Contractors Group IPSE Finished Says Contractor

8
1136
Contractors Group IPSE
Contractors Group IPSE

Contractors Group IPSE

It seems that contractors group IPSE are in a bit of a crisis according to this contractor who is currently a member.

The fact that their definition of a contractors in business on his, or her, own account almost matches the Government and HMRC position, doesn’t count.

ad

It may even exclude most of the members they purport to represent.

Anyway, here is what one contractor has to say.

IPSE At an End as an Organisation

I believe IPSE’s days are over.

At the moment, I currently pay my IPSE subs yearly partly to provide defence against an HMRC investigation or other losses.

I get my contracts negotiated and working practices reviewed, so should never need them,. However, I have the kind of luck that deems I will be that one in a million.

However, in a year or two’s time, when this government decides all contractors are inside IR35 by default, and contractor clients are so risk averse they will only employ contractors as temps on zero hour contracts similar to a warehouse stock picker at an internet retail company, what use will we have for them then?

Providing Historical IR35 Defence

I will pay my subs for another 3 or 4 years to provide historical defence and then that’s it.

No more IPSE membership.

What’s the point?

Should I carry on paying £300 / year just so I can get 4% off at Sainsburys – or a slightly discounted Dell laptop? They’re not one of the more desirable ones, either.

Nope – IPSE has a few years of life left to it, then I suspect membership will fall off a cliff.

There will be no more point in being a member.

And it’s IPSE’s own fault for being so ineffective, naive (to government “promises”) and having a romantic idea of contractors.

IT Contractor Comment

The Matthew Taylor Report, commissioned by Prime Minister May and Chancellor Hammond, will come out in June.

From Press Reports it seems that it will make the definition of self employment far more strict.

Already it would seem to most contractors it is strict enough.

Indeed, 40% of those in the private sector, who previously operated using personal service companies, are now defined as inside IR35 by HMRC’s new online IR35 Employment Status test.

So, what are contractors group IPSE going to tell Matthew Taylor as regards their contractor members?

IPSE Demands on Government Over Self Employment

IPSE are demanding that the Government, via the Matthew Taylor report’s definition of self employment should base self employment around the following:-

  • Having autonomy in their work. For freelancers this means the ability to send substitutes and for there to be no requirement to do work outside what is agreed
  • Having control over working arrangements. Self-employed people are able to decide how to complete their tasks and the hours and location they choose to work in
  • Taking on business risk. Self-employed take responsibility for their finance and tax responsibilities and can be paid on a per task basis
  • Level of independence from clients. This would include things such as having to wear a uniform or using your own tools and equipment to complete your work.

IPSE’s Self Employment Definition Excludes Most Contractors

This will exclude the great majority of contractors who work on projects on a freelance basis.

It will probably exclude the majority of IPSE’s members.

Most contractors are not able to send substitutes. This is a crazy rule anyway.

Most contractors get instructions on what tasks to do, and where and when they should do them.

Most contractors don’t earn money on a task basis but for a set period like three months or six months.

Also, most contractors don’t use their own tools and equipment to do their work. The vast majority of them don’t own a vast networked computer.

Who’s Side are IPSE On?

Yet contractors group IPSE are telling the Government that they agree with them that these contractors are not in proper self employment. They are basically saying that these contractors are disguised employees.

That’s despite many of them operating for years as contractors – and paying contractors group IPSE’s membership fees.

It seems that some IPSE members are more equal than others.

They appear to take a Basil Fawlty type attitude to some of their ‘guests’ i.e. those they used to deride as ‘bums on seats’ contractors. Although they don’t turn down their membership fees.

Shouldn’t representative trade bodies represent their members – all of them?

You wouldn’t find trade unions, like Unite, throwing their members to the wolves.

It’s easy to avoid defeat by the Government if you more or less take their line on what a contractor is.

Is Contractors Group IPSE Finished?

Is IPSE finished as an organisation?

It’s hard for me to say as I am not as close as this reader is to them.

However, if they continue to lobby on behalf of only some of their members and take a similar line to the Government and HMRC on which contractors are really self-employed, you wouldn’t expect those members excluded to continue to pay their membership fees.

40% of contractors in the public sector, who previously used limited companies, are no longer considered contractors for tax purposes.

The figure is 95% to 100% at HMRC for their contractors.

Private Sector Contractors

If the same thing happens in the public sector next year, as some analysts predict, this will decimate the private sector too.

And then IPSE will be mainly just insurance salesmen for a smaller and smaller bunch of what they would call real contractors.

It’s about time they get their fingers out and start fighting for all of those members of theirs who currently operate through personal service companies.

See also IPSE Government Collaboration Will Make Most Contractors Inside IR35.

End

Ad for Contractor Services

If you want to cut your Accountancy costs by using apps, while still getting a personal service, try Aardvark Accounting.

If you do need an umbrella company you could try one of the following:-

Simply Umbrella

Public Sector Umbrella Company

For Mortgages specially designed for contractors try Specialist Contractor Mortgages.

 

ad

8 COMMENTS

  1. “Most contractors are not able to send substitutes.” – you’ve just thrown away one of the three pillars of defence away, Gerry.

