Tag Archive | "awr"

Time to change the world of recruitment methinks


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…?

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: SmiAl – Sad by Al aka pintofeggs

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Modern Britain in a nutshell


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.

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: Ethan Nichtern Banner Illustration by bainesmcg

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Hey, look at what we just did. We killed off IR35!


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…

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: Consensus Kills by miss_rogue

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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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Winning?


I’ve been having a rather quiet week, for some reason, although there have been two notable successes.

Work seems to have hit one of those periodic phases where I’ve done all I can and am now waiting for assorted other (and rather more busy) people to review what I’ve been doing. Of course when they do I go back to not having enough time in the day to do everything, of course. Still it keeps you off the streets.

To fill in some of the yawning gaps in the working day – well, while I’m eating my lunchtime sandwich, anyway – I’ve been reading a series of “Focus on…” briefing papers the PCG has produced in time for the party conference season. These cover a range of subjects, most if not all of which I may have touched on myself in here, from ICT abuse to IR35 to the soon-to-be-infamous AWR.

But the one that is closest to my heart, having been banging on about since early 2003, is the one on Security Clearance. Well not clearance itself, which does exactly what it is supposed to do, but the whole tangled Catch-22 of trying to get it and why it is doing a whole segment of contractors and a whole segment of government work a major disservice by denying access for the former to the latter.

In effect, clearance status overrides competency. No wonder so many public sector contracts go so wrong.

Anyway. The one thing I might take issue with in the paper is the claim by the Cabinet Office that clearance process times are coming down significantly. They quote Cerberus as the reason why: you may recall me talking about Cerberus recently.

OK, so you will forgive the hollow laugh.

My clearance – a humble CTC, mind you, nothing too heavy – finally turned up this week. That’s precisely 147 days since I submitted the original application back in May. Or, to put it another way, a mere 112 days over the stated SLA for processing CTC clearances in 85% of cases. And given I’ve worked several cleared roles over the years, including a stint in the Cabinet Office, you might suppose that mine would have been in the 85% range.

But a slight clue as to what may be going wrong is in the email I got telling me the clearance had come through. We’ve been badgering the client for weeks about my situation and how difficult it is for a one man band like me to work when I can’t move around the building. When they got the nod, they passed it over immediately. At which point I discovered that the clearance runs from 12th of August.

In other words, it’s taken a month for DVA to tell my end client that I’d been cleared. Brilliant…

Anyway, I rush down to the office to get the badge, fill out yet another piece of paper (a blue one this time) and present myself to the lady wot does. “Oh sorry”, says she, “Our badge printer is broken. Can you come back tomorrow?” Aaarrghhh…

Never mind, all done now. My coffee consumption has quadrupled overnight. Success…

Oh yes, the other success. Got off the train last night and was walking through the ticket hall at the station – the ticket hall, note, full of rush-hour people and manifestly not the car park or the approach road – and was confronted by some middle-aged GoreTex-clad loon in a silly plastic hat riding his bicycle through the crowds towards my not insubstantial presence. I was so flabbergasted I simply stopped still in front of him. At which point he suddenly realised I was there and did a sharp left. Straight into one of Mr Brunel’s rather substantial stone pillars. Didn’t do his front wheel a lot of good, although his stupid hat did stop him smacking his head on it. Shame…

Sadly I left before the advancing and rather irate-looking railway official had words with him. But strike one for the pedestrians.

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: RxR bike crash by atlbike

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AWR – instead of clarity we get muddle and greyness


Regular readers – both of them – will have learned by now that if someone ever sets up an Appreciation Society for the benefit of Saint Vince of Cable I am unlikely to be in the queue for tickets. His tenure as Business Secretary has been littered with decisions that seem almost deliberately intended to make the contractor’s life even more difficult than it already is. I doubt he does it on purpose, so we have to conclude that he simply doesn’t think things through properly. Or perhaps he doesn’t pay attention to the outcomes. Well, hey, he is a politician, I suppose.

Consider the Agency Workers Regulations, which are looming ever larger on the horizon. The intent of the original EU-derived ruling was to ensure that low level temporary workers – people who aren’t really in the best place to fight their own corner – are protected from being denied basic rights that are taken for granted by permanent employees; little things like holidays and sick leave and access to the canteen. It has to be said, that is an entirely reasonable and even laudable aim.

As is the way of such legislation, the EU sets the objective and leaves it to the member countries to enact as best they can. So guess what happens when St Vince’s department get hold of it?

Firstly there is a consultation period. They produce a straw man proposal and invite interested parties to comment on it, note ambiguities and errors and suggest any obvious improvements. They consider the responses, redraft the straw man into a final document and that become the legislation.

Except for one minor point. They kind of missed the ever-so-slightly critical point about the scope of the legislation.

Like I said, it’s meant to protect vulnerable workers. Now I am many things but I don’t for one minute consider myself to be vulnerable to being downtrodden. Apart from She Who Must Be Obeyed of course, but I volunteered for that one. So why the hell am I potentially in the scope of the AWR?

