With just over two weeks until the general election, leading contractor accountant Kate Cottrell takes a look at the main parties’ manifestos, and in particular any promises for contractors and IR35.

We have had a couple of weeks of side announcements from the main parties including numerous plans to cut IT projects, cut contracts, cut recruitment and to curb the use of consultants in the public sector. We have also seen “landmark commitments” to “review” IR35 but what do the main parties manifestos say?

Labour

Labour has of course given us a limited insight into their future plans with their budget last month which contained little for contractors. On 14 April they also published a “Tax Framework for Business” in which they have set out how they will work to understand and respond to the views of business. In their drive for a sustainable tax base they have 5 stated principles, competitiveness, fairness, minimising distortions, simplicity and stability and certainity. Of these principles perhaps stability and certainty could hold a promise for contractors and IR35.

However the document goes on to explain that this principle means they would avoid unnecessary changes to tax legislation and where a change is necessary they will try to adhere to a tax-policy making process. The document also clearly states that they will also explain their reasons if they cannot adhere to this process! Labour’s manfesto talks of “creating a shareholding society” along John Lewis lines by reviewing barriers and widening share ownership which is directed clearly at employees. Labour will also consider the construction industry again by extending the Gangmasters Licencing Authority to this sector. Finally Labour are committed to enacting the Agency Workers Directive in full. All in all little for contractors and no mention of IR35.

Liberal Democrat

There is more detail in this manifesto in terms of the figures but again little gain for contractors apart from the proposed increase in the tax threshold to 10K which would impact mainly low earners. The LD’s are calling for a level playing field for business with a promise to review regulations and red tape and in particular a committment to “one in one out” for new legislation and to consult on everything.

We must not forget that it was the liberal democrats who tabled an early day motion for the repeal of IR35 but I understand that many of those who signed and their researchers are considering this again in light of the significant deterrent effect of IR35 and the large sums currently generated from umbrella companies. A more worrying point in this manifesto is a committment to further new powers for HMRC to tackle tax avoidance and tax evasion. As many will know HMRC has been given unprecedented powers and penalty provisions under the current government and the suggestion of more to come is surprising.

Conservative

The Conservative’s manifesto is very business focused and if elected we will quickly see an emergency budget with the removal of the NIC increase. Commitments on small business rates, reductions in corporation tax, moving some of the unemployed to self-employed and cutting costs for bidding for government contracts are all mentioned, as is the introduction of a new Office of Tax Simplification. Apart from the removal of the NIC hike it seems that we will have to await the publication in the first budget of the Conservatives “5 Year Road Map” for timescales on all the other issues and in particular the new Simplification Office tasked with the job of reform.

The Conservatives also commit to giving the public the opprtunity to force the worst regulations to be repealed. The manifesto does not mention IR35 but a committment to review it was given in a side letter. However it seems likely that this will, if taken forward, be a job for the new Simplification Office so could be a long way off.

In summary we have lots of pledges to reform and review from all the parties. Whoever is elected any reforms will of course all come down to the state of the public finances which would suggest that there is a lot of pain to come. None of the manifestos mention IR35 and if we do eventually see lower tax rates and the repeal of IR35 then we can also be certain that contractors will be paying a lot more tax under some other initiative introduced under the banner of fairness and simplification.

Kate Cotterell is Managing Director of Bauer & Cotterell.
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Image: Using a Magnifying Glass and Driving by Mike “Dakinewavamon” Kline

So our Beloved Leader has finally allowed us an election. Good news on several fronts. I make no secret of my desire to see the end of the current Parliament in general and our sitting PM in particular. But before we all get drowned in claim and counter claim about who is best suited to lead us out of the crisis we find ourselves in, I thought I might just remind people why I, as a humble one-man-band contractor, dislike this government quite so much.

Firstly, the iniquitous IR35. Brought in by someone who refused to pay a legally imposed tax to address a problem that didn’t exist and so badly framed only a court could decide if it applied to you or not. So you buy insurances and pay for contract reviews and live in uncertainty, or you go use an umbrella and pay a load of taxes you almost certainly don’t actually owe. Meant to bring in £400m a year, it actually generates around £1.5m. Brilliant work chaps.

Then they killed off MSCs. Not a thing that bothered me, to be honest, but I know of people who were trading perfectly correctly through them who had to shift to a different model.

Then we had the Arctic case, trying to apply the clearly defined S660a legislation to a situation it was never meant to cover and which, in fact, was positively endorsed in the House (by a Tory chancellor as it happens…).

