So this is Christmas, and what have we done? Well, speaking personally, quite a lot in one way and another. But it has been a funny old year in some ways.

Last December I was being optimistic about the Coalition making significant changes in various things. I was cautious about IR35, thinking they wouldn’t be a position to repeal it out of hand, but I didn’t expect young Osborne to come out in the Budget with the statement that he needs to keep IR35 to prevent abuses of the system. Which is kind of where we came in.

He did set up the Office of Tax Simplification though, and from there has sprung the IR35 Forum. The former has turned into something of a toothless wonder, getting ever more bogged down in detail. The more cynical among us might be tempted to suggest that this is because a lot of the parties around that table have something of a commercial interest in keeping IR35 exactly where it is, but that would be an unworthy thought. Wouldn’t it….

The IR35 Forum is still to produce anything but it looks like it can at least claim it has a direction and an intent that its parent body is sadly lacking. However we won’t really know much more until the next Budget.

In reality the best we can hope for is that IR35 remains as is, but Hector is rather more competent at judging who to stick under its microscope.

The Agency Workers Regulations arrived and caught all the agencies by surprise – hey, they only had a year’s warning, so what do you expect – leading to a flurry of letters demanding that you declare yourself outside its scope. Tricky, when anyone is potentially inside its scope and we have no case law to work with. Plus can change as they say.

The Cabinet Office was presented with a major paper on Security Clearance following a detailed, wide-ranging research project led by PCG, who highlighted what’s wrong with the system and, perhaps more importantly, what damage is being done. And even some options for how to fix it. This has been very well received and personally I am delighted, having been pressing for this kind of thing to happen for around eight years now.

Several IR35 appeals were completed, all but one of which were found to be outside, so reinforcing the status quo if not setting any new precedents. The other was the one I wrote about just last week, where the guy was found to be outside and then outside, all in the same contract. I think we’ll park that one in the folder marked “Say What?” and just forget about it.

The Market: now that’s interesting. The financial sector suffered an almost universal 10% rate cut during the year, with a few going even further. The rest of the world, however, seems to be plodding along at the same level. Lots of contractor layoffs and enforced holidays as well – again, only in finance. There are nowhere near as many jobs as they were, and rather more people chasing them, but you have to say that, taken as a whole, things aren’t as bad as some were predicting. The job losses seem to have been in the permanent market, so you have to conclude that UK PLC is sticking with easily-disposable temporary resources until they can see the light at the end of the tunnel. A light which is most likely to be a train coming the other way, if the pundits are to be believed.

And best news of all – our favourite MP and failed tax evader, the fragrant Ms Primarolo, is standing down at the next election.

So it’s been a difficult year for many but not a disastrous one, overall. Speaking for myself I’ve been gainfully employed most of the year, and am hopeful of that continuing a while longer. I’m looking forward to a week off eating and drinking far too much – and not having to face a sheet of blank A4 on Thursday night – before having to face the 7:15 from Bristol in the bleak midwinter again.

Have a good one.

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Image: new check cover by jelene

You will probably have heard me sounding off at fairly regular intervals about how inconsistent and impossible to judge the average IR35 case is. I’ve looked at many appeal judgements over the years and each one has been supportable, given the vague nature of that which is being judged. You can usually kind of see where the judge was coming from.

Now, however, we have a case that fails even a generous stab at understanding the logic.

How else do you describe a judgement that puts the contractor outside IR35 and then inside IR35, within the same contract…?

The case was JLJ Services Ltd vs. HMRC, heard by Howard Nowlan. On the face of it this was one of those cases where a contractor, a Mr Spencer, working through his own limited company and an agency for an end client had been challenged under IR35 and found wanting. He appealed the case and it went to the First Tier tribunal.

So far, so good. Well, not good for Mr Spencer, but you know what I mean.