It seems that DBERR have been gold-plating the requirement. Specifically, rather than draft something aimed at “agency workers” they allowed it to cover any independent worker, including freelance contractors who, as a breed, are probably the least vulnerable workforce in the country.

And what makes me angry (and No 10, who tried to see if it could be redrafted at the eleventh hour) was that very point was made, clearly and explicitly, in the original consultation. They were told the scope is wrong, it’s not meant to apply to this group but only to that one. But when the final draft hits the presses the only exemption is the somewhat mealy-mouthed exclusion of “those genuinely in business” which, as we know all too well, is not a clearly defined anything. They may as well have said “Those who are either taller, or shorter, than six feet. Without shoes”.

So apart from now facing the risk that our contracts are going to get even more tangled as HR and the agencies try to get around the legislation, we lost the chance for a clear chance to define exactly what is meant as a freelance contractor, as opposed to an agency worker. Given the average itinerant fruit picker is unlikely to own his own company, there is at least one simple and very clear separator. This would have greatly aided various other arguments such as who is caught by IR35. But it is not to be; instead of clarity we get muddle and greyness. A bit like St Vince, in fact. Which is something of a pity.

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: Back Yard On New Year’s Day 2011 by Kerry Niemann

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If you want to freelance then come on in. But make sure you’re good enough first.


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.

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

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Who said that IR35 rules have changed?


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….

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: new world park by Paul Keller

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One day, sanity will prevail. But I suspect I’ll have retired by then.


An interesting idea was floated this week on one of the websites I haunt. Someone was getting just a little exasperated at the identity proving process we all suffer these days, and rather than drive 50 miles to an agency’s offices to show them his passport was wondering if having a Skype video conference with the agent while holding his passport would suffice.

General response was along the lines of nice idea, but these are agencies we’re dealing with so probably not. It’s not that we have any objections to proving we are who we say we are; it is to everyone’s benefit, after all. But the whole thing is getting just a little surreal.

Start with the passport thing. What everyone fails to remember is that a passport is only proof of identity if you are the one holding it. Copies, be they full colour images, redacted black and white scans, video image, even with you in the frame – none of these are proof of anything beyond your skills with a digital camera. You have to be there, holding it, at which point the other guy can take a copy of the photo page – nothing else just that page – for their own records.

And there’s another issue. The more peripatetic contractors – like me, for instance – go through this farce several times a year. Just how safe are all these copies of a Crown documents, I wonder? And how many of them are deleted once they are no longer needed?

And given the quality of most of my communications from agencies, just how accurate are the supporting records anyway? We will never know…

The real irritation, though, is that the whole exercise is totally unnecessary. And, as usual, we have to look to those bastions of professionalism and awareness, the agencies and the Human Remains Resources teams.

Because HR are usually in the loop for hiring contractors, they only think of them as pseudo-employees. OK, that’s an old argument that bores even me, but it’s still true. Therefore the master contract the agency has with the end client’s HR team is framed in terms of employment law. This, among other things, lays fearful penalties on clients who don’t ID check their employees.

Agencies, being at the higher end of the risk averseness scale, take great care not to offend. Hence they go to great lengths to ensure everyone they touch is checked. Except I am not an employee of anyone, I am an independent supplier. I’ve checked the people I send out to work for me and am more than willing to assert that I know who they are and that they are allowed to be here. And take any penalties you care to throw at me if I’m wrong. And since I’m not the agency’s employee – much as they like to pretend we are – and certainly not the client’s, there is no legal obligation to ID check me all over again.

All that has to happen is for agencies to have two contracts with their clients: one for employees, one for freelancers. Do that and not only do a lot of contractual arguments go away – along with 90% of the threat of IR35 and the AWR of course – but they save themselves hundreds of pointless man hours a year which, you might think, would appeal to the bean counters who run most agencies these days.

But far too simple a solution will never catch on. Especially if nobody triers to sell it.

And just to close, how about this for idiocy. One guy was asked for his NI number as well as his passport and “other documentary proof of address” to get a building pass. NI numbers aren’t a proof of anything, as the Home Office is at pains to point out. For one thing, while the numbers are unique they may have been given to, or used by, more than one person. So not really a lot of good to anyone as a proof of anything.

One day, sanity will prevail. I suspect I’ll have retired by then.

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: The Usual Suspects by Dylan Parker

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Am I in scope or not? Nope, no idea…


I‘m spending quite a lot of time these days sitting on the train between home and work. It’s not enough time to do the Times crossword, nor to dig out the laptop and do half a day’s work. Even if it were the “aircraft-style seating” is exactly that, too cramped to allow you to do anything apart from sit and stare out of the window.

Doing that, you can’t help but notice the huge amount of hardware that is spread around the edges of our railway system. There are boxes of all sizes, some with arrays of cabling, some seemingly freestanding. There are odd little plaques on station platforms next to the track with sliders on that serve no obvious purpose. Some boxes are labelled but many are not. And all this on top of all the signals and points and speed limit signs and so on. you expect to see anyway.

