IR35 caught contactor wins holiday pay from HMRC

[Fred Bloggs]

FTC is pretty much inside IR35 with some rights. So if the role is inside IR35 then maybe this is the best way for you to work.

If a client offered me an FTC worth my day rate, I'm not sure I'd be too fussed about turning that down when I'd be busy counting the money.

But in the same way, I'd take an inside IR35 role if the financials make sense - have done in the past, would do again.

Generally, as far as I have ever seen an FTC when offered, it is on the same terms as a normal staff role, salary, holiday, sick pay, the lot. The only difference being the defined end date. So an FTC as I see it, has all the disadvantages of being a staff person with none of the advantages of a true B2B contract. The worst of all worlds.

[malvolio]

Generally, as far as I have ever seen an FTC when offered, it is on the same terms as a normal staff role, salary, holiday, sick pay, the lot. The only difference being the defined end date. So an FTC as I see it, has all the disadvantages of being a staff person with none of the advantages of a true B2B contract. The worst of all worlds.

Yes, I agree.

[Fred Bloggs]

Yes, I agree.

Thank you, but would you also agree that seeking employment rights for contractors, along with the moves to bring everyone under a PAYE employment relationship means that the (almost***) entire contracting industry is moving towards an FTC model? The direction of travel has, IMO been clear for sometime now.

I welcome the lady @ the BBC (sorry, HMRC?) getting employment rights, sure if that's what she wanted. But in terms of the traditional contracting model as I have known it for several decades, is it not a somewhat pyrrhic "victory" to celebrate?

For a couple of decades, many of us fought strongly to preserve our way of working as truly independent professionals. But now, it seems the entire industry is being thrown under the bus of the employment rights we always said we never wanted. And it's seen as a victory. How weird. And it hasn't happened by accident. HMG and HMRC have learned a lot more the last twenty years than most are giving credit for.

Sorry guys, you've been out maneuvered here and it isn't pretty to be standing on the outside seeing it happen.

*** There's always going to be a small niche for highly specialised expert resources engaged on truly B2B terms.

[malvolio]

No, it's more a case of making it clear to our clients that tying us down with IR35 caught contracts comes at a price and they can no longer lose a lot of costs and responsibilities by pretending to hire contractors and treating then as wage slaves.

If you want expensive FTCs then fine. If you want flexibility, hire a proper contractor. This case is a good thing when all is said and done.

[Fred Bloggs]

No, it's more a case of making it clear to our clients that tying us down with IR35 caught contracts comes at a price and they can no longer lose a lot of costs and responsibilities by pretending to hire contractors and treating then as wage slaves.

If you want expensive FTCs then fine. If you want flexibility, hire a proper contractor. This case is a good thing when all is said and done.

But - Don't you see that encouraging "contractors" to claim employment rights is severely under mining your ability to do exactly this?

I already said that for a small number of highly skilled professionals, this will continue. But for the typical bum on seat contractor, I guess most of the people on CUK fit that description. Then I'm afraid the argument is increasingly difficult to make. If I were sitting in big co HR dept today, on the cusp of hiring several hundred contractors for a major project win, I'd be weighing this very, very carefully.

[northernladuk]

Completely agree with everything FB says tbh and is what I thought initially reading the story.

Another thought, if these 'contractors' are now on a fixed period with full employee rights at what point do they not apply for IPSE? Where is the line of a freelancer drawn and and FTC employment start?

Would IPSE just be spending money on cases that prove a contractor is no longer a contractor? Seems a bit self defeating.

[mudskipper]

None of us want employment rights. Susan did not want employment rights. She wanted to be engaged as 'in business on her own account' which she had been up until HMRC decided that IR35 should apply. By demanding holiday pay, she is making the point that businesses need to choose to either engage contractors properly, or accept that those 'deemed employees for tax purposes' come with responsibilities.

It is the law. If you are an "agency worker" then under AWR you get holiday pay. If you're not an agency worker, then you're not under SDC and IR35 should not apply.

HMRC cannot cherry pick which bits of the law to obey and which to ignore.

I don't think the majority of contractors will suddenly find themselves working in low paid FTCs - they don't provide the flexibility that businesses want.

Anything that shows HMG what a mess the IR35 reforms are causing is a good thing.

[Fred Bloggs]

Completely agree with everything FB says tbh and is what I thought initially reading the story.

Another thought, if these 'contractors' are now on a fixed period with full employee rights at what point do they not apply for IPSE? Where is the line of a freelancer drawn and and FTC employment start?

Would IPSE just be spending money on cases that prove a contractor is no longer a contractor? Seems a bit self defeating.

Thank you, no point in me repeating much of the stuff I already said in the past about how misguided and self defeating your friends have become. You probably recall I have zero stake now in UK contracting. But it is still very sad indeed to see it all coming true despite me being extremely unpopular when saying it.

[Fred Bloggs]

None of us want employment rights. Susan did not want employment rights. She wanted to be engaged as 'in business on her own account' which she had been up until HMRC decided that IR35 should apply. By demanding holiday pay, she is making the point that businesses need to choose to either engage contractors properly, or accept that those 'deemed employees for tax purposes' come with responsibilities.

It is the law. If you are an "agency worker" then under AWR you get holiday pay. If you're not an agency worker, then you're not under SDC and IR35 should not apply.

HMRC cannot cherry pick which bits of the law to obey and which to ignore.

I don't think the majority of contractors will suddenly find themselves working in low paid FTCs - they don't provide the flexibility that businesses want.

Anything that shows HMG what a mess the IR35 reforms are causing is a good thing.

You know, I wouldn't normally rise to the bait. The situation is now irreversible, the direction of travel very, very clear. Trotting out the same old platitudes pretending things are still how you'd like them to be is beyond sad.

It gives me no pleasure to have been right all these years, your response is the same as it would have been five years ago. Do you still believe it? I guess you do.

I'll make just one observation and leave it there. In exactly which way does it make a temporary resource engaged on a FTC for six months less flexible than an agency engaged freelancer engaged for six months? I'll answer it for you. No difference whatsoever.

My final word on that topic though, you mention a "low paid FTC". I have never seen one. They are always offered at the same salary and terms as other employees. For that is what you have become, a temporary employee. As has Susan.

[Fred Bloggs]

A comment to try to put what has happened here in perspective. A person who understood she was a contractor was in fact a temporary employee. Quite rightly, in my view, she requested and after a fight, got employment rights. Now it is very clear. The person is a temporary employee and has the employment rights and tax obligations that prove that to be so. Very good.

But - That means now that there are thousands of other people out there who will also become temporary employees.

It's simply no use fighting for employment rights, getting them and then saying "oh by the way, we really don't want this anyway". So, the bloke in the street, he thinks "jolly good, the person was being denied her rights, but now she isn't". Or he thinks "jolly good, those tax dodging vermin contractors pretending to not be employees have got what they deserved all along".

You see, by fighting for something that you say you don't want, then winning it, you have fallen into the very trap laid for you several years ago. Myself and a few other people warned your friends and anyone that would listen that this is exactly what was going to happen. Alas, it has now come to pass. The die is cast. All you disguised employees are disguised no longer. And you have nowhere to go, no friends to call on. Under the bus you go.

Sad, but true. Thanks for reading.