There’s been a wonderful example this week of exactly the kind of problem we contractors are faced with when trying to get our point across. A government agency, SLC– which is basically a private firm owned by HMG – was having some operational issues, so they brought in an expert, a Mr Lester, to sort them out. He was proving to be quite good at it, so they offered him a two year deal. Which he accepted. So far, so good.

The original work was done as a bog-standard interim management role: the guy was not employed, he did the job and charged a fee. When the two year deal turned up, he said fine, can you continue to pay me gross to my existing Limited Company and I’ll sort out the rest.

And then it all starts to go a bit wrong.

Someone – doubtless someone with just enough knowledge to be dangerous – asks exactly why Mr Lester has been allowed to avoid paying his taxes. Shock horror! Let’s do a TV programme on it!! This is outrageous!!! Lets’ have a witch hunt and track everyone else doing the same thing!!!!

Yes well, hang on a minute. Firstly we have zero evidence what taxes Mr Lester is paying, since he’s not obliged to disclose that information. There’s no evidence he isn’t paying quite a lot in tax; certainly, like many well paid contractors, a lot more than the average worker. He may even (say it quietly) have declared his earnings under IR35. Who knows?

His is a perfectly straightforward and entirely legal way to operate his company, to share his income with his other half and generally behave like the other 1.5 million freelance workers in the country. Like that chap who earns a million or so a year from public speaking. You know the one, David Milliband, sometime brother and elected, serving MP. Or indeed, the unloved Mr Brown who does the same with his outside earnings, although in his case they all go to charity.

It’s also interesting to note that various senior people had to sign off the arrangement whereby Mr Lester was paid gross. One might think that they had a handle on such things, but I could be wrong. And it’s all a bit moot now anyway, since Mr Lester has done the honourable – if arguably unnecessary – thing and gone on the payroll like the rest of the wage slaves.

But we can glean some interesting insights from this débacle.

Firstly, there are clearly a lot of senior people, including some who are actually in charge of such things, who don’t have a Scooby about how contractors work and how they are paid. Basically they do not trust a usually intelligent and highly skilled worker to arrange his affairs so that all taxes due are paid in full and on time.

Secondly we have once again seen the conflation of avoidance and evasion. Yes you can be against avoidance, but it’s not illegal; quite the opposite, in fact, it has long been sanctioned as an acceptable practice. You want evasion? Fine, so make whatever it is illegal and you’ve got it, but being tax efficient is avoidance, not evasion, and perfectly fine.

And finally, someone can’t actually count. Mr Lester will finish his contract and leave. No pension, no golden handshakes, no extended period on full pay while he finds a new job. That’s quite a chunk of public money saved over a full time employee. In fact, if you do the sums based on the figures that have been published, this tax saving exercise of moving Mr Lester on to the payroll will actually cost several tens of thousands more that if they’d simply left things alone.

But hey, nobody ever accused either HMG or the fourth estate of being financially competent, did they.

And what grates is the underlying point that people who should know better simply fail to recognise that there are freelance contractors among us. People who keep the wheels turning, who make few demands on the state, who represent an efficient and cost-effective workforce. People who are a long way removed from those who create companies for no other reason than to avoid paying taxes on earnings that they wouldn’t have got at all were they not already on the public payroll. You know who you are.

So bring on the witch hunt. But please, break the habits of a lifetime and point it at the right target…

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Image: Getting insight by Miran Rijavec

I’m coming rapidly to the end of my current engagement and have been reflecting on what I’ve been doing. Not out of any great sense of sadness or nostalgia but because I have to hand over to the permanent guys that I’ve been covering for while they were off doing more interesting stuff. Which means doing the Great Chinese Examination and writing down everything you know for them to pick up and carry on doing.

Then, while pondering how best to describe one less than dynamic project without embarrassing the Project Manager too badly, it occurred to me that my job is actually pretty varied in one way and very consistent in the other.

