IR35 – Living with a Broken Promise

Well I guess it’s old news now, although it was quite foreseeable, but despite a pre-election promise the Conservatives have reneged on their commitment to review the IR35 legislation. Instead they will review the process for rolling the changes into the private sector – not the same thing at all.

Instead of me going over old ground, take a look at my previous IR35 post which was published prior to the election (and it’s broken promises).

In the weeks that have followed Twitter has been ablaze with tweets tagged with #IR35 – many are mine. There is a lot of anger out there and our worst fears, that end clients would take the ‘easy option’ and just stop using contractors altogether has come to pass (despite HMRC saying it wouldn’t).

Take a look at the site and you’ll see the extent of the problem that is unfolding.

Many contractors are being let go and the work is being farmed out overseas. Those clients choosing to keep their flexible workforce are either making blanket assessments that all roles are ‘Inside IR35’ (as they see it safer that way) or using the HMRC CEST tool with limited understanding on how to answer the questions it asks – this will normally result in an ‘Inside IR35’ determination.

Many will point at the CEST results and declare that most historic roles should have been deemed ‘Inside IR35’ so the system is working correctly and that we have all be fleecing the system for years.

There is no doubt that some contractors, knowingly or otherwise, have been operating on the wrong side of IR35 – it would be foolish of me to say otherwise. But why is it that whenever a minority are found to be bending or breaking the rules everyone has to suffer the consequences?

So where does that leave me?

Well, I guess I’m lucky in that I’m in the process of securing a role with a client that will be exempt from the changes – they are a start up and satisfy the ‘Small Business’ definition. This means that I’m responsible for making the IR35 determination. I’ve discussed this with the client and they am not an employee and that I’m providing a service via a business-to-business arrangement.

The project involves the development of a viable proof of concept and the contract will last 6 months.

Maybe the dust will have settled a bit by August 2020 and clients will realise that banning PSCs or imposing blanket ‘Inside IR35’ decisions isn’t working for them.

I’m sure that the government (small ‘g’ was deliberate!) won’t have changed their stance – they will more than likely spin whatever happens to their advantage, that’s what they do.

But it all comes down to this – what happens if, when this contract comes to an end, all the suitable roles are ‘Inside IR35’? What will I do then?

Well, it’s simple – if I cannot find an ‘Outside IR35’ role or secure a role with an exempt company, I’ll have to look for a permanent role instead and to close down my Personal Service Company.

I will not work ‘Inside IR35’ as a ‘No Rights Employee’ – period. It won’t happen, ever!

Dave Carson (On The Fence Development) January 2020

This would be a shame and frankly it makes little sense for the government (small ‘g’ is deliberate remember) to stand there and accept that.

I pay more tax as a contractor that I would as a permanent employee – many contractors are the same. So by forcing us out of business there will be an inevitable loss in revenue – where is the sense in that?

IR35 2020 – Thoughts from the Coal Face

I’ve been contracting for over eight years now and in that time I’ve been careful to ensure that, to the best of my abilites, I operate in a manner that places me outside of the IR35 legislation. That is, to provide a service to my clients and not to be seen as an employee.

Currently it is my responsibility to determine the employment status of a role with regards IR35. I do this by having contracts independantly reviewed to ensure that they comply with the legislation and take steps to ensure that the actual working conditions are in accordance with service provision rather than employment.

If I get it wrong then it is down to me to justify my determination, in court if need be, and pay any unpaid taxes should I be unable to do so.

However, in April 2020 that determination could largely be taken out of my hands and placed in those of the fee payer, e.g. the client if I’ve been engaged directly or otherwise a recruitment agency that have facilited the engagement.

HMRC have decided to make this change stating their belief that most contractors are incorrectly self-declaring themselves as being outside of IR35 and avoiding paying the correct level of tax.

They have not been able to substantiate these claims, despite repeated calls to do so – but that’s not the reason for this post.