Then life starts to get a little strange. JLJ had started off as a Unix-based technical expert for the client, Allianz in Bristol, working on a succession of projects. After a few years of presumably valuable and acceptable work, Allianz’s requirements changed and Mr Spencer moved to a more part-time role, on a series of rolling contracts, picking up whatever needed doing.

Now this is the key point, as far as the judge was concerned; the first part, being deliverables based, did not exhibit a degree of control, the second, however, did. Accordingly Mr Nowlan rules that the first part was outside and the second part inside. This despite everything working to the same overarching contract – only the schedule of deliverables had changed – and I’m guessing it never crossed Mr Spencer’s mind that the game had changed underneath him. He simply kept on doing what he was clearly very good at for a client with whom he had a good and mutually beneficial relationship.

That said, by screwing up your eyes and squinting, you could just about see where Nowlan was coming from; the increased level of Control moved the IR35 goalposts in the wrong direction.

Ah but, I hear you cry, having been paying attention over the years, Control is not the only test. What about Substitution, Mutuality and that most recent phenomenon, “being in business”? Which is where I rather part company with the judiciary.

Substitution? The contract had a right of substitution and, as near as I can tell from the judgement, Allianz could reject a substitute with reasonable grounds but were not actually averse to considering taking one on if Mr Spencer was unable to work. Nowlan, however, after a bit of verbal gymnastics – including allowing an Allianz representative rather too much latitude in the accuracy of his evidence giving – said that he “ took it to exhibit a realistic businessman’s contempt for a clause that he probably found irrelevant”, a position he agreed with.

So, Mr Nowlan, how many employees do you know who are allowed to submit a substitute worker?

Mutuality? A mere bagatelle. Mr Nowlan’s words: “There is considerable case law in relation to this test, progressively indicating that the test is of diminished importance or that it is indeed nearly meaningless”. Really? Can’t say I’d noticed any diminution in its importance. Cases have recently hinged on someone being sent home without pay when the systems failed and they could no longer work, while the permies sat and waited for normal service to be resumed. On full pay. Heigh ho.

So there went the RMC judgement on what constitutes employment then.

In business? It’s clear from various comments that Nowlan considered JLJ Services to be irrelevant and queried why it had been set up. So a judge trying a contactor case involving an agency who hasn’t heard of S44-47 ITEPA 2003 then. But hey, it was Nowlan’s first IR35 case.

So in conclusion, at a very long stretch, the judgement may be supportable. But we should not lightly dismiss the ability of a judge to take a fairly cavalier attitude to the key IR35 tests on some fairly flimsy grounds.

In fact the only good thing to come out of the whole case is that we should be grateful that First Tier cases do not set precedents. Luckily for us…

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Image: 1996 UK Royal Mail Cartoon Stamp Card by andertoons

I got involved in a fairly interesting little debate recently: when is it a good idea to encourage people to compete for your own market? This is not quite as silly a question as it sounds. The government has already stated that it sees a flexible workforce as a key driver to our economic growth and is looking at encouraging people to build their own businesses if they want to do so.

OK, so the latest jobless figures, the rather depressing statistic that most newly created jobs aren’t going to UK residents and growth is still something of a twinkle in Osborne’s eye might seem to indicate that we have bigger problems to solve. Nevertheless, it’s always good to know that The Powers That Be think that what you do is of value.

But this leaves something of a dilemma. Especially for the PCG who are, as we all know, the only real voice speaking up for the freelance workforce. Quite rightly, they are aiming to ensure that if someone wants to take up the freelance banner, they have all the information they need to make a success of it.

Sadly, that also means pointing out the downsides. Which are considerable.

Firstly we still have IR35 and, inherent in that particular stupidity, the feeling that HMRC and, to a lesser but still significant extent the Treasury, still think that we are doing what we do to step around paying taxes. Which we aren’t, of course, but let’s not go over that again. That attitude manifests itself in many ways: the AWR would be a lot less of an issue if it had been drafted specifically to exclude incorporated workers, for example. To any logical mind, career freelancers are not in scope of the AWR and never should be, but still there is that “genuinely in business” caveat, as I may have mentioned in the past, so clearly HMRC still don’t really understand why we do what we do.