Then when they lost that one they immediately produced the fully-formed Family Business Tax (or Income Splitting, as they termed it). That has never actually gone away, but at least the lobbyists were able to demonstrate just how poorly thought out and generally unworkably ridiculous the whole idea was. So that never saw the light of day, thank God and the PCG. The latest one is the Agency Workers Directive, another piece of EU-inspired nonsense that has a genuine purpose at heart but once again is so badly enacted you still won’t know for certain if it applies to you.

And underpinning that catalogue on ineptitude is the constant failure to distinguish between avoidance and evasion (hint: only one of them is illegal, Gordon), the joyous embracing of selling our IT industry abroad by failing to manage the abuse of the ICT system, the wholly unacceptable retrospective change behind BN66 and a raft of smaller but equally rubbish rules and regulations that blight your working life.

So all in all, I hope never again to hear a dour Scots voice telling me all this grief is in the interests of fairness. It isn’t, it’s in the interests of a discredited socialist agenda that’s wrecked the country and cost me a lot of money for no benefit whatsoever.

So farewell, New Labour. Whoever or whatever replaces you, at least the only possible direction is upwards.

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It was only a matter of time before HMRC launched an all out attack under the Managed Service Companies legislation – it would now seem that time is up! Some of the big providers have already fallen and the rest will soon come under fire.

The number of enquiries into providers has more than tripled in the last month, and I am reliably informed by my source within HMRC specialist unit that we can expect to see much more HMRC activity in the coming months.

The problem for limited company contractors

What many providers fail to warn contractors is, if they set you up with a limited company, administer the limited company for you, have involvement in your company’s activities or dictate your salary, expenses and dividend levels it is likely your company is a managed service company and your company is liable. It does not matter if the provider was based offshore or not (and in all likelihood the provider will have gone into liquidation anyway so HMRC have no hope of recovering money).

HMRC’s first port of call is the managed service company – this is your company. If the company is unable to pay the debt the next party in line, under the transfer of debt rules, is the director of the limited company – you personally.

A common misconception across the board is that if the third party administering the limited company is an accountancy practice then the Managed Service Companies rules do not apply – this is a fallacy there is no outright exemption for accountancy practices.

If you have already received a letter from HMRC’s or you are currently operating through a limited company where a third party has more say over your company’s finances or activities than you do then you need to act now – get advice from an expert, do not rely on your provider!

Any problems for non-limited company contractors?

While umbrella workers and those working through a self-employed model may not be directly in the line of fire under the managed service companies legislation they must remember that they themselves are personally liable for their own tax affairs (even if they provide their services through an offshore provider).

If your umbrella company is processing expenses you have not incurred – you are liable for the unpaid tax, not the umbrella company.

If your self-employed CIS company is not deducting CIS tax when it should, or encouraging you to claim expenses you are not entitled to you are liable for the unpaid tax.

Are any safe?

Not every provider is operating incorrectly but many are and, despite any assurances to the contrary, contractors are in the frame for the unpaid tax. Investigate, investigate, investigate! Do not simply take assurances that providers have counsel’s opinion or that they have been approved – this counts for nothing when HMRC come knocking on your door.

Ask for explanations on every document you are give, ask to see copies of the tax advice received and talk to other contractors about their experiences – at the end of the day if it looks like a tax avoidance scheme, it probably is; if it looks too good to be true – it probably is!

David Harmer is the Operations Director of Accountax Consulting
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Contractors may have breathed a sigh of relief following the pre-budget report having found little changed. However can any tax payer really expect to pay the same tax/NIC post general election?

Considering the state of the UK’s finances the answer has to be a resounding no. The electioneering has begun and we hear calls from one party for a £10K nil rate tax band, accusations from the current incumbents of a forthcoming class war but the emphasis from all three main parties is clearly on fairness.

IR35

Public campaigns for the repeal of IR35 have so far failed. If they had succeeded it would be unrealistic in the extreme to expect in its place a system where less or even the same tax/NIC is generated from those operating through limited companies.

The Agency Workers Directive (AWD) calls for a definition of the genuinely self-employed and suggests that those outside IR35 would also be outside the AWD. This new legislation presents a real opprtunity for end clients and agencies to understand and address the issues of employment status. We could at last see an end to engagers who want all of the controls over the freelancer as an “employer” but with none of the responsibilities that an employment relationship brings. The AWD in its current form also addresses the perceived unfairness with regard to employment rights for those inside IR35.