There are a number of problems with this, seemingly subtle shift in responsibilities but, as I see it, the main one that a great many end clients have no concept of IR35 or how to interpret it. Until now they’ve really not had to worry about it – the contractor turned up, did the work and left again. The client paid the contractors Limited Company or the recruitment agency an agreed fee and life was simple.

From April 2020, fee payers that meet the size and turnover criteria will need to determine whether IR35 applies and is so deduct tax as source prior to paying the contractors company. However, the IR35 legislation is complex and confusing – with HMRC losing more cases than it wins it is clear that they don’t fully understand it either.

If, in the eyes of HMRC, the fee payer gets the IR35 determination wrong and have deemed a contract to be outside of the legislation instead of inside then they will be responsible for paying the overdue tax – which may not be trivial. So what do we think clients are going to do? Are they going to invest the time into understanding IR35 so that they can defend and ‘outside’ determination or just take the ‘easy’ route?

Well, in spite of HMRC saying it wouldn’t happen, many major clients, particularly in the banking sector, have already stated that they will either not be engaging with contractors after April 2020 or will be considering ALL contract positions to be within IR35. That way they will stay on the right side of HMRC and everything is simple again.

The problem is that while HMRC may be happy with this, afterall they will be receiving additional revenue from these blanket IR35 determinations, many contractors are not.

Without getting into the nitty-gritty of IR35 it is not easy to see the problems that this will create for contractors but I think that there is an opportunity to educate the clients here. To make them aware of the difference between contractors, who provide a business-to-business service, and their permanent employees.

Provision of Services – A ‘Tradesperson’

First of all imagine that you run a company and want to freshen the office up a little bit.

You contact a decorating company and explain your requirements and agree on a price and timescale for the work. The company duly send a suitably qualified decorator to your site, you tell them what you want done and they get on and they get on and do it.

When they are done they leave and if you are happy with the work you pay the invoice.

So, what have you done here?

You have engaged with a company to provide you with a service. They have sent one (or more) of their employees to carry out the work and then invoiced you for that work.

The key here is that the company has provided you with a service – you have not directly employed the person who arrived to do the work. You don’t need to pay their taxes or into their pension. If they are unavailable the company can send someone else, suitably qualified of course, to continue with the work.

If the work was scheduled to take a week and it’s finished in three days then you are not obliged to provide additional work to fill the time – and neither is the decorator or company obliged to accept it if you do. The engagement was for a set piece of work and once that is done the engagement is over.

Now, I think that’s pretty straightforward and nobody should have a problem with that. But the thing is that the provision of service is somewhat clear cut; you have engaged with a company who provide services that your company is not skilled in.

Provision of Services – Contractors

Imagine now that you run a company which has a Software Development aspect to it and you need some additional resource to fulfil a project on time.

You reach out, directly or via an agency, to a company providing contracted software development services, explain your requirements and agree on a price and timescale for the work.

The contractor arrives on site, is told what needs to be done and gets on and does it.

Once the work is completed there is no expectation that further work needs to be offered or accepted and the engagement is over.

During the engagement should the contractor fall ill there is no expectation that their services will be invoiced unless they are able to send a suitable replacement (at the contracting companies cost) to continue with the work.

Does this sound familiar? It should do – it’s pretty much the same as the previous example with the decorator.

The difference is that the service being provided is something that your company already does and the contractor is probably expected to work within an existing team.

This is where the lines start to blur and the grey areas start to appear.

Why does this make a difference?

With a contractor more embedded in the business and it’s team it is easy for the client to see them as an employee and attempt to treat them as such.

I’ve had instances where a client will attempt to dictate my working hours (despite working a standard 7.5 hours) and my dress code (I was wearing a polo shirt with my company branding).

Would the client feel able to do this with their decorator? I think not.

If they arrive at 9 and leave at 3 but get the work done to the required standard and complete the job on time then surely that’s what matters. If the quality isn’t there or the job isn’t finished then that’s another matter altogether.

The client wouldn’t expect to be able to dictate the dress code for these external workers, or when they take their lunch breaks so why expect to do it with a contractor?