Don’t believe all that rubbish about monster pay packets, most contractors actually do it for the chance to work in different places with different people learning different things.

Although, to be fair, the monster pay packets might also have a certain appeal…

Anyway, my usual contract is to parachute into an existing team where I’m either filling the seat of someone off doing something else for a while, or adding some resource because the guys haven’t got enough hours in the day. It’s a case of turn up, get introduced, sometimes in detail, sometime very sketchily (although with my appalling memory for names and faces, it matters not a lot which!), work out the key players, the quick way to get to work and the coffee supply and get on with it. With a bit of luck I’ll also be asked to make things work better or even work completely differently, which is the bit I quite enjoy. But the real challenge is that steep learning curve where you have to fit into the team like you’ve been there for years. Then the real guy comes back and you’re out of a job again. Rinse and repeat.

So as I say, interesting work in a boring sequence. And I wouldn’t have it any other way, to be honest.

But there’s another thing I keep seeing, everywhere I go. Basically I work in and around Service Management, which is the bit that turns the technical wizardry of the data centre into the mundane consistency of the user’s desktop environment. All that stuff that ITIL used to be about before V3 came along and made it incomprehensible and expensive in equal measure. But ITIL has been around for a long time now, and certainly predates the working lives of a lot of the people I work with. So why does nobody know how to use it properly?

Everywhere I go, they have a Service Desk. The usually have a Change Manager. They may have got really enthusiastic and have a CMDB that works. Usually they’re just an asset register with aspirations; the test is to see if it can tell you who will shout if you turn something off. Which is all well and good, if you like your cappuccinos without milk.

Where is the Service Catalogue? I’ve yet to work somewhere that has even a pale shadow of the ITIL ideal. It’s not like it’s all that complex either, the broad brush approach will work perfectly well – email , internet, Office, Security, User Management, assorted approved applications, that kind of thing. Not the tin and wires, that’s for the propeller heads in the back office. The Service Catalogue is the glue that holds it all together, the steamed milk that makes your breakfast coffee sing and stops the cinnamon sinking. Without the Service Catalogue, how do you know what you’re providing, what your Change Manager is changing and what your Service Desk is servicing?

Perhaps I should get out more, but one day in my serial existence I’ll come across a site that uses the basic ITIL structure properly. And that would be really very interesting.

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Image: Mobile Edge ScanFast Messenger Bag by Mobile Edge Laptop Cases

Start the year as you mean to go on. Not a bad maxim, of course. Except that I’m starting with the prospect of being out of work at the end of the month. Not, I hasten to add, that I hadn’t seen it coming; the current gig is to fill in for a full time guy who’s been off on a specific project that he has now completed and is returning to business as usual. So no hard feelings. Honest…

Obviously I’m not all that worried; if you want to be a freelance you know that you’re going to finish contracts and you plan for it. There’s money in the corporate war chest so just focus on finding the next exciting opportunity and move on.

Except for an awful lot of contractors, it’s not that easy. These are the ones that don’t understand the risks of IR35 properly, or who have always worked in a world where IR35 is hanging over their heads. Quite rightly they take the low risk option and either declare themselves inside IR35 or work through an umbrella (or, if you’re a real hero, one of the strange offshore things…). That means you take out all, or almost all, your income as taxed earnings and leaves you with no reserves in the company to tide you over. And that is one of the hidden but very real negative impacts of the IR35 legislation; Cameron wants a vibrant, flexible economy but insists on cutting off its base material at the knees.

Then again, I am slightly appalled at the number of contractors who blithely accept they are IR35 caught in the first place, usually quoting conditions that we disposed of years ago. It’s not like there isn’t a huge amount of material out there but too many seem happy to roll over and pay taxes they probably don’t owe in the interests of a quiet life.

Their decision, obviously. But it does irritate.

The other side effect of finishing the gig is that I’ve had to take notice of the recruitment trade again. Never something I enjoy. The first step is to dust off the CV of course. I’ve already seen a couple of roles that I know are within my range and experience so a quick cover letter and attach the latest edition and sit back and wait for the phone to ring.

