Why does our Government dislike contractors so much? IR35 Rant.
I mean - surely this can't be about HMRC wanting MORE money, right? ;)
This Government seems to be dead against entrepreneurship and small business growth - even post Brexit! I, for one, would have thought that this would have been the time to invest in subject matter experts within the UK.
Despite wanting (& desperately needing) these subject matter experts within the private and public sector, it wants to treat these individuals unfairly. And in my view, certain Government Departments need these people on side more than ever.
Here is an example of what's going wrong in the Public Sector right now:
The Government:
"Hey person with niche skills. Come and work for us. We'll pay you less, but don't worry, you'll be treated like a full-time employee. Oh, but just one thing. You'll get NO employee benefits at all. But that's Ok, isn't it?"
No - It is not Ok!
Who would want to be paid less for their skills, yet be forced to work without any holiday or sick pay or even maternity/paternity pay? And how is that Ok?
Those of you who know me, know I've been around a bit (the UX Circuit, thank you), but I've never actually worked within Public Sector or had much to do with IR35. Yet, I'm seeing the impact around me.
For example, 1 in 3 contractors are now developing mental health issues as a result of this change:
And the interesting thing about all of this, is that if you use the HMRC CEST Tool, to assess your IR35 Status, it's highly likely to deem you to be OUTSIDE of IR35!
I'm not going to predict anything too dramatic, but the law-degree-educated voice inside of me, tells me that this might be quite a dangerous 'game' HMRC are playing. And I think that this is the best we can wish for at the moment.
Head of UX Research at Entain
5 年Maybe if the Government paid it's civil servants more fairly and what they deserve, more contractors would be interested in becoming permanently employed.
The other elephant in the room is that some of the principles behind the changes are wholeheartedly very noble, even if the implementation sucks. Take for example the undeniable fact that if someone is behaving like an employee, and is treated by the client as an employee then they should be rightly taxed as an employee. Obviously this doesn’t mean that the employee should lose out and rates should reflect the skills etc. At the moment companies have effectively been subsidised by the government because for every quid the contractor earns the client pays less compared to an employee with the same take home. Secondly the changes shift the risk from the contractor to the client - we have all be in contracts where the client has tried to treat you as part and parcel or exert some control despite having no contractural rights to do so. Now the ball is in their court to set the terms and assess the role and then pay accordingly if they want to attract talent. Staff will need to be trained to ensure they understand how the relationship works and what they can and can’t expect from that relationship.
So you touched on some key things there, aside from it being effectively a zero hours contract in all but name. The piece that interests me most is that if companies correctly implemented the new rules and did individual assessments via HMRC’s own tools they would find the vast majority of contractors are outside IR35; unfortunately employers are falling foul of the fear, uncertainty and doubt surrounding this change. I know many employers who are desperate to hire contractors and keen to continue to keep the payment terms and relationship they have with existing contractors but are prevented by their legal teams who deem the risk too great. This is a risk that must be taken in the context of HMRC only very rarely making an IR35 case stick. It’s important to remember that HMRC themselves have contractors which are outside IR35 so it is absolutely possible to do it properly but the advice and the guidance provided to businesses who engage contractors has been terrible.
Lead Service & UX Designer
5 年The thing I hate most about the IR35 changes is that to continue contracting means paying Employers NI and umbrella fees. Why should contractors pay a fee to work, plus pay someone else's tax? It would be preferable if day rates were lowered so employers could pay their own NI and cut out the umbrella companies. I'm sure umbrella companies are having a great year though!?