Anyway, leaving that well-trodden path to one side, it should be obvious, but often isn’t, that the other thing a freelancer needs is something to sell. After all, you are selling your skills and expertise, whether you’re building websites for local businesses, doing safety audits for nuclear power plants or running hundred million pound projects. That means that you need to have a fair bit of experience and expertise to sell on the open market. And that means that freelancing might be a valid career choice but, like boxing, you have to put in the roadwork first.

Of course there are always exceptions: I know of people who have never held down a “real” job and went straight from college to freelance, either by being very clever or very lucky. Or both.

So freelancing is a career step, but it has to be one that comes a little later in life, when you have learned enough, not only about your own subject but about business in general. It’s like skydiving, where stepping out of a perfectly serviceable airplane is a hopelessly stupid thing to do – until you do it and immediately want to do it again and again…

So, going back to the original point, perhaps the line should be not to encourage people to turn freelance, but to make sure they know that they need three things first – expertise, experience, and understanding. The first two are up to you but PCG are there with the third, in spades.

So the real message is if you want to freelance then come on in and we’ll do what we can to help out. But make sure you’re good enough first.

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Image: “Just use an open standard that already exists!” by Todd Barnard

Another judgement has been handed down that looks like it will further clarify the eternally vexed question of when is an employee not an employee. In the case of Autoclenz vs Belcher, it has been conclusively proven that, despite the contractual terms in place, a group of workers were de facto employees since they failed the key tests for non-employment and were in fact providing their services personally.

The real trick in this case is not that the workers were employees per se, but that the actual working conditions of their engagement, the rules under which they worked and the level of freedom they had in how that work was done contradicted the contractual terms in some key areas. Hence, they are employed.

Furthermore they failed to satisfy the judge in the Appeals Tribunal that they were in business on their own account, which, as we have seen, is now the real key test for both the AWR and IR35. And that is important.

This whole issue of “are you in business” is gaining greater importance and is beginning to rank alongside the triumvirate of Substitution, Direction and Mutuality, which, as any fool knows, are how you decide if you are IR35 caught.

Clearly it is not a revelation that these conditions have to exist in fact as well as in the contract; we got that one sorted in the Dragonfly case, which upheld the arguably self-evident case that the contract has to reflect reality and if it doesn’t it will be ignored in favour of a hypothetical one describing that reality.

So from our side – that of the genuine freelance contractor – this has merely clarified what we already knew and doesn’t actually take the IR35 argument a lot further forward. For the clients though, this presents something of a headache, especially when taking on us real contractors. They may have to consider doing something I’ve been on about for a long time now, use B2B contracts that treat me as a supplier of expertise, not as a temporary employee. That, in turn, greatly reinforces my status as being a genuine business. And that puts me neatly outside IR35 and the AWR without any further discussion needed.

Although I’m not holding my breath for that to happen.

Still, this goes back to the original IR35 legislation, which contains a thumping great non sequitur at its very heart. The question it asks is “Would you be an employee if you were an employee and not working through your own company?”. Well yes, I probably would, but that situation doesn’t in fact exist. It also goes on later to talk about how you treat two contracts, one caught and one not-caught. If you have a not-caught contract, then you’re in business, almost by definition. So how can you possibly also have a caught contract? Confusing, isn’t it? Let’s hope the IR35 Forum has the wit and wisdom to get this whole area sorted out for once and all and we can put HMRC back in their box.

Ah yes, HMRC. You may recall my little contretemps from last week, about them losing a CT payment. I got another reminder last Friday, with even more interest added, so I phoned them up, more in anger than hope, it being close to seven o’clock in the evening. And astonishingly I got to speak to someone. What is more, they identified what had gone wrong – their idiot system had seen two payments and assumed that they must belong to different tax years – and was able to sort it out there and then. So well done them. For once.

Except they still owe me some overpaid PAYE and have done for quite a while now. I suppose I could always try phoning them again….