Which it hasn’t. Bugger…

So back to the CV with a more critical eye. It’s not a bad one in terms of things achieved, though I say so myself, but I re-read it properly and I have to say it needs a bit of work. It’s kept up with the recent contracts I’ve done, but I have been lazy and not re-engineered the whole thing, simply adding on the last contract each time. As a result, it’s all got a bit unfocussed and a couple of years too long. So this weekend it’s back to the drawing board with the electric pencil and re-write the thing to tell the world how good I really am.

Let’s face it; there aren’t that many roles out there at my kind of level that are close enough to home to make them feasible, and there are an awful lot of good people on the market. So the CV has to fill two completely different roles in one document; tick all the boxes that the “recruitment consultant” (for which read ex-sporting goods salesman turned sales researcher) thinks I can do all those funny things that the client absolutely has to have while being literate enough to persuade someone who does know what they’re doing that I know what I’m doing. But hey, I write stuff for a living, ranging from complex technical analyses to fully architected service designs to this blog, so how hard can it be? Well, actually, pretty damned hard. Wish me luck!

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Image: Voting Screen – Cartoon by DonkeyHotey

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

One of the great appeals of freelancing your way through life is the constant change, working in new places with new people, solving new problems and generally getting away from the mundane grind of the usual nine-to-five employee world. Well, that’s what they always told me. Perhaps I’m getting old (hell, I am getting old) but I fear I’m beginning to disagree…

As the train pulled out of the station this morning at precisely 07:14, I was reflecting on my journey in. I followed the same old silver Mondeo up the hill out of the village. We were overtaken by the same small white van, doing rather more than the posted 40 mph limit. I just knew at the next set of lights that the red Fiesta in the right turn lane was going to go straight on to get ahead of everyone else in the queue (and screech to a halt 50 yards later at the Pelican crossing…). The flash of brake lights for no obvious reason had to be someone encountering the suicidal loon in the black hoodie cycling along with no lights and no awareness of the world around him (with his luck, he really should be buying lottery tickets…).

Hearing the same announcement every morning at 07:03 about penalty fares. Standing on the platform at a point where you just know the carriage door will be right in front of you and the guy in the over-elaborate winter jacket is going to push in so he can get to the coffee counter on the train before anyone else, not that there’s ever much of a queue to make it even faintly worthwhile doing.

And work, while satisfying and frequently challenging, is basically about bringing a range of systems and services from development into business as usual in a totally consistent way. I have to capture the same information for each system, spot the occasional variation from the standard model and make sure the usual suspects know exactly what to do with the new service when it goes live.

Consistency and repeatable processes. That’s how the world works if you don’t want to waste resources reinventing the wheel every time you need to go somewhere.

But what happens when the world changes?

This is something the agencies are going to have to wake up to, probably sooner than they think. Over the last 20 years they have evolved to the point where most of their process is so consistent you don’t actually need to apply intelligence to it. A lot of the time, you don’t even need people, good pattern matching algorithms will do the drudge work. You keep the good guys chasing the jobs but filling them is all about cranking the handle.

But the market – or the IT contracting market, at least – is changing, and changing very quickly. I’m working for a Managed Service Provider at present who can charge their end client less than £200 a day for programming resources. When you consider the margins they make and the overheads they have to cover, that is eye-wateringly cheap. UK-based contractors simply cannot hope to compete at that level.

The implication is that very soon now the requirement is going to shift to supplying genuine expertise: clients will be looking to the contract market only to bring in people who can add specific skills, in either technical, business or delivery arenas. And our current highly commoditised agency supply chain simply won’t be able to cope any more; they will have to start applying intelligence again. Oh dear…

As Henry Wallace said, the only certainty in life is change. But I say the real trick is to notice change is happening.