Umbrella Companies

Arguably expenses for Umbrella users were saved thanks to the Daily Telegraph! The future is the flexible workforce and there is still an important role for umbrella companies to play. HMRC has fired several warning shots regarding Umbrellas use of over- arching contracts of employment and it seems there are numerous ones out there that do not work. Returning to the issue of fairness and the fact that agency workers generally cannot claim expenses the Umbrella user may find him/herself in the same position as the PAYE agency worker.

Changes

Brace yourselves for a change of government, an emergency budget and more tax to pay.

Opportunities

New regulations bring opportunities for education and better understanding of employment status issues by all the parties in the contractual chain which is good news for Contractors.

In the meantime we still have IR35 and Umbrella expenses schemes and HMRC is very much out there using its new powers and spending its enormous budget on compliance work. 2010 is going to be a year for all contractors to take notice of the changes and the opportunities and consider their positions accordingly.

Kate Cotterell is Managing Director of Bauer & Cotterell.
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With Christmas just around the corner, it’s seems the Government have thrown themselves well and truly into the festive spirit.

Umbrella company contractors will be pleased to hear that the new rates for maternity, paternity, and statutory adoption pay will rise from £123.06 per week to £124.88 from 4 April 2010.

This is good news for those planning a baby, and particularly surprising given the fact that the official RPI for September was -1.4 per cent.

The new rates, which have just been announced by The Department for Work and Pensions (DWP), were published through a fairly low key press release. Indeed, several commentators believe that the changes have been so badly publicised, many small businesses will remain blissfully unaware of the announcement.

Steven Tucker, director of The Payroll Site, can’t believe the government was so poor at promoting it’s own positive news. “This will be really welcomed for many employees but the actual announcement was buried on page 13 on an attachment to a press release about pensions. I mean, why bother?”

Limited company contractors and contractor accountants are being advised to check their payroll software to ensure the new rates are set-up from next April.

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With the PBR set for 9 December, it will be interesting to see what changes the Chancellor makes to help struggling contractors, operating either via their own limited company or through umbrella companies.

Unfortunately, I don’t see the Chancellor providing any early Christmas presents to us. With the country in debt for approximately £200 billion, it’s inevitable that the Chancellor is going to have to use his speech to tell us that we are all going to have to pay more to bail out the country. The question is, will contractors have to pay a disproportionate amount?

A few predictions:

VAT provides a vast source of revenue for the government and I wouldn’t be surprised if this is increased to 20%. This could provided additional revenue for contractors who have registered under the terms of the Flat Rate VAT scheme – so potentially good news!

Restriction of company losses – If the government restricted losses so that they cannot carried forward and used to reduce future profits, when times improve, all limited companies would be required to pay more tax.

NIC increases – It would seem logical that we will see an increases in NIC. My guess is that the employer rate will remain as is at 12.8%, but an increase to the rate payable by employees earning above the higher rate. At present, NIC is payable by these employees at 1% on the top slice of their income. How high would the Chancellor go – 2.5 or 3%? This will impact more on umbrella contractors, as those running their own business can still use dividends to reduce their overall tax bill (subject to IR35).

So how will it be for contractors? Overall I see the Chancellor taking his pound of flesh equally from employed contractors as well as those running their own businesses. Therefore, the gap between umbrella contractors and limited companies will remain equal. However, the “net” income earned by both groups each will, unfortunately, go down.

Here’s hoping I’m wrong!

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The quick answer is that it doesn’t in the slightest and has no impact on your take-home…

Any company that repays business expenses to its employees has to account for how that money is spent and how the associated VAT has been dealt with. The usual way to do this is via some kind of proof of purchase, usually in the form of a VAT receipt or payment slip. This provides the necessary audit trail should HMRC challenge any particular item of expenditure.

However, managing and copying those receipts for even a fairly modest workforce can become a headache. To save everyone’s time and effort, companies can apply to HMRC for a dispensation to stop having to supply copies of receipts to support their P11D submission. Instead they undertake to verify all claims made and certify that the figures they supply to HMRC at year end are accurate and supportable and have been verified.

So how does that help the umbrella user with their expenses?

Actually it doesn’t make the slightest difference. The dispensation often quoted by Umbrella companies applies to their dealings with HMRC, not yours. They may decide to take your expenses at face value and not insist on seeing receipts to support your claim, but there still needs to be an audit trail. If an investigation in to an umbrellas P11D return is launched, HMRC may well be asking you to prove your claims and if you are seen to have claimed for things you should not have, then it will be you facing the penalties. As a result you are required not only to ensure your claims are correct but that you retain the proof, for up to six years.