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Image: new world park by Paul Keller

How would you feel about a business where you didn’t really understand what the product is and were selling to someone who also doesn’t understand what it is but whose understanding was different to yours? But nevertheless the overall business has an annual turnover close to £30 billion.

Because that’s the Recruitment industry these days.

I was in a meeting recently where an account manager from one of the local agencies gave a talk on how the agency interacts with the contractor and all the various add on services they provide. Made for several PowerPoint slides of things ranging from de-risking payments to providing help and guidance And very interesting it was too, until another speaker, this time a contractor, stood up and gave their view of the same relationship..

Guess what? They didn’t really match.

To be fair to the agency, they do find the business and they do factor the money and they will, if pressed, negotiate rates and the like with the end client, all of which is pretty valuable if you want a quiet life. Where it goes wrong is how they represent us to the client.

Every agency tries to tell the client that they have this pool of highly expert staff ready to fulfil any role the client wants filling. And what is more their sophisticated search facilities and in-house databases match candidates to roles with unfailing accuracy. So explain why, if that’s what they do, why is my Inbox getting three or four emails a day from agencies offering me a whole series of roles, almost without exception ones that bear little or no relationship to my actual skills or location. Could it be that what they do and what they tell people they do aren’t exactly fully aligned?

And, of course, this same doublethink has permeated the client HR departments. Because they get contractors from the “recruitment” agencies and those contractors are presented as individuals, rather than as service providers, they see us as a slightly weird form of employee. OK, we may have different email addresses to the permie staff and we might miss out on things like car parking rights and canteen access, but ultimately we are still seen as just another worker.

So why is this important? As long as we get paid, does it really matter?

Well yes it does, actually. In fact it’s getting increasingly important. The career contactor has to demonstrate more and more to HMG that we are free-standing businesses; small ones, admittedly, and ones who probably won’t ever grow too much, but still businesses with all that implies. Sadly, that argument gets cut off at the knees by the way the market treats us as a lightly modified employee with an inflated salary.

Of course, deflecting this juggernaut from its path is not going to be easy; in fact, it may not even be possible. After all, £30 billion a year is something with a lot of momentum. But that doesn’t mean we shouldn’t try. The freelancing model we have in the UK is certainly unique in Europe, and pretty much unique in the rest of the world, with only Australia and the USA coming close to the level of operational freedom we enjoy.

So it’s a real shame that the very people we have to deal with to get our skills to work are the only people who seem not to understand the value of that uniqueness. I think it’s time they found out.

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Image: HAIER kids by boni_face

Finally, HMG is starting to come good in its promise to put 25% of government procurement in front of SMEs and other small suppliers. A new search website has been launched, where you can find and bid for a whole range of smaller contracts ranging from managing a construction project to window cleaning council buildings. Let’s just hope they remove some of the barriers that used to be there.

To be fair this kind of work has been on offer for some time. The Supply2Gov initiative has been dropping tender opportunities into my Inbox for the last two years. Sadly none have really been in my particular field of expertise, but at least they are there to be won if they were.

Apart, that is, for one small detail. The Pre-Qualification Questionnaire or PQQ

To be allowed to bid for any such work you have first to be approved as a potential supplier and the PQQ is the mechanism by which this is done. It is not a trivial document; it’s several pages long and, as you might expect, asks a lot of questions and seeks a lot of detail. It is trying to establish that you have the skills, expertise, resources and financial stability to do the job, which is fair enough. The problem is the parameters it sets to achieve it.

You have to prove that you have delivered the same piece of work, successfully, at least three times in the recent past. This is OK if you supply repeatable services such as the aforementioned window cleaning, or supplying desktop PCs or install Pelican crossings. It gets a bit harder – actually, a lot harder – if you are talking about softer skills such as project management, service improvements or even website design. This, no doubt, is a reflection of the lack of awareness at the buyers end of how some of these things work. For example, a school website may look very similar to one built for a retail outlet, but the underlying business model is very different. On the other hand, installing a Pelican Crossing or building a datacentre are, to a project manager, very similar operations indeed.