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Image: Open Source World in KLDP.net by joone4u

I really must think about writing these jottings earlier in the week. I routinely find myself talking about things that have just happened rather than predicting what’s about to happen. Although, of course, that does mean I can be a little more accurate in what I’m saying. Better late than never I suppose…

But this week’s major news in contractor world was PCG’s third National Freelancer Day, which as we all know is held on November 23rd. This is an event that celebrates the role of the freelance worker in today’s economy and is primarily aimed at ensuring the value they bring to the UK is recognised.

The event is going from strength to strength, with ever increasing participation. It was picked up in a wide range of places, including the Twitterverse and a host of freelancer websites. More importantly it not only the mainstream press but we even got a mention from Evan Davies on Radio 4 and a ringing endorsement of the freelance profession from some politician called Dave, who said “This Government recognises the valuable contribution that freelancers make to the economy and, as more and more people choose to join your ranks, you have all our support”. He’ll go far, that lad, you just watch.

So PCG are to be congratulated on a job well done. Again.

Elsewhere though, things are giving off mixed messages. There has been a lot hand-wringing about rate cuts and job losses affecting contractors. Which is quite worrying, with all this fear of double-dips (still think that sounds like an ice cream) until, that is, you look a little more closely.

These cuts are only happening in banking and finance. Other people aren’t seeing cuts in rate – I know I’m not, if a sample of one is useful – and others are actually saying they’ve got a raise in rate. There are plenty of reported contract extensions out there as well. Just not in banking. How odd.

Another point, if you are of a suspicious mind like me, is that all the banks are cutting by the same rate, a precise 10%. Nice round number, of course, but it is just a little odd that they all see the need to make the same cut regardless of how well or how absolutely dreadfully they are faring. One might even think they were working to the same hymn sheet. Surely not: they are, after all, in competition for the best resources and paying a shade more than the competition is one way to secure them.

But hey, these are banks, after all. It’s not like we expect them to understand economics or anything. So it must just be a fluke of timing and cost accountancy.

Ah but, it’s also interesting to note the response of the guys being hit by these cuts. The proportion that react with “That’s it, I’ll go somewhere else” to those whose reaction is “90% of something is better than 100% of nothing so I’m staying” has reversed totally, with the latter group now prevailing. Mostly that’s because the feel there aren’t the jobs out there to be had, which is understandable. And in fact they’re probably right; the vacancies created by the macho “I’m outa here” brigade don’t exist so there is nowhere to go. Rather than a big round robin with the worst performers falling off the bottom, as happened last time around, everyone has stayed on their chairs. And that, if you’re the banks, is actually something of a result; keep the same staff, no retraining needed, and 10% of quite a lot of money to feed into the bonus pot.

OK, so perhaps the banks aren’t all that stupid after all.

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Image: Facing My Manga by Rob Boudon

Contractor accountants may be interested in the latest plans to make UK personal taxation more transparent and easier to understand.

David Gauke, the exchequer secretary to the Treasury, last week laid down the Government’s vision for a simpler system.

It’s no secret that a lot of taxpayers find tax confusing and the Government has now said it wants people to be able to understand what they pay. In a discussion paper entitled “Modernising the Administration of the Personal Tax System” the coalition has set out a range of ideas to help people obtain access to information about their personal taxes.

The government wants to hear the opinions of taxpayers, tax professionals and representative bodies on a variety of issues. For example, the consultation asks which areas of the personal taxation system cause the most difficulty and how technology could be used to provide taxpayers with better access to their personal tax records.

As part of its plans to overhaul our tax system, the Government has also published a paper summarising the current state of play with regards to the integration of income and National Insurance. Technical working groups are currently being established to explore the possible options and employers, payroll and tax professionals are being invited to join these groups and provide their opinions.

David Gauke explained that the tax deduction on a payslip is the only way that people know how much tax they pay, but the Government wants to make the whole system more transparent so that people understand their tax rate, the amount they currently pay and how much they should pay.

