What do you think will happen to agencies next April?

[cojak]

i think agencies will need to cut their cloth according to the income, the days of selling in cheap labour that should be perm will probably end, so they will need to focus on selling in higher skilled labour. Assuming the same costs can be spread over a lot less work won't fly, so they will have to shrink to match.

Personally I have never used an agency, and invest my time in keeping the client sweet and building my reputation - after all that is the product I sell.

If that's the case there may well be quite a bit of shrinkage in the recruitment market, which may mean the OP needs to consider a new choice of career.

[LisaContractorUmbrella]

How the temp manages this £12 is up to them - this is what is paid either to a limited Co that they run, or to a brolly that will then make deductions, I let my guys use any route they choose, its none of my business.

What I was trying to get at, is that to maintain current levels of pay, I would have to charge clients more, which at junior level, would not work.

I guess another way to see it, it to ask why on earth use a recruiter to fill jobs like these? I can throw a ball on Grainger Street and hit someone who can do these roles, the most sensible change would be for companies HR to get it together, and stop relying on recruiters to fill basic jobs....although this would not help me one bit!

This is pretty much the root of the problem. HMRC don't like the fact that lots of low paid workers have been moved out of employment to brollies or PSC's as it's meant that the workers loses employment rights but they also gain tax relief on travel and subsistence and the numbers doing so far exceed the numbers that the Government originally intended to have that advantage. So, in an attempt to move people back to permiedom and to increase the tax take by drastically reducing the numbers who'll be eligible for tax relief they have decided to apply the SDC test. Having obviously considered that it was a good idea they are also planning to apply it to IR35. If clients could be persuaded to keep lower paid workers on their own books we probably wouldn't be in this position but with employment costs as they are it's really hardly surprising.

[LisaContractorUmbrella]

I thought there was going to be some hope at the end of the tunnel... but going through the various posts here I see this:

1. Clients won't budge for any rate increase etc., irrespective of what the law changes will be (its buyer's market)
2. Agencies won't change (many have asserted this), and why should they anyway. They don't want to charge more to their customers.
3. Contractors: I see most of us saying we will just whine and take the hit.

Great. If I was HMRC or HMG, I would simply put through all these changes (divi, T&S, IR35 complete change) as soon as possible and get the industry/contracting business model closed for ever, without any outcry etc... since its very very clear its just a "contractor's problem" now. As for clients - they don't give a toss about "top quality work" - so they will find cheap work force one way or the other, at their cost terms (through offshore, onshoring offshore people, etc.), agencies will do whatever clients want.

And the govt knows we (contractor - the sellers) will as usual blame it all on the foreigners , and whine about it and carry on.

Go for it HMRC/HMG. Its all yours now!! Kill this market happily!
There is no way the contractor's forum or groups like IPSe etc. that can do anything about it.

And that's what HMRC are banking on - that all this will go through without a fuss. They told us in the last meeting that we had with them that contractors don't care or can't be bothered - only 3 responded to the original consultation on T&S - you're seen as an easy target. What they want from you is facts and figures to demonstrate how this will really affect you and the industry not a load of whining and complaining that they know will be replaced with apathy and acceptance after a couple of months.

We asked them for something we could put out in a press release that would encourage contractors to respond and they declined which came as no great surprise. So, we decided to do it ourselves and put together a survey which would demonstrate the damage that these proposals would cause - after a couple of weeks we've had 650 responses. Eek did the same thing on here and has had 100's of responses.

So, don't give up and don't think that things can't change! Ok, there's a chance that none of this will make a difference and that HMG and HMRC will ignore us completely but I'm damned if I'll see this industry go down without a fight

[eek]

And that's what HMRC are banking on - that all this will go through without a fuss. They told us in the last meeting that we had with them that contractors don't care or can't be bothered - only 3 responded to the original consultation on T&S - you're seen as an easy target. What they want from you is facts and figures to demonstrate how this will really affect you and the industry not a load of whining and complaining that they know will be replaced with apathy and acceptance after a couple of months.

We asked them for something we could put out in a press release that would encourage contractors to respond and they declined which came as no great surprise. So, we decided to do it ourselves and put together a survey which would demonstrate the damage that these proposals would cause - after a couple of weeks we've had 650 responses. Eek did the same thing on here and has had 100's of responses.

So, don't give up and don't think that things can't change! Ok, there's a chance that none of this will make a difference and that HMG and HMRC will ignore us completely but I'm damned if I'll see this industry go down without a fight

Likewise unlike IPSE I'm not coming up with crap ideas and pretending it will fix all problems.

On the T&S consultation

Unlike IPSE I always thought even before Lisa said as much that HMRC need actual facts to show them the size of the problem, got those.
The suggesting has a fundamental flaw in it so we highlight that and point out that the current suggesting will fall totally foul of the law
However as we think we know what the actual purpose is I may have a solution that allows them to fix 2 without losing the entire purpose of the bill.