I may well sound like a bit of a diva here – I mean, who do I think I am? But this is the reality of the matter. The client has engaged my company, directly or indirectly, to provide a service – I am not their employee.

Now, in order to integrate into a team a contractor will normally work similar hours but their hours should only really be dictated by their ability to access the building (assuming they are working on site).

I will obviously make efforts to integrate with the team and working conditions but this is in order to maximise the value of the services I provide – I’m kinda old school like that.

The Take Away

I believe that unless clients can understand this concept then they will have little chance of being able to make an accurate determination of employment status.

If they see contractors as employees, albeit temporary, then they will simply not grasp the importance of determining an accurate employment status with regards IR35.

It may well be that a particular role is correctly deemed to be within IR35 and if this is the case then that’s fine.

However, clients should avoid taking the stance that all contracts are within IR35 – doing so will not only damage the contracting industry in the UK but the client will also severely hamper their ability to engage with an experienced, temporary and flexible workforce to delivery their project and products.

On The Fence Development – What’s All That About Then?

I’ve been contracting for over seven years now and during that time I’ve had  a number of clients, friends fellow contractors ask me “…why ‘On The Fence‘? What’s that all about??”.

Ignoring the fact that the blog I initially hosted on this domain was about my experiences with Linux and Open Source while working day to day as a .NET Developer using Windows, I think that the name fits – it’s all about not putting all your eggs in one basket as it were.

I think that there is quite a wide line between trying to be a ‘Jack of All Trades’ and a ‘One Trick Pony’ and as a Contractor I think that this is a good place to be.

Some will disagree, Jon Sonmez of Simple Programmer certainly advocates specialising and he’s retired in his 30’s so maybe I’m the one who’s wrong here. But while I can see the merits in this approach and it worked out well for Jon, I don’t think that being ‘the expert in the Xamarin.Forms Grid control‘ is going to get me that far (that’s not to say that the Grid control is a trivial thing of course).

I also don’t think that trying to be a Guru in Desktop, Web and Mobile development  is viable either. We all know that this would be virtually impossible to achieve with the technology shifting under us all the time.

I do however think that to be a viable option as a contractor you need a good foundation knowledge, spread of skills across various technologies and a desire to learn as you go (let’s face it – nobody can know it all).

So that’s what I aim for.

I have experience with Desktop development using WinForms, WPF and am starting to look at UWP.

On the Web development front I am currently working with a client who has an ASP.NET WebForms application and another using MVC while a freelance project has me ramping up on ASP.NET MVC Core development on a Linux host.

With Mobile development I am all Xamarin, whether it’s the native flavours for Android and iOS or Xamarin.Forms. Hooking these up to Azure (or ASP.NET WebAPI Core) backend is also within my skillset.

I’m always looking to keep my skills up to date, while able to support existing deployments using older technologies – and even migrate them forwards should that be the desire.

The Ups and Downs of being a Contractor

As with most careers being a contractor has it’s ups and downs and I have certainly had my share of both over the last couple of months.

When my last contract came to an end I entered the limbo land that is ‘between contracts’. Due to the nature of contracting many clients require someone who is immediately available, or at least within a week or so. Looking further than a couple of weeks ahead and you are probably going to be passed over for someone who can get their feet under the desk much quicker.

I had not been looking for a follow-on contract because I already had a holiday booked and, knowing that I would have minimal phone & email access for a couple of weeks, I had decided to leave that until I returned to the UK. I then gave myself a couple of weeks ‘off’ during which time I would continue work on the Xamarin implementation of the FillLPG for Android application and hit Pluralsight to keep my axe sharp and my stills current.

This worked out quite well and I secured a contract with a previous client pretty quickly – but this was subsequently withdrawn as their client put the brakes on the project. Disappointing but that’s how it goes sometimes. At this point I was approaching the end of the two weeks I’d given myself to find a new contract and for the first time in three and a half years I was not actually billing any time at the end of a month. Still – something else would come along….

