So what now?

[Fred Bloggs]

Of course, on the other hand, this could all be the final nail in the coffin of UK contract project houses in the oil and gas (and related sectors). Usually about 75% of projects are contract engineers and designers. Already the large majority of the design work is being done in India and has been for several years now (in fact safe to say all of it now). Most of the higher level engineering is now also being done there. The only work that comes to the UK design houses pretty much is now the conceptual and front end studies that actually do need the expertise that we have here. It is very likely that the entire project cycle for major oil and gas projects will never again be done in the UK. In fact, it's a certainty. Folks like me have had to steadily move up the food chain to keep ahead of the low cost engineers and designers. But that game is almost played out now too. It is a very steep sided pyramid and there's no room at the top of it any more. Sadly, it looks like we have lost yet another high skill/high pay industry to Asia.

[IsaacD]

The vast majority of my contracting experience is private sector (banks/pharma) but I am currently in an outside ir35 contract within the public sector and I've a few thoughts.

My view is it will be different in the private sector for a couple of reasons.

1) More warning. The public sector launch of this was a shambles, the online questionnaire only arrived a few weeks before the deadline, giving management very little chance to understand and resolve, which meant a lot of undoubtedly wrong outside determinations. The private sector could start preparing now, if they really wanted.

2) More distance. HMRC are able to put more pressure on other public sector bodies than they will be able to on the private sector. Ultimately it will be a compliance/risk register issue for the private sector and each company will make it's own decisions depending on their risk appetite (i.e. risk of being investigated vs risk of losing some talent).

On the plus side, the off-payroll rules have helped increase awareness (if not possibly understanding) of ir35. In this contract I got the not unusual request to do some training, but I said it wasn't in my contract - this sort of response can get you a label of "unhelpful/awkward" in certain contracts with implications at renewal, but here they quickly agreed and dropped it. Generally it's a good position to be in, no back of the mind worries about ir35 investigation and a clear statement of work to deliver to.

Also, whether individual contractors think they are inside/outside of ir35 is an irrelevance under the off-payroll rules. Either you are and you suck it up/negotiate a new rate or you leave - it's far more binary than it was, which is good if you're on the right side of the line.

I suspect the majority of project based work in the private sector will be outside, because the work itself is temporary so the risk is temporary. The BAU work will be under a different sort of pressure. If I'm wrong then consultancies are going to experience a boom in business.

[TheFaQQer]

1) More warning. The public sector launch of this was a shambles, the online questionnaire only arrived a few weeks before the deadline, giving management very little chance to understand and resolve, which meant a lot of undoubtedly wrong outside determinations. The private sector could start preparing now, if they really wanted.

Prepare how? For what?

Private sector cannot (and IMHO should not) prepare for something which may or may not happen, and where there is no clarity over how things would work in the future - that would be irresponsible towards their shareholders. CEST makes an assumption that every public sector role includes mutuality of obligation, which is why HMRC didn't even build ion a single question about it. Private sector roles cannot (and should not) make that presumption at all, so they cannot make preparations because they do not know what tool will be in place that accurately reflects case law and asks questions around all three pillars of employment.

There is no suitable tool available to all private sector companies to use, so what should they prepare and how?

[IsaacD]

Prepare how? For what?

Private sector cannot (and IMHO should not) prepare for something which may or may not happen, and where there is no clarity over how things would work in the future - that would be irresponsible towards their shareholders. CEST makes an assumption that every public sector role includes mutuality of obligation, which is why HMRC didn't even build ion a single question about it. Private sector roles cannot (and should not) make that presumption at all, so they cannot make preparations because they do not know what tool will be in place that accurately reflects case law and asks questions around all three pillars of employment.

There is no suitable tool available to all private sector companies to use, so what should they prepare and how?

They could prepare by assuming the same CEST tool will be used for them as it is for the public sector. This is a fair assumption. The tool is crap, obviously with multiple flaws, some of which you've mentioned, but it's available to use if they wanted to find out what happens if the current public sector process is applied to the private sector..

[WordIsBond]

Prepare how? For what?

Private sector cannot (and IMHO should not) prepare for something which may or may not happen, and where there is no clarity over how things would work in the future - that would be irresponsible towards their shareholders. CEST makes an assumption that every public sector role includes mutuality of obligation, which is why HMRC didn't even build ion a single question about it. Private sector roles cannot (and should not) make that presumption at all, so they cannot make preparations because they do not know what tool will be in place that accurately reflects case law and asks questions around all three pillars of employment.

There is no suitable tool available to all private sector companies to use, so what should they prepare and how?

It would be irresponsible towards shareholders not to do contingency planning. This is likely to hit some private sector clients hard, increasing costs, creating potential liabilities, etc. They had better be ready to take part in this consultation, and be ready to give some assessment of how it is likely to impact them. "We don't like it" doesn't cut it.