It was a busy week last week as far as income tax related plans were concerned. The Government also published its draft Real time Information regulations, which it hopes will improve HMRC’s administration of PAYE.

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Image: 29/365 – Mattel MONSTER HIGH Series: “Gloom Beach” version Frankie Stein by puuikibeach

Contractors who own holiday homes abroad need to be aware that HMRC has set up a new team of tax investigators to look into possible tax avoidance. The Treasury hopes to net at least £500 million from this new initiative by 2014-15.

The “affluent unit” team will consist of 200 investigators and specialists will use software to search through publicly available information in the hope of identifying people who own overseas property and who should have been paying income tax on rental income, or if a property has been sold – capital gains tax.

The investigators will make use of “risk assessment” tools in order to highlight individuals who do not seem to be declaring the right income and gains, as well as those who do not appear to have been able to afford to buy the property legitimately.

Owners of holiday homes will also be asked how they funded the purchase and whether they are declaring it as a source of income.

An HMRC spokesperson said the affluent unit would be targeting individuals with assets of at least £2.5 million, as well as those who should being paying the top rate of income tax. The unit will be modelled on the High Net Worth Unit, which brought in £247 million in its first two years.

This focus on overseas homes is another part of HMRC’s wider crackdown on tax evasion. David Gauke, the exchequer secretary to the Treasury, explained that HMRC has demonstrated increasing success in tackling tax evasion at home and abroad. The government is giving out a clear message that tax cheats no longer have anywhere to hide.

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Image: Happy Sky Pilot in Big Sur! by greenfaerietree

You have to laugh, you know. I never cease to be amazed at the number of posts I see about contractors claiming all sorts of problems with, variously, notice periods (don’t need them, as I’ve said before), IR35-safe contracts (fine as long as they represent reality), the AWR (don’t start me on that one again) and the infamous opt out from the Agency Regulations (opt out if you can but it makes little real difference). Plus, of course, the running complaint about the agency’s percentage of the contractor’s rate: except, of course, as ony fule kno they don’t get the percentage, the contractor does.

However there is a common theme to these various complaints. The agency.

We have to be fair to the poor agents themselves though. Increasingly they are run by accountants targeting sales figures and maximising margin. Little details like serving both sides in the contract have zero relevance to their business model. The individual agents are given achievement targets and so have no time for the niceties if they want to pay the mortgage. And of course it is much more cost effective to employ minimally experienced drones to handle the phones and use software to do the pattern matching between CV and job description.

All of which is fine if you’re dealing with a commodity market like general development, operations and service management roles. But it’s a serious problem for all sides if you are a little more senior, or have niche skills in some area or another. Or even if, like many, you aren’t a specialist in any given field, just a good, solid all-rounder who can make a success of any contract they’re given.

In effect you start from scratch every time you need a new contract. No matter how good you are, you still have to get through the auto-pilot box-ticking recruitment business we have these days. The one that says the agent gets a new role then stands there waving a piece of paper in the air to see who might be interested: usually several hundred, often hopelessly under qualified people on average. The signal to noise ratio in recruitment is actually appalling. How much cleaner if he had the resource to hand when the role comes in.

So how do we change the paradigm (see, I can do business speak as well…). The answer is surprisingly obvious.

The contractor pays the agent, not the client. Shock, horror…

Seriously, it would work. I have many skills but selling isn’t one of them, nor is cold-calling to find work (actually that’s just cowardice, but the result is the same). So why not outsource that part of the business to someone who does it for a living? The agent goes to the client with a zero margin deal. The contract would have to be B2B and, legally, you would have to be opted out of the Agency Regulations, both of which would appear to be good ideas. You know, solid in business indicators, no IR35, no AWR, no secret upper contracts…

There would be no hint of you being anyone’s employee either, since you’re at the top of the contract, not the bottom.