The umbrella may use the “no receipts required” line to sell their services, but the reality is that it is entirely irrelevant to you. HMRC recognise this and in 2008 launched a crackdown on Umbrella Company dispensations, threatening to remove any that it found to have broken the rules. This was a serious threat and umbrellas have largely stopped stressing their Dispensations and “HMRC Approval” (another irrelevant myth) as a direct result.

Remember always that if the Umbrella gets it wrong, it’s you who has to pay the bill.

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Umbrella companies have been around in one form or another for a while, but only really came to prominence with the advent of IR35 in 2000.

The idea is that if, under IR35, you are going to be paying taxes at the same level as a permanent employee, why have the additional hassle of running your own company, or of being employed by the agency with the limitations on finding work that implies. Using an umbrella simply removes all such issues, making getting paid a much simpler process.

Of course, this only really applies if you believe your engagement is caught by the IR35 rules. If it is not, the savings through using your own company are significant. However, for now we will assume you are in fact inside IR35.

There is still a small saving to be made by using your own limited company, since you won’t have umbrella fees (although you may have roughly similar accountancy ones instead) and you can keep 5% of your gross to cover the basic cost of running the company. Nevertheless, the overall sums involved are comparatively small and can probably be disregarded.

By using an umbrella, you do not have to worry about payroll calculations, VAT calculations, completing assorted tax-related returns and managing company bank accounts. You do not need to go through the process of setting up your own company, getting a business bank account and registering for VAT. In other words, you can start contracting very simply with minimal preliminary work and can focus on doing the job you are being paid for.

As a result, umbrellas are ideal solutions for people new to contracting, for those who are unsure that contracting is the way they want to work long-term, and for people who are only going to be contracting for a few months, possibly in parallel to another job entirely. They also suit people who genuinely don’t want the bother of running a company – although in reality that is not that onerous for most contractors – and who do not want to be concerned about their IR35 status; as an umbrella user you are effectively an employee and IR35 cannot apply.

But step outside IR35, or decide to take up contracting full time, and you might then like to think about setting up your own company.

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So having decided to go with an umbrella company, the next problem is to choose one. There are many to choose from and you need to do some research.

The following list of questions will help you decide which ones are those you can trust with your income; especially if you already know the “right“answer.

How many clients do you have?

Although by no means a guarantee of good service, clearly if they have a lot of clients they must be doing something right, they must have been around a reasonable length of time and be fairly stable financially.

How do you calculate your fees?

Be wary if they base their charges on your contract rate as opposed to simple weekly or monthly fees. They do the same amount of work no matter how much you are earning, so ideally they should charge a flat rate.

How much are your fees?

On the face of it an obvious question, but some will quote gross fees and others net. Fees are in effect a taxable expense, so can be quoted either with or without extracting the tax element. Neither is wrong but post-tax quotes are dependent on your exact tax position and may vary over time, so gross fees, although apparently higher, are more reliable indicators. Be sure you are comparing like-for-like.

How will you pay me?

Many will use BACS payments into your personal account, which can take a few days to process and clear. Some use CHAPS for near-immediate payment, although you may have to pay extra for it. Hopefully not many will use paper-based payment systems these days.

How often will you pay me?

Weekly is good, monthly is acceptable, any more than that is not. Ensure that you get paid against your proof of work done; it is not your problem if they or the agency have not been paid by the client.

How much will you pay me?

The usual rule is that the umbrella will take your gross income, deduct their fees and any allowable expenses and calculate your PAYE and NICs on the balance. As a rule of thumb, you will be lucky to keep much more than 70-75% of your gross unless you are paying out quite a lot above average on expenses. You are, after all, being taxed as a normal employee, using the same rules. If the umbrella is saying something significantly above this level – 85% is the usual offer – and can’t explain how, or start talking about expenses, walk away.

What about late payments?

Be very sure you understand what your contract with the umbrella says on this subject, what the actual contractual payment terms are and who is responsible for chasing up outstanding amounts; not all umbrellas will do this on your behalf.

What about expenses?

