Even with the zebra graphic and incorporating the word ‘joke’ in the article title, it’s still a struggle to emphasise just what a farce this is for HMRC, The Treasury, and HMG in general.
memyself-eye is spot-on noting that the dividend tax pretty much killed the appeal of contracting.
I threw the towel in just last month after working 15 months on an inside-IR35 role. I liked not having to worry about keeping up with VAT, getting the transactions in order for the accountant, concerned about an investigation. But without employment rights, it grated that I was paying Apprentice Levy, NI for Employers. I turned down roles in Staffs (for HMRC) and Blackpool (for the DWP) numerous times because of the travelling and subsidence costs that couldn't be easily reclaimed.
So went permie with a local role that will see me to the end of my working life. When it was good it was good, but I haven't met a new contractor under the age of 50 now for a few years. The Treasury killed that goose long ago.
This has moved on a little in the New Year and Barclays and Lloyds decision has become a boon for the 'Challenger Banks' like Starling and Monzo.
It's notable that such enterprises haven't followed the same strategy for IR35, principally because it's not in their interests to do so. Barclays and LBG have kindly offered-up their most skilled and rare-to-find contractors to them, and in doing so, the Challenger Banks are able to hoover-up those contractors who were otherwise rarely appearing on the market as available.
As with all such things, the market adjusts and someone is able to exploit an opening. For Barclays and LBG the self-imposed injury inflicted by their respective personnel directors denies them access to the most highly-sought-after skilled individuals they need, whilst enabling their up-and-coming competitors to claim the very people who might have helped the 'established' banks to leverage new technology (particularly in The Cloud).
How have come to this conclusion?
Because I've just secured a role with a challenger bank and they are gleefully crowing about it as I left Barclays thanks to its IR35 stance. I know I'm not the only one.
The most highly-skilled contractors will simply decline to work for the Banks and Finance industry firms that decline to use the assessment tool. That will provide their competitors with a commercial advantage; being able to use contractors that the likes of Lloyds and Barclays have deliberately denied themselves access-to.
The next tier down will likely either retire, take a sabbatical and perhaps update skills, will find roles abroad, find roles with different client who properly assess (see above) or occasionally, give-in a go for the umbrella option. Those that accept 'in' contracts will always be looking for an 'out' contract to hop-to at the first opportunity.
The next tier down are those contractors who really could rightly be described as disguised employees. They don't earn the top rates so they won't generally find switching to umbrella firms that different. Other than those who have travelling/subsidence costs - in which case they will likely throw the towel in.
The main losers;
* The Conservative Party. With 4.8 million self-employed including 2 million freelancers, plus other voters in their households, the Tories are looking at a measure that will adversely impact circa 6 million potential voters - most of whom will vote normally either Tory or LibDem. Potentially this measure alone will lose the coming Election for Johnson if IR35 is publicised to enough of those 6 million before the polls open.
* The end-user clients who don't choose to assess roles - they're access to skilled contractors will be vastly reduced
* The 'body-shop' consultancies - who won't have easy access to highly-skilled contractors if the end-user clients don't perform proper assessments of role
* Recruitment firms and accountants
* Associated industries - like the vehicle contract hire/leasing infrastructure, which will see a rather substantial drop in income April 2020
* The Treasury - IR35 might realise £1 billion, but it will lose a lot more as the economy shrinks, impacted by the lack of access to skilled contractors and a flexible workforce
* The UK economy - see Treasury above. Any tax shortfall will have to be made up from primary tax
* Former contractors with insufficient skills-in-demand
This is poor thinking from the respective Human Resources Directors.
Switching contractors to PAYE/umbrella isn’t feasible because determining that the contractors were inside IR35 will invite a retrospective investigation from HMRC. That threat will ensure the contractor walks/takes a sabbatical/retires/finds an ‘outside’ role elsewhere...
Whatever the solution, Barclays and Lloyds will be deprived of the contractors, and their skills, and will never be able to engage them again for the same role.
That’s a big hit for both Banks to take, caused by a lack of critical thinking by their HR leads.
I'm not convinced this legislation will go through.
Finance Bill 2019-2020 has yet to be voted-on in the HoC. The tory government is now a minority one. Brexit is a mess, whether you voted Leave or Remain. The Tories are vulnerable to losing votes to the LibDems and dozens of Tory constituencies with tiny majorities will be lost if contractors/self-employed choose to switch their vote on this subject alone, if not Brexit itself.
Even getting the Finance Bill through Parliament will be an effort, as, at-the-time-of-writing, Johnson's government can't win any vote at all.
The Tories need every vote they can muster and IR35 is a sure-fire vote-loser - no-one will vote for them because they introduced IR35 to the private sector; its a Labour policy that Hammond took on to promote.
I'll be amazed if it gets through, and if it does, amazed that the Tories win the next Election outright. On the day after the GE, I suspect someone in the Tory Policy Unit will figure-out they blundered with the nations' self-employed and contractor community.