The agent would have to know who you are, what you can do, what you are worth and what your history is. He would be able to sell you actively and be incentivised to find you repeat business, since that’s where his margin comes from. He could specialise in given areas and build up a stable of people with the relevant skills, or he could be the one to fill the awkward jobs from his knowledge of his customers.

Best of all, you set the gross and the agent gets the percentage.

So what’s not to like? If you’re big enough and strong enough to build and justify a working reputation, and be able to be sold into an open market, why not go for it? I’d happily pay for that level of access and support, which has to be better than fighting your way to the top of some disinterested minion’s in tray to get noticed.

All we want is a couple of good agencies with the courage to bite the bullet and disregard the way they’ve always done it.

Ah. That might be a problem. Anyone know any brave, risk-taking agency FDs…?

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Image: SmiAl – Sad by Al aka pintofeggs

Contractors may have already encountered difficulties trying to obtain finance from their bank.

Shawbrook Bank has now published research findings that confirm that the leading UK banks are making it too hard for small businesses to get a loan.

45% of SMEs say that the level of bureaucracy is too high and a mere 6% think the process they have to go through when they apply for a loan is transparent. Furthermore, 89% of respondents said the banks lacked common sense when it comes to lending.

The CEO of Shawbrook Bank, Owen Woodley, said smaller forms should be receiving as much assistance as they need to help them grow and become successful. It’s a matter of grave concern that so many of them feel the loan application system is unclear and obstructive.

It is vital for a small business to be able to access the right finance when they need it if they are to expand and in order to achieve that we must have a lending process that is straightforward and efficient.

Shawbrook recently promised that it would make £250 million available to UK small enterprises next year.

Another problem facing small businesses is that credit agencies appear to have very different ways of assessing credit worthiness.

A recent study of the credit reports of private firms discovered a 150% average variation rate in the credit limits recommended by three high profile agencies. Although agencies do use different criteria to base their scores on, the size of the discrepancies is causing concern.

Phil McCabe from the FPB pointed out that a flawed credit report could mean the difference between success and failure for an entrepreneur.

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Image: DUNCE by SLOTHY *33*BLKCLD*

I’ve been having a funny old week at work. For once I’ve got up to date on my deliverables and am waiting on assorted worthies to review and respond to the results. Meanwhile the technical team next door are working all hours God sent to keep up, while my in tray is almost empty. Well, it makes for a quiet, if rather boring life.

So I find myself taking a look around the world of contracting to fill in the time. And it seems there are some odd things going on out there in Reality.

My old mucker St Vince of Cable is at it again. So busy earning money he failed to notice he was over the VAT threshold. Luckily his accountants did notice – months late, but hey – and he sorted it out, paid the tax and the (very) small fine, job done. Silly mistake by someone with his vast experience of real business (two whole years as an Economics Advisor, wasn’t it?) and no real harm done. But on that subject, could I ignore a hard and fast taxation rule, forget to declare some taxable income for a few months, then discover my mistake and pay it back with a tiny penalty and a smack on the wrist? Don’t think so, somehow.

HMRC are apparently cheering about improving their take from IR35. Say what? It seems they are getting more money back from the pitifully few cases they manage to pursue to completion. What is more, this has been seized on by some who should know better as an example of the deterrent effect of IR35. Their argument is that people are paying taxes via umbrella companies rather than risk an IR35 investigation. So that’s OK then. After all, what could possibly be wrong about scaring people into paying taxes they don’t actually owe by threatening them with a piece of legislation so badly drafted it needs a three year investigation and court case to determine if it actually applies to this single set of circumstances?

AWR is continuing to cause hilarity among those who understand it. Not only are some agencies sending out letters asking contractors to declare themselves outside its scope – something you can’t actually do in any meaningful sense, of course – but they are persuading assorted Human Remains teams that using agencies protects them from the AWR. Say what (again)? Take someone on directly with no intermediate agency and the AWR is dead and buried. Using an agency increases the risk, not reduces it. Doublethink at its best, and a good illustration of why contractors don’t want anything to do with HR if they can possibly avoid them. Or agencies, come to that.