And all this complexity so you can get on a train, be moved though a series of connections and arrive within two feet of where you got off yesterday. In other words, that complex infrastructure doesn’t impact on you in the slightest; you can get to where you’re going without having to think about it at all.

So what a shame that same approach doesn’t apply to legislation

I’ve been looking at two different set of documents recently, the clarification of the Agency Workers Regulations and some of the material around the latest position on ICTs. These are complex subjects, admittedly, but in essence the aim of the documentation is to allow you to determine to what extent the relevant legislation affects you personally. And I think both have failed in that aim.

The AWR guidance, apart from containing more typos and grammatical errors than I’ve seen in a hundred other HMG papers combined, is bafflingly opaque on perhaps its most fundamental question: am I as a freelance with my own company in scope of these regulations or not? Nope, no idea…

The reason, apparently, is because the authors want to be able to exclude artificial avoidance measures taken by the unscrupulous. They do this by including lots of fuzzy wording that’s open to interpretation. So to pursue the railway analogy, the points may be set to take you to Wales, but you may still end up in Cornwall. Why, nobody knows.

It’s the same with ICTs. The criteria are clearly stated: for example, work here for up to 12 months and you have to be paid £24,000 a year in salary. Except they haven’t defined “salary”, they haven’t defined what allowances go to make up that salary and some of their attempted clarifications are actually mutually exclusive.

Now these documents have been written by clever, educated people who have a solid grasp of the matter in hand. You have to conclude that the ambiguities in the documents are deliberate. You may accept that this is to minimise the risk of avoidance of the rules, but I’m afraid I don’t. As I said to my previous MP when debating the Arctic case, the best way to avoid people breaking the rules is the make the rules binary. You can’t really apply uncertainty theory to a set of points and expect to end up on the right track.

All in all, it’s a hell of a way to run a railway.

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: Fishers of people by LivingOS

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What sort of budget would suit online accountants?


A number of leading organisations are calling on George Osborne to deliver a budget that supports small businesses such as contractor accountants.

Recent research from BDO found that business leaders in the UK want the coalition to speed up its plans for simplification of the tax system and concentrate on helping entrepreneurs, rather than big multinationals, in the budget.

66% of business leaders think the coalition should accelerate its plan to reform the business taxation system and make it fit the needs of all UK firms.

Respondents to the survey were also asked what measures the chancellor should take to reduce the deficit. 50% favoured more public spending cuts but very few thought the solution was to increase taxes such as income tax or VAT.

However, when the economic situation improves, 41% of business leaders believe a cut in personal taxation should be prioritised. 35% said further measures should be taken to reduce the deficit and only 6% thought a cut in corporation tax was a priority.

Stephen Herring, a senior tax partner at BDO, said the results highlight that there is an urgent need for business tax reforms to drive business growth across all sectors.

The REC has written to George Osborne asking him to make sure the Budget really is a ‘Budget for Jobs’. The letter builds on the themes of the REC manifesto to remove the barriers that are prohibiting growth and deliver opportunities and jobs.

In particular the REC suggests avoiding any increase in business taxes, implementing an NI holiday for SMEs that hire young people and scrapping the National Insurance increase. The Confederation also calls on the government to do all it can to smooth the AWR implementation and promote flexible working.

The ICAEW says the chancellor should concentrate on long-term growth plans rather than quick-fix solutions. In order to achieve this, he should develop a simpler taxation system, a better approach to supporting enterprise and a highly-skilled, socially mobile workforce.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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Gold-plating of EU directives is to stop immediately


Shortly before Christmas, the Business Secretary Vince Cable, promised to help British firms compete better against their continental rivals, by cutting European red tape.

The Government plans to stop the “gold-plating” of EU directives in cases where implementation goes beyond the minimum standard decreed. This new policy will take immediate effect.

In future, the text of European directives will be written directly into British law and will mean that the UK’s interpretation of the law is not unfairly restricting British businesses and limited company contractors. Additionally, every five years ministers will review the European directive legislation and will consult with businesses on the application of the rules.

The ARC has welcomed the coalition’s move, saying it will help businesses in the UK compete fairly. Chairman Adrian Marlowe said that nobody has asked for favours, but by helping Britain compete, the way is set for greater employment and prosperity.

Copying EU directives directly into law without adding interpretations makes sense and this should ease the problems of actually implementing the regulations. EU legislation is not subject to open debates unlike UK led regulations. Legislation, such as the AWR, will be able to pass straight into law without parliament voting on it.

Marlowe explained that the Agency Workers Directive contains “gold-plating” that is not essential under the EU directive and this has put both recruiters and employers at a disadvantage.

Marlowe also pointed out that the use of agreements between social partners causes concern. A few organisations get disproportionate authority and if this device continues to be used he urges Mr. Cable to make sure the entire process is open and transparent.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

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