You have to demonstrate that you have at least three times the available finance than the project is worth. For the average project delivery role, the kind of thing I would be involved with, that means you need around £150,000 free capital in the bank. For a one man company to be sitting on that kind of reserves is just a little optimistic.

Finally to bid for the bigger pieces of work, you need to get together a team to deliver the work. Being contractors, that means either you bid for the work and sub-contract the work, or you form a consortium and bid as a single entity. Except that a single contractor is highly unlikely to have the financial backing demanded for what is now a substantial piece of work, and the individual members of a consortium aren’t allowed to aggregate skills and experience and finances, they are treated individually.

So all in all, it was a good idea but the delivery mechanism had some serious, and for some insurmountable, barriers to success. Let’s hope the new process is a little more user-friendly.

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Image: My Cartoon by justDONQUE.images

Usually I find one thing to talk about each week; even in the depths of the silly season there is something relevant to freelancing worth trying to write a few hundred words about. This week, for some reason, I haven’t found a single thing. Perhaps I’ve been a bit too busy to notice – you could say the current client presents some interesting challenges – but I have tried. Honest…

The main event in the news – well, the BBC version of the news so it really must be important – is all about the Millibands and the will-he-won’t-he tedium of will big brother work with little brother or not (and he won’t, it seems). Sorry but from here I really don’t care that much. While Her Majesty’s Opposition is an important element of the government process, precisely who wears the various labels in the Shadow Cabinet is actually fairly irrelevant. Unless you’re interested in who fights the next election, which is far enough away to be of zero interest, I’m afraid. And anyway, I’m a contractor; there are far more important things to worry about.

One of them is a bit of a debate on EBTs. I’ve said before that these may be a good thing for some but you have to go in with your eyes really wide open. The risks are just that bit too high if you don’t fully understand the scheme and, equally importantly, the government’s attitude to them. My point is that since HMG have effectively shut down EBTs from next year, people who sign up to one now are at a considerably higher risk of investigation than those who have been using them for some time. This, for some people, seems to be an unreasonable position. Heigh ho…

There’s been another discussion on Security Clearances and the old Catch-22 of no clearance no job, no job no clearance. Somehow this has mutated into a discussion about how clearance works. That’s really not what it’s about, the process and the parameters work well and are pretty effective. All I’m really interested in is being allowed to get in front of the hiring manager to sell my services, which is something that I and a majority of other contractors can’t do at the moment. I’m more than happy to take my chances of persuading a hirer that I’m worth the effort of sponsoring for clearance, but I can’t do that if I can’t ever get to meet them.

And of course the whole visa issue rumbles on. This is getting increasingly confused, not helped by a certain Mr. Cable’s interventions. Nobody is saying we shouldn’t allow ICTs; there are plenty of instances where they are entirely justifiable. However, when you consider that some of the people complaining about the proposed cap on them haven’t actually used the ones they are allowed to use, just what is the problem? Apart from reading that a small number of companies from one country have brought in several thousands under ICT visas. The argument is not about ICTs, it’s about misuse of ICTs. Some supposedly well informed people will insist on missing that minor detail.

So, lots of motion, not a lot of progress. Bit like the current contract, really.

Alan Watts can found at LinkedIn.
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Image: Progress by kevindooley

Another frustrating week in the hunt for the next contract. It’s clear that there is still a fair bit of work out there for the taking. Sadly it’s also clear that there are an awful lot of people out there trying to take it and competition is very strong. But it seems to have had at least one side-effect; you must only apply for a job if that’s the job you’re already doing.