And finally, credit rating agencies. Not the big ones who are randomly downgrading assorted banks and even whole countries, although they’re bad enough, but the ones being used to credit check job applicants in line with FSA regulations and failing them, often on some pretty flimsy histories. Which means no job offer. Fair enough?

Well no, really. For one thing the FSA rule being quoted applies to people in a limited number of roles within financial services; directors and those who advise customers on fiscal matters, for example. It’s not actually meant to apply to the third DBA from the left in the support team. But hey, it’s an income stream for someone, so who cares that it’s both utterly irrelevant and genuinely damaging; I know someone who regularly has to turn down good people because of this nonsense.

Modern Britain in a nutshell. Never mind the outcomes, follow the rules no matter how idiotic and irrelevant those rules are. Truly we are a nation of jobsworths; after all, there’s no money in being a shopkeeper any more.

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Ethan Nichtern Banner Illustration by bainesmcg

I thought it worth returning to the Agency Workers Regulations again, if only because I was ever so slightly amused by the reactions of certain agencies to them. With their industry’s usual instant and carefully controlled grasp of the subject, this week contractors started getting emails and letters from some agencies about how to manage the AWR. After the act had taken effect and therefore after the point at which you should react to it for an existing engagement. Genius, isn’t it?

Anyway, as is the way of such things, the letters are asking unanswerable questions.

The first one is “Do you work through a Limited Company or an Umbrella?”. Excuse me, but why do you have to ask? You have the contract in your filing system, along with the payment terms and the pointless fourteen pieces of ID. Don’t you know who you are dealing with? Please don’t tell me you weren’t even faintly interested in the company with whom you signed the contract. Silly old me thought you were dealing with MyCo when clearly you are only interested in dealing with me personally. OK, so that explains a lot, doesn’t it? Dropped the mask ever so slightly there, Mr Agent.

Secondly, “Do you consider yourself to be in business?”. Cue raucous laughter. I have signed a contract with you in my capacity as the Director of a UK Limited Company. A contract in which there are several clauses establishing that there is no employee-like relationship intended, which directs you to pay money into a business bank account and which charges you VAT. Does that not give you a slight hint that I’m trying very hard to be a business and not a temp from Office Angels?

Finally, “Do you consider you are operating inside or outside of IR35?”. Now you really are taking the Michael. We’re using your contract. You set up the deal with the end client, you know the requirement, you know what’s in your contract with them, and you understand how the client views the relationship between me and them. So why ask me? If I am inside IR35, it’s because you put me there, not the other way round.

Ok, so the poor dears are only trying to keep their masters happy and, as usual, de-risk everything as far as they can. Since you can’t actually opt out of the AWR anyway it’s all rather pointless, but if it makes them happy. Although there may be a different slant on this.

If the agencies, on behalf of their clients – who, we must remember, are actually those stout and highly aware souls in the Human Remains department – are concerned about the people they supply being in the scope of the AWR and so able to claim all these interesting extra benefits like holidays, there is a very simple way to prevent it. If you’re in business, you’re out of scope. It says so in the AWR itself.

So, Mr Agent, let’s make sure I am genuinely in business, as best we can, so the AWR can be ignored. This means that firstly you stop the pretence that you have this vast pool of experts at your disposal and you just send a couple of the most relevant over for the client to look at. Secondly that the client will exercise no direction and control over how the work is to be performed, beyond that minimum necessary that all workers will need to follow. And finally we drop all this pseudo-employee-with-multiple-exclusions contractual nonsense and start using simple business-to-business contracts. You know, something along the lines of “YourCo will supply these skills for this period to deliver this thing for which we will pay you this amount of money, conveniently broken down into weekly payments. The End”. It really could be that simple.

Hey, look at what we just did. We killed off IR35 as well. Gosh…

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Consensus Kills by miss_rogue