Reply to: Outside IR35 contractors 'shown the door'

[krytonsheep]

Or the WIPRO guy gets on the phone and sells then their services for what the contractor would have cost but where IR35 does not apply.

Most large tech companies have offices around the world, so they already have direct access to teams which cost a lot less than the UK. But they know through experience, what the capabilities are of each location.
The pattern I've seen is the hard / important stuff often ends up being done in the UK even though it's a lot more expensive. I think it comes down to a combination of ability and trust.

[Paralytic]

To be fair, I think it is incorrect to think of these, or any other guys, as magic bullets.

It is the government they are up against and there have already been copious examples whereby reason and logic, and downright protests, go unheard and unheeded.

I am sure they are doing as much as they can but at the end of the day, if the HMRC have already made up their mind, even God would be hard pressed to revert decisions.

Not just God, but any other make-believe entities too.

[simes]

I think we need to forget ipse as “any hope” in the IR35 battle

To be fair, I think it is incorrect to think of these, or any other guys, as magic bullets.

It is the government they are up against and there have already been copious examples whereby reason and logic, and downright protests, go unheard and unheeded.

I am sure they are doing as much as they can but at the end of the day, if the HMRC have already made up their mind, even God would be hard pressed to revert decisions.

[GhostofTarbera]

Or the WIPRO guy gets on the phone and sells then their services for what the contractor would have cost but where IR35 does not apply. And no tax is due to HMRC because of it

For interest - my last project we were getting blended Rates of £550 a day for each wipro resource (from dev to testers to arch’s)

Chaps told me they got paid between £26-£35k (that’s including there London housing allowance)

Most worked 6 days a week 12 hours a day, if they did not, they were soon replaced


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[TheInvoicer]

It’s good practise to be reviewing your resources versus demand and performance.
Consultancy model is to maximise return through margins, low paid inexperienced resources help achieve that. Worked with plenty good folks around the world but how many times have you seen the consultancy team propped up by a couple of good people in front of many inexperienced people, it’s the norm not the exception.


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[edison]

At every large tech company I've contracted at, the management are usually under pressure to reduce contractor count ( to replace with permies). The IR35 reform will probably be seen as a perfect excuse to do that. Eventually if they can't find the talent and projects are getting delayed, then they'll have to start considering hiring contractors outside of IR35.

Or the WIPRO guy gets on the phone and sells then their services for what the contractor would have cost but where IR35 does not apply. And no tax is due to HMRC because of it

It should be good practice to regularly review perm headcount and especially contractors/consultants.

At one place I worked at, every quarter, the IT management team collectively went through a list of every single contractor and asked 'what's going to happen if we get rid of them?' Every contractor had to be justified and if no one could, they were terminated. Over a period of less than a year, the number of contractors was reduced by 25% and to be quite frank, no one noticed any reduction in output or service quality.

Any contractors approaching two years service were also reviewed to see if the role should be a permanent one. Again, several contractor posts were converted to perm roles although a few contractors left instead.

Admittedly, this is a more complicated exercise where there are hundreds or thousands of contractors but the principle is the same.

I can't speak for Wipro but I've used one of the smaller Indian IT outfits and they were actually good quality and value for money for their offshore/onshore staff.

[TheInvoicer]

Or the WIPRO guy gets on the phone and sells then their services for what the contractor would have cost but where IR35 does not apply. And no tax is due to HMRC because of it

And the finance guys says ok to use wipro and the delivery guys gets no input. 6 months down the line the delivery hasn’t moved as would be planned/hoped and the costs are now going up to resolve/unwind and benefits getting lost. Accountancy guy asks the delivery guy why this has happened...what then?
Or am I just unrealistic about the value we add?


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[BoredBloke]

At every large tech company I've contracted at, the management are usually under pressure to reduce contractor count ( to replace with permies). The IR35 reform will probably be seen as a perfect excuse to do that. Eventually if they can't find the talent and projects are getting delayed, then they'll have to start considering hiring contractors outside of IR35.

Or the WIPRO guy gets on the phone and sells then their services for what the contractor would have cost but where IR35 does not apply. And no tax is due to HMRC because of it

[JohntheBike]

I think we need to forget ipse as “any hope” in the IR35 battle


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frustratingly, I guess you are correct. I don't know the details of the case that IPSE were supporting, because I didn't renew my membership this year. However, the Alcock case was due to be heard in September, and there has been no word from Dave Chaplin on the outcome. I can only surmise, given my own experiences, that both cases have been nobbled.

[cwcsolutions]

Fair enough provided that the advice is also to change client as well, to reduce the risk of retrospective action.

Absolutely, although the same adviser working for both sides may not be acceptable, but certainly the contractor's position will be reported to the hirer/client, which is what is supposed to happen and why hirers will be required to pass the determination down the supply chain - to give a right of response, leading to a proper discussion. Better this than give up the ghost at the first hurdle.

[krytonsheep]

Until recently, I had hoped that the private sector would see the value of contractors to their business and use their resources to meet the requirements of the new rules, but no..

At every large tech company I've contracted at, the management are usually under pressure to reduce contractor count ( to replace with permies). The IR35 reform will probably be seen as a perfect excuse to do that. Eventually if they can't find the talent and projects are getting delayed, then they'll have to start considering hiring contractors outside of IR35.

[GhostofTarbera]

On a not unrelated note, the Alcock case and the case that IPSE is supporting seem to have gone very quiet. Being cynical, perhaps they've been nobbled.

I think we need to forget ipse as “any hope” in the IR35 battle


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[DaveB]

Fair enough provided that the advice is also to change client as well, to reduce the risk of retrospective action.

That depends on the circumstances.

If a client makes a decision based on an assessment of IR35 that all roles are caught after April then yes, changing client would be prudent. If they make a policy decision as a business that they will not engage contractors working through PSC's after April then that is different. No IR35 assessment has been made, it is a business policy decision.

[fidot]

personally I’m advising people to accept payment under the deemed payment method, keeping their PSC live, so that when contracts start being properly assessed and offered on the correct basis, they’re ready to take them.




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Fair enough provided that the advice is also to change client as well, to reduce the risk of retrospective action.

[cwcsolutions]

But, saying that, things are rarely as good or as bad as they first appear.

Savvy clients may well start hoovering up outside contractors. Give it 18 months and things will have settled, just not in ways that many of us can predict at the moment.

Those 18 month are going to be pretty rough I think though.

I predicted that the public sector would cease using contractors or force contractors to use umbrella companies, while sitting at the consultation table. This was because the umbrella company representatives said they were going to tell clients to drop PSCs, and when I told HMRC that blanket decisions will lead to overpayments and raised number of refund claims via personal tax returns, as HMRC had said it would stand by CEST results if they differ from the PSB’s determination, I got a shrug of the shoulders. When neither side of the fence is actually prepared to do the job properly, what hope was there?

Until recently, I had hoped that the private sector would see the value of contractors to their business and use their resources to meet the requirements of the new rules, but no..

So in a fit of near depression, I coined the phrase ‘domino effect’, not to scaremonger, but because that’s what I am seeing.. no attempt to check status which was the real aim of the IR35 Reform, and large businesses simply following the crowd. I expected that of the public sector, but I thought that the private sector would use the reform as an opportunity to firm up the use of contractors in their businesses. I hope that hirers quickly realise that this is what any good business should do.

So, I agree it will ‘sort itself out’ over the next few months to a year, and rather than walk away or challenge their hirers’ decisions, personally I’m advising people to accept payment under the deemed payment method, keeping their PSC live, so that when contracts start being properly assessed and offered on the correct basis, they’re ready to take them.




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