You can accept that if the role is in say Finance, then clearly you do save a lot of issues taking on someone who already works in Finance, since they would know the regulatory and business environment. Actually it turns out an awful lot of openings are in Finance since the only people with the money to spend are the banks. Wonder where they got it all…

Anyway, I digress. Taking someone already in an industry vertical, while frustrating to the outsiders looking in, is quite understandable. However, the market now sees to be taking this to a whole new level which is what causes the frustration: no matter how good you are at what you do, if someone doesn’t want you to do exactly the same thing for them that you’re doing now, then you have a problem.

I’ve talked before about the whole agency candidate-finding process being reduced to a box-ticking exercise in an attempt to get the flood of applications down to manageable levels. This also saves them a lot of money themselves of course, since the bulk of the work can be delegated to fairly junior researchers who don’t actually need to understand the role or the candidates.

So getting a role is now totally dependent on what it says on the CV. And that is where it all starts to go a bit wrong.

If your CV is to stand a chance it has to be a very close match to the original requirement. Sadly, however, with the laziness of the average agent, a lot of the job specification doesn’t make it to the advert; probably takes too long to cut-and-paste it in to Broadbean or whatever they use to set the adverts up. Given a career history like mine that is pretty wide ranging, I then have to work out which bits to highlight in the first page summary on my CV – no agent bothers to read the detailed job history any more – to stand even a vague chance of getting past the first filtering process at the agency, never mind getting passed on to the client. And if the advert misses a key bit of information, then you fail at the first hurdle.

As an example, I put an application in yesterday evening and around midday today I finally got to talk to the agent about the role. Too late! It seems the role was largely about recovering a programme of work that was not delivering and needed a total shake up. “But you didn’t ask for that, and as it happens that’s what three of my last four roles were mostly all about, fixing and successfully delivering broken projects” I pointed out. One of which, incidentally, was worth around £250 million.

“Ah but”, was the reply, “You didn’t state that explicitly so I didn’t pick it up. Sorry, but I’ve already sent in all the CVs I’m allowed to”. End of conversation.

So there in a nutshell is why good people are sat on the bench. This whole market needs a different approach. And that’s something I will talk about next week.

Meanwhile, anyone need an expert is anything?

Alan Watts can found at LinkedIn.
© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Experts Only by Ross Mayfield

The client’s Head of IT asked me to comment on a paper he’d received from another part of the Group recently, talking about outsourcing their back office functions to save money.

Fascinating read, and clearly someone has been taken in by the sales pitch. For one thing, they’re planning on moving all the staff across, leaving no local management in house. That seems a touch suicidal for a start. Then they say the staff, protected by TUPE rules, will retain their current pay and conditions, including no redundancy and already agreed annual increases for three years.

So where, exactly, do the savings come from?

Also looking at the two providers in question, and having worked with both at various times… Let’s just say I could think of only one who could possibly be a worse choice. Needless to say the comments were less than flattering with a strong suggestion that my client does not ever consider taking the same route – or if they do, to do it properly!

Then I read that Siemens are balloting “contractors” over strike action. Surely some mistake – they aren’t contractors, they’re employees supporting an outsourced arrangement and being threatened with a pay freeze. I can think of quite a few people who would welcome a pay packet to be frozen, much less whine about it not going up.

That big network contract is still unsigned as well, with an absolute deadline that turned out not to be one. I’ve lost the will to live on this one, to be honest. If you can’t trust the sales team to come up with an accurate and supportable deal, what chance have you got? More meetings tomorrow to discuss the options, but I’m getting to the point where I suggest the client walks away and starts again. At least they have a fully worked design for next time round.

And finally got some workable numbers back from the new project time recording work. Oh look, time spent on projects that aren’t due, no time spent on things that are supposed to be urgent, variations between estimate and actuals of up to 1600% (seriously…). The Project Managers weren’t a bit fazed, though. Early days, not sure the guys are logging time properly yet, give it some time…

Having worked at quite a few client sites over the years, some good, some bad, one (naming no names!) absolutely awful, I’ve long been conscious that UK’s middle management isn’t quite at the leading edge these days. On the evidence of the week just gone it looks like I’m slowly being proven right.

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Image: dockheads by [phil h]