Be very wary of any umbrella that starts quoting “dispensation schemes” and “HMRC Approved expenses”. They may well have these, but they are to do with their business, not yours. You can claim any expenses the umbrella will allow you to; these will usually be all those associated wholly and exclusively with doing the job and those rules are the same for all freelancers. Some umbrellas may have set amounts for certain expenses such as overnight stays, but at the end of the day you are personally responsible for paying the correct amount of tax, and can only claim for money you have actually spent. Be certain you know the umbrella’s position on this whole area and walk away if you have any concerns.

What other extras will I be charged for?

Employers’ NICs will be deducted by the umbrella (usually their charge to the agency/client will have a small uplift to cover this cost). Because of various employment rules and regulations, the umbrella must also make provision for things like holiday pay and pensions. You may need insurances such as Professional Indemnity; if these are provided by the umbrella they may be chargeable. Make sure you understand what additional charges will be made. At the end of the day, everything will come out of your gross contract income.

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On Remembrance Day I had an appointment with senior officials of HMRC in Parliament St London – a stones throw from the Cenotaph. The meeting was concerning the coding of expenses incurred in travelling to temporary workplaces.

This is of major concern to employees who work directly for an end user and have to fund their own travel expenses, either in whole or in part, from their income. This will not normally concern employees who work through umbrellas or via their own companies as their expenses are reimbursed by their employer and as this website is generally aimed at contractors who work in that manner there may be no direct relevance to individuals but what I have to say is more widespread and may affect us all at some stage.

In 2006 I retired after 39 years distinguished (?) service with HMRC. I hired the Council Chamber of Chester Town Hall for my retirement “do” and there were one or two senior members of staff present. Now, your retirement “do” is the only time that you can say what you feel without fear of any come back at a later date. I did the usual thing of saying that the department that I was leaving was not the department that I had joined etc etc but, with the utmost sincerity, I said that the one thing that had upset me more than anything else was the deterioration in the standard of service that was being provided for the general public.

On and off for a number of years I managed the HMRC office in Chester and of particular concern to me was the level of service that we provided to the general public. I was of the opinion that a person could telephone without actually leaving their armchair – to write and post a letter involved considerably more effort but if a person took the time to leave their home, to travel into Chester and to call in at the office then I was of the opinion that the least we could do was to respond promptly by providing that person with the best possible service. Over the years leading up to my retirement in 2006 that standard of public service was in decline.

In my retirement speech I said that my aim had been for Chester to provide a service equivalent to the football Premiership Division but unfortunately the then current standard of service was now Fourth Division – Chester and District Sunday League. Those were my words and they didn’t go down too well with the senior officials present but – tough – unfortunately that is the way it was – my main concern was that the fourth division of the Chester and District Sunday League would accuse me of dragging their reputation down by likening them to the tax office service to the public.

Back to the meeting at Parliament St last Wednesday – it became apparent that a new HMRC computer system (hereinafter referred to as “it”) is being introduced as from 6 April next year and will have, built into “it” certain, but limited, parameters. “It” will not, for example, recognise that a person has changed employment. “It” will know that a change has occurred but “it” will not take that into account when determining the PAYE code.

This can have a serious affect – for example – you work directly for an end user and incur allowable, but non-reimbursed, travel expenses of £10000 in 2009/2010. In September 2010 you submit your 2009/2010 self assessment tax return containing that claim – your 2010/2011 code (the code for the following year) will be amended to include £10000 expenses even though you may have changed jobs and are not incurring travel expenses. Your code will be amended just the same and the onus will be on you to ring the tax office and get them to put it right – except they have already got it wrong. Say you are liable at 40% and the code change happens in October – half way through the tax year – you will get a repayment of £2000 to which you are not entitled. If you let it run throughout the year you will get tax relief of £4000 – you will be £4000 underpaid and HMRC will want it back.HMRC are public servants but this, in my opinion, is not serving the public and when I pointed this out to the HMRC reps present and compared it with what happened years ago when the public were served I was told that HMRC do not provide the Rolls Royce service that they provided in the past.

I was told that HMRC staff have been cut to the extent that standards have had to drop and that the new computer will mean that even more staff can go ……..When I had overall charge of the public counter at Chester I aimed to provide a Rolls Royce service – I think that most of the time we did very well – it was workmanlike and on the whole more than met expected standards – probably a Ford Cortina. What HMRC have now isn’t Rolls Royce – it isn’t a Ford Cortina – it isn’t even a push bike with a motor – it’s a pogo stick..

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While it is fair to say that IR35 will have an impact on your own net income, quantifying exactly how much impact is not that simple, since there are several variables. You can, however, compare the overall results in general terms.

