contractors (the ones with in-demand skills and who keep up-to-date with their industry) will leave. One factor is that it is a wide world out there. It used to be fairly uncommon to have City of London contractors seek contract work outside the UK - not so anymore since the (very) rough patch of 2009. Better contractors easily move under friendlier skies (often with family).
They are immediately replaced by cheaper imports so the transfer is not apparent right away.
Quality suffers, but that's only visible in the medium term.

Yes I agree. I have seen a drop off in good quality technical engineers since around 2012, a lot of the highly qualified and experienced engineers have gone to be replaced with cheaper Southern European Engineers - who are happy to come to the UK as they have few job prospects where they live.
So two affects causing good engineers to leave; one is rates dropped due to European influx and two government crackdown on limited companies.
Their replacements are inferior - in language and technical ability, this will have a detrimental effect on Engineeeing in the UK and I have seen examples already.
Personally speaking I have started the process to move abroad (and I am permanent staff) as the quality I am dealing with day to day is worsening.

[DotasScandal]

1. Why are the clients not pitching in to lobbying the Government about the damage that reducing the flexible workforce will do?

2. If there are people prepared to take a lower rate for the job, who are likely to be de facto employees, will more experienced contractors either leave, accept a lower figure or go permie?

Speaking from own experience:

1. Blissful unawareness and increasing blind reliance on outsourcing (with little regard for quality)

2. The stronger contractors (the ones with in-demand skills and who keep up-to-date with their industry) will leave. One factor is that it is a wide world out there. It used to be fairly uncommon to have City of London contractors seek contract work outside the UK - not so anymore since the (very) rough patch of 2009. Better contractors easily move under friendlier skies (often with family).
They are immediately replaced by cheaper imports so the transfer is not apparent right away.
Quality suffers, but that's only visible in the medium term.

[QCApproved]

1. Why are the clients not pitching in to lobbying the Government about the damage that reducing the flexible workforce will do?

I have no idea they should be all over it in every industry. I'm considering raising it with the banking trade bodies. Things are still very subdued in the FS sector at least and given the effect of offshoring there is more thought given to hiring contractors than when tall this originated in 2000. However should things pick up it will be a significant cost because there will be the need once again. Quite frankly the energy and attention the regulators demand consume all before them. They represent the biggest risks and costs - this is an irritation currently.

2. If there are people prepared to take a lower rate for the job, who are likely to be de facto employees, will more experienced contractors either leave, accept a lower figure or go permie?

This is a more difficult one - there are always hot areas everywhere. People in compliance and reg and allied IT areas will get what they ask for. The weaker will take the hit or go permanent but there are multiple other factors at play for any such decision.
When you are looking at fines in the hundreds of millions £200 notes on a day rate x 20 is neither here nor there. in some institutions they have regulators on site filing progress reports as to whether xxx million should reign down from its suspended status APN style.
However, in general, the Stronger the sectors and economy someone is going to have to start bearing increased day rates.

[webberg]

It may be this is an avenue one or more of the various collectives we are banded into look into.

I've raised this question many times and whilst I've been told that my assumption - "if contractors are taxed as employees, their costs increase and therefore either their daily rate goes up or the client gets a lower quality of work" - is incorrect, nobody can answer the following questions.

1. Why are the clients not pitching in to lobbying the Government about the damage that reducing the flexible workforce will do?

2. If there are people prepared to take a lower rate for the job, who are likely to be de facto employees, will more experienced contractors either leave, accept a lower figure or go permie?

Either way, there is going to be less cash for people to spend (and more in HMT) so the economy will suffer as the only policy Osbourne has is to spend our way out of trouble.

[BlasterBates]

Regardless of the final outcome and what has to be paid or not as part of this contractor tax issue; It's important all culpability is addressed and acknowledged and there is some reckoning/accountability for it - given the effect its is having on a large group of people. The best route I can suggest for this is a Public Enquiry or Royal Commisssion into Contractor Tax Policy and Legislation and its enforcement/administration and management going back to 2000 to address the:

activities of marketers/promoters of schemes particularly those associated with professional bodies and the factors driving these schemes and any allied issues of mis-selling and omitted regulation.

AND

The activities of HMRC itself and its officers for (i) the IR35 situation and (ii) inaction on any schemes for years and years.

(amongst other things)

It's clear to me that IR35 is effectively unenforceable (and this frankly became clear around 2002 )and statistically a chance worth taking.
These pan industry mekon-brained blue sky characters doing 3 to five month rainmaker stints from location to location working on special projects and exempt from IR35 represent a very small part of the actual "contractor" workforce. My own experience of having run teams of contractors (and having been one) on a number of Financial Services Projects over 20 years are they mostly de facto permanent employees staying around often for years and years under full direction and control or whatever the grounds for distinction are.

