Theresa May to Abolish Contracting Profession in June

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Abolish Contracting Profession
Abolish Contracting Profession

Abolish Contracting Profession

According to today’s Times newspaper, Theresa May intends to abolish contracting profession in June.

It is then when she gets the report that Matthew Taylor is now compiling on contractors and contracting.

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It seems that Mrs. May knows much of what will be in it and backs it to the hilt.

National Insurance Increase for Contractors

The first instalment of it was to increase National Insurance for contractors.

So, we can get a flavour here of the tone.

They took this out of the Finance Bill after pressure from backbenchers as it was not in the Conservative Manifesto.

Taylor says that he is disappointed that the Government took it out.

Much Stricter Rules on Self Employment

The report is going to recommend much stricter rules governing what is self-employment.

It seems that they will ban employers now from having ‘control’ over freelance workers.

They say that a freelancer will no longer be able to do a job that a permanent person previously did.

So, they are basically going to define the role and say whether it is inside or outside IR35.

IT Sector the Main problem

They say that the problems arise mainly in the technology and delivery sectors but it is spreading.

This will affect the majority of IT contractors. Most of them come in to work on projects alongside permanent colleagues doing similar work to them.

The Government will no longer allow this.

These are what IPSE used to refer to derogatorily as bums-on-seats contractors.

Lack of Control on Contractors

In future, companies will have no control over the work done by what the Government sees as genuine contractors.

They will not allow them to give contractors the specification, tell them what to do or monitor their progress on a weekly basis as if they are an employee.

When a company, currently, wants to create a new computer system they decide how many permanent staff they will need going forward after the project is over.

They hire extra ones if need be.

Then they take on contractors for the rest of the work on the project.

They can get rid of them easily when the project is over. They won’t need them all then.

Similar Work to Employees

The bulk of the contractors will be doing similar work to the permanent staff on the project.

This is how the majority of IT freelancers operate.

Indeed, the estimate is that 90% of freelancers operate in this way.

It seems that the Government will no longer let them do this in future.

The company, through its project managers and project leaders, have control over what these contractors do.

These measures will surely abolish contracting profession as we know it and leave just a small percentage of current contractors.

Matthew Taylor’s Final Report

Matthey Taylor’s final report will get to Theresa May in June. The word is that she will act on its recommendations.

The report is going to say that companies are abusing the law by taking on supposedly self-employed workers for jobs that are normally done by permanent employees.

Companies are doing this to avoid paying sickness benefit, holiday pay, pension and maternity benefits.

Forced to Incorporate

The report is going to say that they are unearthing evidence that shows companies telling people to incorporate rather than taking them on the payroll.

This is arrant nonsense. How many contractors do any readers know who wanted to take a permanent job but were coerced into becoming contractors and incorporating by client companies.

This is not normally how it happens at all, although I’m sure you might find the odd case of it happening.

Providing State Benefits

Matthew Taylor wants to provide state benefits to contractors such as sick pay, social security and maternity leave.

However, it seems that this is the part of the report least likely to be implemented.

I wonder why!

Stricter Definition of Self-Employment

It seems that there is going to be a new, more clearly defined, definition of self-employment.

It also seems that this will be much stricter than now.

If this report gets implemented, most current contractors will be under threat.

Government Don’t Know What They Are Doing

I don’t think the Government knows how contracting operates.

Why should companies take on a lot of new permanent staff when they only need them for a short time, i.e. when there is a new major project?

That is where contractors come in.

Their hiring is flexible and they will go when the project is implemented and staffing levels ramp down.

The fact that they are doing a similar job to permanent staff shouldn’t matter.

Contractors have just got over the budget.

Now they have this ridiculous report in June to ‘look forward’ to.

When, and where, will this all end.

Government attacks on contractors just seem endless and interminable.

It looks like they want to abolish contracting profession for good.

Perhaps they will allow contractors to continue contracting but through umbrella companies rather than PSCs.

Who knows!

Where’s IPSE in all this?

End

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

and Contractors Umbrella Company Future – Limited Companies Doomed.

and Public Sector Umbrella Companies IR35 Contractor Bonanza

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It adheres to all the new tax rules. They created it after the Chancellor’s spring statement.

It’s just like other umbrella companies in that the contractor is an employee of Simply Umbrella but they get to keep far more of their money than through an ordinary umbrella company.

It could be a great solution for both public sector contractors IR35 problems and indeed any contractor.

