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Figures on IR35 DO exist. So who’s kidding who?

Figures on IR35 DO exist. So who’s kidding who?

As well as being technically proficient, independently minded and a bit intolerant of rigid work patterns, we’re also a tolerant bunch, us contractors. You kind of get used to having to dig out the truth from the often intentional obfuscation you get from the agencies, the client, the civil service and a host of other places. And you get to recognise some universal truths.

“Cyclists can ride safely on footpaths”. Yeah right…

“All contractors are very well paid”. Well we aren’t exactly running on empty, but we are usually pretty good at what we do, and command a decent rate accordingly. But the average rate for IT contractors as a whole is around £40 a hour these days,which is near as damn it the same net take home as a permanent employee on £40,000 a year; good but not exceptional.

“We require you to opt out of the Agency Regulations”. No you don’t. For one thing it’s nothing to do with you, Mr Agent. It’s not my problem if you’ve agreed a contract with the client that is incompatible with the requirements of an Opted-In contract for me. Since 95% of all Opt Outs aren’t legally correct, from what I’ve seen, why not work on the assumption that everyone is opted in? Ah, of course, then you wouldn’t be able to claim that the workers you supply are your own dedicated resources, would you?

“Opting In is highly beneficial”. Well, is it? The two key gains are guaranteed payment and a time limit on handcuff clauses. The former may have a superficial appeal, but if the agency’s not got any money they aren’t going to pay you anyway. The latter looks nice, but there will be the upper contract between agency and client that almost certainly stops them taking you on for at least as long as the period in your own contract. So where’s the handcuff limitation protection then?

“Retain 85% of your gross with our compliant solution”. Yeah, right. You do until the scheme gets legislated out of existence, the scheme owners do a runner or you discover the scheme doesn’t actually work in the first place. Then again Hector has recently given up trying to shut down some of these schemes because they can’t safely separate out those who should genuinely use them, like pension funds, and those who are taking advantage. Although that won’t stop them trying.

“We need to retain IR35”. Ah, now, hang on a minute. That was Osborne’s position in the last budget, when for a while we thought we had proven that IR35 was not only damaging and spiteful, it wasn’t actually earning any money for HMRC. The case was slightly hampered by the repeated assertion that there are no figures specifically covering IR35 within the ledgers of the Treasury. So we kind of accepted Osborne’s assertion that he needed it to dissuade Friday-to-Monday converts. (This despite one of the more obvious cases being Mr Hartnett, ex permanent Head of HMRC, now freelance Acting Head of HMRC. Didn’t even have to empty his waste bin). And the implicit assertion that since he wasn’t keeping any measure that wasn’t cost-effective, then IR35 was paying its way.

Then, all of a sudden, PCG gets a very interesting answer to an FIO request. It seems those figures do exist. What’s more, they are pretty damning: total case prosecuted over the last five years? Three hundred and twenty two. That’s slightly over one a week. Total revenue gained as a result? Five million, four hundred and forty two thousand, two hundred and ninety nine pounds. A shade over a million a year. Or just under seventeen thousand per case, assuming all were successful, which they almost certainly weren’t. Doesn’t exactly go very far against the one trillion government shortfall, does it…

Ok, so this is interesting. We have been told more than once that no figures on IR35 were being kept. You can even find that in Hansard. Now, suddenly, they have been. Most odd. So who’s kidding who, Mr Osborne?

And who in the previous administration was responsible for the earlier statements. I think we need to be told.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

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

Image: Urban Art by freeflyer09

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