Now the IR35 discussion document is far harder as I'm still trying to work out what scenarios create "self-employed" people... And looking at the discussion in the FLC threads both here and on the IPSE fanfest I need to try to identify the routes / reasons in which people become self-employed, weigh up how much that would annoy the general public / HMRC and then try to identify simple tests that HMRC can use to say you meet that route / reason so its valid / bogus...

SDC is a sledgehammer as HMRC think they have no other option. Lets give them another option...

[eek]

Or conversely they put on a local bus or taxi and pay the expenses themselves - Collect a few permies on the way. I've done a few gigs where the client pre-booked all my hotel and travel and paid it themselves. How do you tax that one? or have a travel service option on the agency contract.

That is how current clientco works if you are organised. How do you know how much to claim when you never see the invoice....

[eek]

Or write on the P11D if you don't transact any money through your limited co?

That's what I meant...

[DaveB]

As the T&S consultation stands now, it won't make any difference how you bill for them - the client can pay all the expenses for you directly for all it matters. Because your travel and subsistence will need to go on your P11D and be declared as a benefit in kind - so separate them out is fine, but it's not going to help you as an individual get the money out without paying PAYE and NI on it at some stage.

Not directly, no. What it will do is allow me to effectively raise my rate without raising the headline number. At worst I can add expenses to the day rate and offset the additional tax, rather than paying T&S out of the day rate end then laying tax on it as well. If I can set the T&S at cost + tax margin then I'm no worse off than I was. The numbers would need working on but a capped rate of £50-£60 per day for travel and accommodation costs doesn't look too bad. Most places I've worked have capped expenses costs higher than that for their permies. Even public sector agencies tend to come in at around £80 per night for hotel accommodation. I can certainly do better than that.

[czakky]

If that's the case there may well be quite a bit of shrinkage in the recruitment market, which may mean the OP needs to consider a new choice of career.

To be honest the shrinkage is looking like a possibility, things have changed a lot even in the last 2 years, I've gone from having very few roles and a ton of candidates available, to having a ton of roles that I can't fill as everyone even half decent has a contract now. On that note, anyone want a gig writing ruby on rails in the North East, or want to go and re-work the army's internal systems in APEX in Hampshire? (although you'll be working on ARMYNET - as a previous end user, its a train wreck)

I do think that these changes will well and truly be the end of the golden age of recruitment, and I can see them hurting my take home in a number of ways - not cool.

Oh, and as for C# breaking my search tool, that's not the case - finding a developer worth a damn that's not in a contract that will work in some of the locations my clients are in is. Most of the time, the only people on job boards need visa's and/or are awful, and if they don't/aren't, they get an offer close to home and won't go and live in the middle of nowhere.

Thought on this - as it's going to hurt the whole IT industry, and everyone in the supply chain to it due to skills issues, would it be worth asking clients for input on this? HMRC can ignore contractors quite easily, but would they ignore the thousands of businesses that rely on them to deliver work?

[eek]

To be honest the shrinkage is looking like a possibility, things have changed a lot even in the last 2 years, I've gone from having very few roles and a ton of candidates available, to having a ton of roles that I can't fill as everyone even half decent has a contract now. On that note, anyone want a gig writing ruby on rails in the North East, or want to go and re-work the army's internal systems in APEX in Hampshire? (although you'll be working on ARMYNET - as a previous end user, its a train wreck)

I do think that these changes will well and truly be the end of the golden age of recruitment, and I can see them hurting my take home in a number of ways - not cool.

Oh, and as for C# breaking my search tool, that's not the case - finding a developer worth a damn that's not in a contract that will work in some of the locations my clients are in is. Most of the time, the only people on job boards need visa's and/or are awful, and if they don't/aren't, they get an offer close to home and won't go and live in the middle of nowhere.

Thought on this - as it's going to hurt the whole IT industry, and everyone in the supply chain to it due to skills issues, would it be worth asking clients for input on this? HMRC can ignore contractors quite easily, but would they ignore the thousands of businesses that rely on them to deliver work?

I've never understood why Sage One was allowed to be written in Ruby (its the north east I know the market as well as you do)..

And yes its essential for clients to complain. The problem is identifying people in a position to understand the problem and are also in a position to be both willing and able to write suitable letters on behalf of the company...

[eek]

What is interesting is when I started contracting the T&S rules for home to work travel were as proposed - no allowance. The two year limit was brought in by the Tories in the 90's as there was a whole series of rules around how much you could claim when you went to a different site than your "normal" working site. For car commuting it does make a company car look a lot more attractive. Switching into paying private petrol might be worth a look.

Can you point me at the history? Its nice to attach the history of the situation to the document it shows your comment has done the ground work...

I should remember that but probably started later than the change occurred (95) and it didn't matter as I went from working in London to contracting in London the commute was identical.