    “Most contractors get instructions on what tasks to do, and where and when they should do them.” – you’ve just thrown away another of the three pillars of defence again.

    So, anyone who takes anything you say as right, then you’ve just thrown most of them under the bus if HMRC listen to you. Thank goodness they don’t or your ill-informed drivel would destroy the way all work in one quick go.

    • In waht virtual reality world do you live John? Probably the same one as IPSE. I’ll bet that the number of contractors who have successfully invoked the substitute clause in their contracs would be miniscule. IPSE should be representing all their members and not just the minority who fit in with their idea of what a conractor is. They are more or less agreeing the Government’s definition of a contractor – which excludes most current contracors. What I am arguing is that those who work on IT projects, who are given work by the Project Manager, and doing a similar job to permanent staff but on a contract basis and not able to use a substitute are, still contractors. IPSE, HMRC and the Government argue that they are not contractors. Yet the majority of at least IT contractors operate this way. Who is helping and supporting them? Why are they taking membership money for a freelancers organisation from them when IPSE believe that they are not really freelancers but disguised employees?

  2. The definition of employment was set in the sixties in RMC. That’s the world that we live in – both you and I. Many IR35 cases have argued (and been won on the point) that having an unfettered right of substitution is an indicator of self employment – if you don’t think that’s important then you’ve just thrown away the defence successfully used by many contractors.

    “Yet the majority of at least IT contractors operate this way.” – if you mean that the majority of IT contractors operate this way (not sure what you mean by “majority of at least”) then your wrong – in my experience almost every contractor I’ve worked with (if not all of them) have an unfettered right of substitution in their contract. If you’re saying that they haven’t then that would leave only SDC and lack of MoO as defences to an IR35 investigation.

    Throwing that way, like you want to, would be stupid.

    • Have you ever invoked the right of substitution? How many contractors do you know who have? You and I both know it is a complete sham. I’m not suggesting contractors throw it away. However, we all know what it is. It is in the area of Control that I would say that most contractors lose out. The common or garden IT Contractor deveoper is given a piece of work, told how long it should take, what equipment to use and where the owrk should be done. The Project manager will come round once a week to track progress against estimate. Are you telling me that this is not a contractor? That’s what the Government and HMRC say. It’s also what IPSE say too. They deride them as bums-on-seats contractors while still taking their membership fees.

  3. Yes, I’ve invoked my right of substitution on more than one occasion – you maintain that it’s a sham but it’s not something that you are throwing away. That’s not really going to stand up in any investigation is it, Gerry? You either have a valid right of substitution (in which case you win your IR35 case) or you don’t and therefore have the much harder fight to show you aren’t subject to SDC (which you’ve said is fake too) or lack of MOO.

    The law requires three parts to determine employment and in your blog you’ve said that two of those don’t apply. That’s the kind of thing that the government love to hear – that you only think MoO is valid.

    • “Gerry? You either have a valid right of substitution (in which case you win your IR35 case) or you don’t”. That’s incorrect. A court case upheld the right of substitution even if the contractr never invoked it. According to the judge, HMRC would have to prove that it would never be invoked – and they couldn’t. By the way I think that Mutuality of Obligation is ridiculous too. What difference does it make if on a 12 month project if a contractor is hired for 3 months at a time instead of indefinitely till the project ends? IR35 is ridiculous. All three major measures of it are ridiculous. When you accept that these three measures are what defines a contractor, as you, the Government, HMRC and IPSE do, then that excludes the majority of contractors. It would mean that you and IPSE believe that all contractors who are told what to do etc. on a project are not real contractors but disguised employees. I don’t agree with you. IPSE were set up to get IR5 abolished – not define it leaving most of their members potentially caught by it.

  4. “A court case upheld the right of substitution even if the contractr never invoked it. According to the judge, HMRC would have to prove that it would never be invoked – and they couldn’t.” – that’s what I said. Either you have a valid RoS (in which case you win) or you don’t, in which case you have to fight on the other pillars.

    I disagree that the three pillars are ridiculous and exclude most contractors. The pillars have never been challenged successfully since RMC, and yet there is a thriving freelance section of the workforce. If the pillars exclude most contractors, as you state, then either the industry doesn’t exist or they are all inside IR35. So which is it, Gerry?

    And if you think that these are ridiculous ways to define what a contractor is, what definition should it be? Give me something that can be taken as a definition that government, HMRC, clients and contractors can work with.

    • Well, let me ask you this. There is a contractor hired to work on an IT project.

      1. He has a substitution clause in his contract but the client has been told that this cannot be invoked without their say so – and they said that although they would allow the contract clause they would never allow it to be invoked.

      2. This IT developer is given a series of specifications, is told how long each task should take, is told where to perform those tasks and what equipment to use. Once a week the project manager comes round to track progress against the task estimates.

      3. The contractor has a three month contract with a week’s notice either side for the first month and one month’s notice either side thereafter. The contractor has to do the work he is given and the client has to pay him even if, occasionally, there is nothing to do

      This would describe most IT Contractors in my experience.

      To you, is this person a contractor?

LEAVE A REPLY