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Contractors to be affected by new government guidelines?

The Government’s newly published red lines for its IT contracts could have major repercussions for freelance workers when it comes to taxation, sources say.

Cabinet Office minister Francis Maude just came out to announce that since there’s not enough competition when it comes to the public IT sector the Government has seen fit to publish new guidelines. The new rules are also supposed to be a cost-cutting measure for the Government by giving it the freedom to get out of overly long and needlessly restrictive IT provision contracts, limiting their duration to two years or less and limiting their value to £100 million or lower except in highly specific instances.

On the one hand, these new guidelines should encourage smaller firms as well as freelancers and contractors to bid on government contracts. Of course there are a few problems with this plan if you ask me, one being that this might start out as a simple cost-cutting measure but the amount of red tape it could generate is simply massive. If you think about it, the one advantage of larger IT firms handling longer-term and wider-scope contracts means that there are fewer overall contracts active at any one time, and there are only a handful of firms actually working on these projects. That means fewer overall points of contact, and longer contracts means firms know the systems – and the personnel – they liaise with within the Government very well. This keeps disruption to a minimum and overall guarantees some rather smooth sailing.

Then again, long contract terms can definitely breed complacency amongst firms, especially when there are absolutely ironclad contract terms that simply make it impossible for the Government to rid themselves of less-than-admirable service. Shorter terms will definitely rectify this in a major way, and with the increased competition this will also bring the quality of service back up – but I simply have some serious misgivings about limiting the size and scope of these contracts as well. Maybe it’s just me, but I don’t relish the amount of paperwork all these additional smaller-sized contracts are going to generate, regardless of whether it means better tax revenue for HMRC!

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