Reply to: Risk premium?

[psychocandy]

Correct, I've been out of work a year now. I've had one interview in that time and after the interview even the agency cannot get any feedback from the client whether the role is being filled or not. That project is live and is underway right now in London but I suspect that the client co (an O&G super major) are weighing up doing the job without filling the role I was up for.

Regarding overseas work or permie jobs - not a chance. It might have to be enforced early retirement for me, I'm 58.

Really???????

[webberg]

Thanks to all contributors here, I'm learning a lot and I suspect others are.

Just be careful as HMRC is known to read these posts (hello).

The offshore sourcing of specialists or clients is interesting.

HMRC has just agreed a remarkable project where some 60+ countries have agreed a template for taxation of certain activities, including remotely sourced labour and services.

This is known as BEPS (Base Erosion and Profit Shifting) and was probably originally aimed at our favourite coffee, internet and logistics operations. I confess that I have not read the final papers and agreements to see if the reach has extended to individual level, but I would expect it to have done so, or to do so shortly.

I can see that I will need to at least skim this agreement!

[Fred Bloggs]

Due to lower oil price, there have been over 65,000 jobs lost in the UK over the past year. Several rate cuts, shorter working weeks, companies still trying to reduce head counts, freeze in new hires, no new projects being sectioned.


1. No - Won't get any rate increases [ Oil company profits have more than halved]

2. Become an employee - Won't get employment offers due to market conditions.

3. Use a Ltd and take the risk - Yes, no other option.

4. Something else - Options abroad are limited due to the same issues of lower oil price.

IR35 with SDC (probably 2017) - As has been seen with agency reporting requirements, clients will not take any risks and report everything & everyone as under SDC. Higher chance of being caught by IR35.

It's grim up north!

Correct, I've been out of work a year now. I've had one interview in that time and after the interview even the agency cannot get any feedback from the client whether the role is being filled or not. That project is live and is underway right now in London but I suspect that the client co (an O&G super major) are weighing up doing the job without filling the role I was up for.

Regarding overseas work or permie jobs - not a chance. It might have to be enforced early retirement for me, I'm 58.

[eazy]

Energy Sector

Due to lower oil price, there have been over 65,000 jobs lost in the UK over the past year. Several rate cuts, shorter working weeks, companies still trying to reduce head counts, freeze in new hires, no new projects being sanctioned.


1. No - Won't get any rate increases [ Oil company profits have more than halved]

2. Become an employee - Won't get employment offers due to market conditions.

3. Use a Ltd and take the risk - Yes, no other option.

4. Something else - Options abroad are limited due to the same issues of lower oil price.

IR35 with SDC (probably 2017) - As has been seen with agency reporting requirements, clients will not take any risks and report everything & everyone as under SDC. Higher chance of being caught by IR35.

It's grim up north!

[mudskipper]

Agreed. Did you see that any contract via an agency will have the presumption that SDC applies?

I remain unconvinced that the bit of the regulations that makes this assertion will apply to Ltd co contractors any more than it does today.

[cojak]

As I've said in a previous post I think that many contractors will go back to permiedom (certainly if they are looking at retirement in the next few years). Those in contracting will restrict themselves to contracts within commuting distance, or the day rate will be such that they'll take the hit but with a much depleted final income.


http://forums.contractoruk.com/futur...ml#post2152484

[MrMarkyMark]

It depends. Demand is in the UK, but supply is essentially global, so anything to increase overseas supplies (e.g. ICT) will impact this. Also, some clients may fundamentally shift their approach from contractors to consultancies. I'd expect quite some variation among sectors.

In IB, one of the reasons, they use a lot of consultancies, is that they can body shop someone in, within a day or two, no security checks required.
Contractors have to go through, potentially, 5 weeks security checks, before commencing with the engagement.

[pjt]

Also with the negative news around IR35, Travel and dividend taxes this will make a lot of permies think twice about jumping into contracting, reducing supply.

Supply and demand will out.

One small flaw in this is that permies will have no idea this is happening. I doubt most contractors are even aware!

Fingers crossed your right though.

[jamesbrown]

I think rates will go up, not by contractors asking for it. Just simply when contractors stop renewing. It will be the out of the way places and central London that will get the shortages first... Also with the negative news around IR35, Travel and dividend taxes this will make a lot of permies think twice about jumping into contracting, reducing supply.

I personally have been on the two year limit on a work away contract and not renewed, I worked out that I could take a different contract for a lot less and be better off than staying.

Supply and demand will out.

It depends. Demand is in the UK, but supply is essentially global, so anything to increase overseas supplies (e.g. ICT) will impact this. Also, some clients may fundamentally shift their approach from contractors to consultancies. I'd expect quite some variation among sectors.

[fidot]

Personally I will go for a higher rate for SDC contracts, and if possible, avoid SDC contracts altogether. If the situation is so bad that this is unavoidable then highest net bidder wins. And there would be very little likelihood of me working away from home unless desperate. Just wouldn't be worth it anymore.

Agreed. Did you see that any contract via an agency will have the presumption that SDC applies?

[GB9]

It's worth noting that the client may end up having a direct bearing on our tax situation by deciding whether or not the role is subject to SDC. If they say it is then by default they are pushing us into a higher tax bracket.

Edit: hence the client saying that our tax affairs aren't their business isn't totally correct.

Personally I will go for a higher rate for SDC contracts, and if possible, avoid SDC contracts altogether. If the situation is so bad that this is unavoidable then highest net bidder wins. And there would be very little likelihood of me working away from home unless desperate. Just wouldn't be worth it anymore.

[WordIsBond]

If the new world of 2016 is as bad as painted with taxed T&S and perhaps an increased risk of IR 35 applying, is the simple "remedy" of charging a higher daily rate going to be met with

1. No

2. Become an employee

3. Use a Ltd and take the risk

4. Something else

Most engagers would prefer not to have employees for a lot of the tasks contractors do. So #2 won't be all that widespread, but a lot of hidden employees may go that way.

Some contractors will sit on the bench, for a while, if they can't get increased rates to cover the hit. Any UK client that wants my services will pay more because I am pretty sure I can keep busy with foreign clients. There will be enough who demand more pay or opt for foreign work or just drop out because it isn't worth it any longer, that there will be a supply shortage, unless rates increase to at least mitigate the damage. And when there is a supply shortage, rates will increase.

Since some contractors, maybe quite a few, will just take the tax hit in stride, the supply/demand dynamic won't be enough to push rates up to cover the complete tax hit. But rates definitely will increase until an equilibrium is reached. That's how economics works.

[TheFaQQer]

Am I wrong in thinking the hotel would have the tax relief??

If the T&S changes are implemented as planned, and there is supervision, direction or control, then you would not be able to claim tax relief on the hotel.

[pjt]

Ah so not mega commuter then?

Yes but hotel in the week I presume?

Am I wrong in thinking the hotel would have the tax relief??

[psychocandy]

Erm, I make the journey once a week.

Ah so not mega commuter then?

Yes but hotel in the week I presume?