There are basically four ways to get paid as a freelance contractor: under normal PAYE, either on a fixed term contract or as an agency employee, through an Umbrella company, with your own company operating inside IR35 or with your own company operating outside IR35.

Normal PAYE

Whether you are on a Fixed Term Contract – essentially a normal employment contract but with a pre-agreed termination date – or are employed by the agency who found the work, you will be treated as a normal employee for tax purposes and pay all the usual taxes and NICs. Expenses are very much at the discretion of the employer or agency, but will be limited.

IR35 cannot apply and hence has zero impact.

Umbrella Company Contractor

You are in effect an employee of the umbrella and so IR35 cannot apply. Once again, you pay full PAYE and NICS on your income. However, out of your gross you also have to pay Employers NICs (usually the contract rate will have been raised to cover this cost) and the umbrella’s service fees. You can, however claim various working expenses that will reduce your overall tax burden; in effect the costs you incur by working become tax-free income. Beware, though, that all such expenses have to be justified and verifiable and treat claims by umbrellas that they have generous expense policies to increase your take-home with a degree of caution. The umbrella will also make other deductions to cover various statutory requirements such as holiday pay and pensions

The end result is you will take home more net income than straight PAYE, precisely how much depends on your level of working expenses.

Own Company inside IR35

At its simplest, and starting with your gross income from the contract, you can deduct 5% to cover operating costs of having your own company, allowable business expenses such as travel and equipment costs, Employers NICs paid during the year and any salary paid during the year. The balance remaining is the “Deemed” income and is liable to full PAYE and NICs.

In terms of overall impact, you are paying tax on 95% of your gross rather than the 100% if you are working through an umbrella, so there is a small benefit to this approach.

Own Company outside IR35

You can set a salary level of your choosing and then take any post-tax profits in the form of dividends, which are not liable to NICs. Setting a gross salary to the same as the tax free personal allowance therefore means you can save significant amounts of taxation. You offset salary payments, working expenses and other costs such as training (which is not allowable under IR35) and pension payments against your gross, pay Corporation Tax on the net profit, the balance being the amount available to you as dividends. You can also leave some or all of those profits in the company for later years.

The overall impact is that you will retain a higher percentage of your gross income than through any other route. However, it does mean that you have to be certain of your IR35 status.

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With the delay of the Agency Workers Directive (AWD) until October 2011, there is at last some relief for contractors. Make no mistake, AWD as drafted would have a big impact on contractors given that agencies and end-clients would be forced into processes that would at best delay placements and at worse, remove some of the roles available.

But it’s only a temporary relief, October 2011 is fixed in stone but at least there is time to plan properly and get all our heads around it. The really ironic thing for umbrella contractors is that much of what AWD tries to do (equal rights with permanent employees) is already provided by businesses like Parasol. On the other hand some contractors don’t want the same rights as the “permie” but because Europe and UK Government can’t differentiate between true vulnerable workers and contractors then everyone is caught.

I would still urge everyone to lobby the government to push the point around understanding the labour market in the 21st century as without continued focus everyone will be classed as “vulnerable”. Make no mistake, I am no advocate of exploiting workers and some of the previous practices are rightly condemned but we seem to be blindly lumping everyone together because Europe don’t “get” contracting and the UK Government are scared to define anything.

I understand the last point to some degree, they will be concerned that sharp operators will find a loop-hole and that’s another reason why umbrellas (who mainly employ professional contractors) are caught specifically.  It did not make a world of difference to Parasol contractors as we have a very robust employment model and a true accountancy practice but of course, by association we get pulled in.

So business as usual for us all in a time when that does make sense for a change. Contractors can get the roles that are coming up, agencies can plan and end clients won’t be hassled for pay rates and conditions, well not yet anyway.

I have a long held belief that UK plc is stuck between two camps and never gets clarity as a result. As a member of the EU we are held to some of the social chapter practices that don’t work for our markets. We also try to be entrepreneurial yet quite often go too far with that too (banking anyone?). AWD is a good manifestation of that problem, socially driven with the desire to protect workers not getting rights (a good thing) versus some complicated carve outs to try and allow the UK to function (excluded if you work for less than 3 months on one client) for our more flexible approach to business.  So we are stuck between the two and guess who ends up paying?

A braver person may have produced a definition of worker and a framework to prevent abuse (that’s what we lobbied for).  That’s an opportunity missed in my opinion and AWD will loom in the background as a distraction we could all do without.

Rob Crossland is the Managing Director of Parasol
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