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Have a look, also, at Public Sector Umbrella.

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13 COMMENTS

  1. I’ve been a freelance software developer for 20 years and my experience says that most of this article represents more from public perception than it does from reality.
    Do your writers not have actual industry experience?
    May’s proposals are akin the the original reasons given for IR35, i.e. the ‘Friday to Monday’ principal, and I actually think they are a good thing.
    This might lead to the end of “Contracting as a profession”, but certainlt not “Contracting as a business”.

    • Hi Paul, I can more than match your 20 years experience as a contractor and it is at all levels from software developer through Business Analyst, Project Manager, Systems Manager and then CIO in charge of a dept of 80 – all as a contractor. So, I do have ‘actual industry experience’. I disagree with your analysis that it is just reinforcing the original reasons for IR35. IR35 originally came about because newspapers (The Times I think) exposed companies who were laying off people on a Frday and starting them on a Monday as a contractors. This goes much further if implemented. They say themselves that they are going to change the definition of employment to be much stricter. This will affect all contractors who work on projects and who are controlled by the company through Project Managers etc. They don’t want to see anyone in PSCs any more. It will mostly umbrella in two years time. I wish there was a quoted one and I’d buy shares in it.

    • I think The Times is subscription only online. I got the old fashioned paper version yesterday. It was on the front page.

  2. All public sector contractors are forced to go under umbrella company after governments IR35 Shenanigans. Do you know how much take home that contractors will be getting from the Umbrella companies – 60%, 70% or above? Under limited company, most limited companies were getting 80-85% takehome. What’s the impact of this sudden transition on contractors takehome? When will this shenanigans gets to private sectors?

    • Not all Public Sector contractors. I’m working in the public sector on a defined role in a position that cannot be filled by a permanent employee. Having talked it through with the public sector body, we’ve reached an agreement of being outside of IR35, helped along by the HMRC tool. 80-85% sounds rather high to me though.

  3. …They will not allow them to give contractors the specification..
    so you have to do a project for us, but we cant tell you what it is
    at least it would give a big boost to the psychics industry

  4. Fellow contractors, don’t give up on yourselves because of this IR35. Take the leap of faith and travel outside this country where you would be paid and have a better life. As as long as this country remains as it is, they will leave the big corporations alone and come after the easy targets and that’s us the small guys.

    Jump and leave them to it. When there is a fatigue and project delays, do you now what? Surely, they might yearn for us.

  5. Can contractors work on a self-employed basis (ie no company in the middle either umbrella or contractor’s own)

    I’m concerned that with £600 a week in travelling costs to some contracts I need to recoup these somehow.

  6. I’d be intrigued to see the governments reaction to 10’s of thousands of small businesses closing down in a few months if this becomes law. Newspaper headlines such as ‘Theresa May closes 55,000 small businesses in 3 months’ might just make them think again but the damage could be done by that point.

  7. Its nothing short of barking mad. The public wont even notice it until it starts impacting on projects that affect thier pockets or thier health. By which time itll be too late. This is a two pronged thing; the first one to continue to hollow out the middle class in the name of equality, which has been part of the globalist drive for over a decade and the second to drive more work and revenue in the direction of the big systems integrators, solution providers and outsourcers in return for directorships and consultancies after leaving Parliament – the old Blairite revolving door.

    Its obscene, but IPSE are impotent and there is no opposition in the commons to speak of that is worthy of the name. All we are going to see is more of the same over the next 5 years. No matter how unfair all of this is, its not going to be bad enough for the proles to vote Corbyn in, even if he thought any different. And, thanks to the press, most of them will think we’ve had it coming for years as well.

  8. the frightening thing is that the alternative is that all of the business goes to either

    1) The big consultancies who make a massive mark up for providing the same contractor the company could have gotten directly for 1/2 the price

    2) The off shore companies who seem to have half of their team on shore for years at a time

    I dont understand how either of these is in the interest of the uk economy

  9. What about if an employer takes on a current contractor on a rolling monthly zero hours contract, paid by the day worked, through PAYE? That way the client still takes on a contractors for a temporary project, still pays a day raye, still only pays the contractor for days worked, has no obligation to employ contractor more than is necessary, and can let the contractor go at the end of the project. All this would give the same level of flexibility as now to both parties. On the plus side, no costly accounting for the contractor, and they accumulate holiday pay.

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