This is why the law is being changed (and the div tax went up) and will no doubt be extended beyond the Public Sector in due course.

It may be this is an avenue one or more of the various collectives we are banded into look into.

Yes exactly, this is my opinion most contractors are temporary employees and there are a small number running a real business. The change of law to stop this is a matter of time and has already been done in other countries such as the Netherlands, Germany and Switzerland where there are contractors, but without much exception they are real contractors working as specialists for a few months. Companies have switched to payrolling or outsourcing companies.

[DonkeyRhubarb]

My own experience of having run teams of contractors (and having been one) on a number of Financial Services Projects over 20 years are they mostly de facto permanent employees staying around often for years and years under full direction and control or whatever the grounds for distinction are.

That was my experience too working for large Telcos but, unsurprisingly, you don't get many on public forums like CUK admitting to this.

[QCApproved]

Regardless of the final outcome and what has to be paid or not as part of this contractor tax issue; It's important all culpability is addressed and acknowledged and there is some reckoning/accountability for it - given the effect its is having on a large group of people. The best route I can suggest for this is a Public Enquiry or Royal Commisssion into Contractor Tax Policy and Legislation and its enforcement/administration and management going back to 2000 to address the:

activities of marketers/promoters of schemes particularly those associated with professional bodies and the factors driving these schemes and any allied issues of mis-selling and omitted regulation.

AND

The activities of HMRC itself and its officers for (i) the IR35 situation and (ii) inaction on any schemes for years and years.

(amongst other things)

It's clear to me that IR35 is effectively unenforceable (and this frankly became clear around 2002 )and statistically a chance worth taking.
These pan industry mekon-brained blue sky characters doing 3 to five month rainmaker stints from location to location working on special projects and exempt from IR35 represent a very small part of the actual "contractor" workforce. My own experience of having run teams of contractors (and having been one) on a number of Financial Services Projects over 20 years are they mostly de facto permanent employees staying around often for years and years under full direction and control or whatever the grounds for distinction are.

This is why the law is being changed (and the div tax went up) and will no doubt be extended beyond the Public Sector in due course.

It may be this is an avenue one or more of the various collectives we are banded into look into.

[squirrel]

And as your employee, you will be required to provide a pension, and the paperwork needs to be done in Romanian or Polish.

And not forgetting his new crime of aiding tax evasion ...

[BlasterBates]

The problem is that when the rules on IR35 change next April (and assuming they mirror closely those seen for public sector bodies), the onus is very much upon YOU to ensure that your decorator is complying with ALL of his tax obligations.

If he is working under your supervision, direction and control then he is effectively to be taxed as those he is your employee. If he does not tax himself in that way, YOU may become liable.

The UK is coming into line with Germany on IR35 and I suspect that similar guidelines will exist for the decorator to be considered your employee he would be working for you on a regular basis, i.e. getting a few rooms painted wouldn't count.

However you are responsible for the cleaner as they usually come in on a regular basis. If you used the decorator once a month yes that's a potential problem.

[flamel]

The problem is that when the rules on IR35 change next April (and assuming they mirror closely those seen for public sector bodies), the onus is very much upon YOU to ensure that your decorator is complying with ALL of his tax obligations.

If he is working under your supervision, direction and control then he is effectively to be taxed as those he is your employee. If he does not tax himself in that way, YOU may become liable.

And as your employee, you will be required to provide a pension, and the paperwork needs to be done in Romanian or Polish.

[webberg]

How my decorator conducts his tax affairs are none of my concern, I'm not his keeper

The problem is that when the rules on IR35 change next April (and assuming they mirror closely those seen for public sector bodies), the onus is very much upon YOU to ensure that your decorator is complying with ALL of his tax obligations.

If he is working under your supervision, direction and control then he is effectively to be taxed as those he is your employee. If he does not tax himself in that way, YOU may become liable.

[SlipTheJab]

Shame on you - David Gauke says that is "morally wrong".

How my decorator conducts his tax affairs are none of my concern, I'm not his keeper

BTW Love Jimmy Carr's response via Twitter to hamface's predicament:

'I'm going to keep it classy. It would be ‘morally wrong’ and ‘hypocrytical’ to comment on another individual’s tax affairs.

— Jimmy Carr (@jimmycarr) April 8, 2016'

[flamel]

Plenty of on shore tax evaders around as well, my decorator has just offered to knock 10% off for cash

Shame on you - David Gauke says that is "morally wrong".

[SlipTheJab]

Plenty of on shore tax evaders around as well, my decorator has just offered to knock 10% off for cash