My answers
Even with the zebra graphic and incorporating the word ‘joke’ in the article title, it’s still a struggle to emphasise just what a farce this is for HMRC, The Treasury, and HMG in general.
memyself-eye is spot-on noting that the dividend tax pretty much killed the appeal of contracting.
I threw the towel in just last month after working 15 months on an inside-IR35 role. I liked not having to worry about keeping up with VAT, getting the transactions in order for the accountant, concerned about an investigation. But without employment rights, it grated that I was paying Apprentice Levy, NI for Employers. I turned down roles in Staffs (for HMRC) and Blackpool (for the DWP) numerous times because of the travelling and subsidence costs that couldn't be easily reclaimed.
So went permie with a local role that will see me to the end of my working life. When it was good it was good, but I haven't met a new contractor under the age of 50 now for a few years. The Treasury killed that goose long ago.
This has moved on a little in the New Year and Barclays and Lloyds decision has become a boon for the 'Challenger Banks' like Starling and Monzo.
It's notable that such enterprises haven't followed the same strategy for IR35, principally because it's not in their interests to do so. Barclays and LBG have kindly offered-up their most skilled and rare-to-find contractors to them, and in doing so, the Challenger Banks are able to hoover-up those contractors who were otherwise rarely appearing on the market as available.
As with all such things, the market adjusts and someone is able to exploit an opening. For Barclays and LBG the self-imposed injury inflicted by their respective personnel directors denies them access to the most highly-sought-after skilled individuals they need, whilst enabling their up-and-coming competitors to claim the very people who might have helped the 'established' banks to leverage new technology (particularly in The Cloud).
How have come to this conclusion?
Because I've just secured a role with a challenger bank and they are gleefully crowing about it as I left Barclays thanks to its IR35 stance. I know I'm not the only one.
The most highly-skilled contractors will simply decline to work for the Banks and Finance industry firms that decline to use the assessment tool. That will provide their competitors with a commercial advantage; being able to use contractors that the likes of Lloyds and Barclays have deliberately denied themselves access-to.
The next tier down will likely either retire, take a sabbatical and perhaps update skills, will find roles abroad, find roles with different client who properly assess (see above) or occasionally, give-in a go for the umbrella option. Those that accept 'in' contracts will always be looking for an 'out' contract to hop-to at the first opportunity.
The next tier down are those contractors who really could rightly be described as disguised employees. They don't earn the top rates so they won't generally find switching to umbrella firms that different. Other than those who have travelling/subsidence costs - in which case they will likely throw the towel in.
The main losers;
* The Conservative Party. With 4.8 million self-employed including 2 million freelancers, plus other voters in their households, the Tories are looking at a measure that will adversely impact circa 6 million potential voters - most of whom will vote normally either Tory or LibDem. Potentially this measure alone will lose the coming Election for Johnson if IR35 is publicised to enough of those 6 million before the polls open.
* The end-user clients who don't choose to assess roles - they're access to skilled contractors will be vastly reduced
* The 'body-shop' consultancies - who won't have easy access to highly-skilled contractors if the end-user clients don't perform proper assessments of role
* Recruitment firms and accountants
* Associated industries - like the vehicle contract hire/leasing infrastructure, which will see a rather substantial drop in income April 2020
* The Treasury - IR35 might realise £1 billion, but it will lose a lot more as the economy shrinks, impacted by the lack of access to skilled contractors and a flexible workforce
* The UK economy - see Treasury above. Any tax shortfall will have to be made up from primary tax
* Former contractors with insufficient skills-in-demand
This is poor thinking from the respective Human Resources Directors.
Switching contractors to PAYE/umbrella isn’t feasible because determining that the contractors were inside IR35 will invite a retrospective investigation from HMRC. That threat will ensure the contractor walks/takes a sabbatical/retires/finds an ‘outside’ role elsewhere...
Whatever the solution, Barclays and Lloyds will be deprived of the contractors, and their skills, and will never be able to engage them again for the same role.
That’s a big hit for both Banks to take, caused by a lack of critical thinking by their HR leads.
I'm not convinced this legislation will go through.
Finance Bill 2019-2020 has yet to be voted-on in the HoC. The tory government is now a minority one. Brexit is a mess, whether you voted Leave or Remain. The Tories are vulnerable to losing votes to the LibDems and dozens of Tory constituencies with tiny majorities will be lost if contractors/self-employed choose to switch their vote on this subject alone, if not Brexit itself.
Even getting the Finance Bill through Parliament will be an effort, as, at-the-time-of-writing, Johnson's government can't win any vote at all.
The Tories need every vote they can muster and IR35 is a sure-fire vote-loser - no-one will vote for them because they introduced IR35 to the private sector; its a Labour policy that Hammond took on to promote.
I'll be amazed if it gets through, and if it does, amazed that the Tories win the next Election outright. On the day after the GE, I suspect someone in the Tory Policy Unit will figure-out they blundered with the nations' self-employed and contractor community.