And it did, in the form of a potential 12 month contract which required SC clearance (which I have). The location was a comfortable commute and the day rate was pretty good too. At the start of October 2014 I was offered the contract (subject to references) which I duly accepted. It turned out that the client was using an external resourcing company and they required 3 years of references – which as a contractor amounts to quite a few people to contact. Fortunately my recruitment agent dealt with most of this for me and after completing numerous forms I was finally given a start date.

But the story does not end there – more’s the pity. While driving to the client site I received a phone call (yes I have hands-free in the car) advising me that the external resourcing company had not processed my security clearance and I would not be allowed on site. This was disappointing but it turned out that while my SC clearance was valid it had deactivated because I was not in a security role for more than 12 months – who knew.

Worse was to come as the process of reactivating my clearance relied on a clunky website that frequently displayed the good old ‘Yellow Screen of Death’ but eventually served up a PDF form to be completed and was followed by a 10 day process of validation. This would be more billable time that would pass me by. I was able to pick up some freelance work, make good progress with my Xamarin development and watch a number of Pluralsight courses so it was not as if I was sitting around watching Daytime TV.

The validation process ended up taking almost 3 weeks and I was eventually given another start date and my recruitment agent was just waiting for the purchase order so that he could generate the contract.

The start date arrived but I still didn’t have a contract to sign. Finally, at 2:00pm I was advised that the client had reorganised resources and didn’t need my services anymore (apparently I was not the only contractor who was cut loose).

So between the incompetence of the external resourcing company and the unprofessional behavior of the end client, who has expressed their desire to get me on site as soon as possible, I had essentially ‘lost’ over £6500 in billable time. This was bad enough but I had been contacted about numerous other contracts while I was waiting but due to the nature of this one I decided to wait it out.

But it’s not been all bad. During the last month I have been able to migrate a local church website from an aging version of Joomla to a slick Squarespace site and secure a maintenance contract to administrate and maintain it. I’ve also migrated their creaking database (created by a parishioner) to an MVC4 web application and add new, desperately needed, features that the previous implementation could not support. The FillLPG for Android application has been written using Xamarin, has gone into Beta testing and should be released before Christmas. I’ve also watched a number of Pluralsight courses to help keep my skills current and improve my chances of securing interesting contracts in the future.

They say ‘You Can’t Keep a Good Man Down’ and as I type I have an interview for a Bristol based contract later today and have a number of other irons in the fire so things are looking up.

Dealing with Recruiters – a Contractors Survival Guide

I’ve been contracting for about a year now and this has meant that I’ve had numerous dealings with recruiters and recruitment agencies. While I’ve been quite successful in obtaining contracts I’m afraid that my opinion of many recruiters (not necessarily the agencies themselves) is that they do not provide any value to the process, indeed the detract from it. Now before all you recruiters out reading this head down to leave a comment (please do so after you’ve finished reading though) let me qualify that statement with a few examples in the form of some tips for the unwary (a survival guide if you will):

  • When you answer a call from a recruiter, make your first question – ‘Is this a contract position?’
    • My CV states that I’m a contractor and my job site profiles indicate that I’m looking for Contracted positions but I constantly receive calls and emails about permanent positions. Not only is this wasting my time but also that of the recruiter. This is compounded when I receive a call while at a client site and have to stop what I’m doing to have a pointless discussion.
  • I’ll send the details over to you now – believe it when you see it
    • I’ve lost count of the number of times that a recruiter has said – ” I’ll send all the details over to you shortly “, and then hasn’t bothered to do so. If they don’t think that I’m suitable for the role then just say so, I’m cool with that. By promising to do something that they have no intention of doing is unprofessional to say the least.
  • Beware the question – ‘Have you been put forward for any other positions recently?’
    • This sounds innocuous enough but could be the recruiter just trying to uncover any opportunities that they are unaware of. I have first hand knowledge of this after I told a recruiter about an interview I had lined up. I later found out that he had contacted that company with a list of candidates he thought they should also consider for the role. As it happened his agency was not on the approved supplier list so it was a non-starter for him but it proves the point.
    • The question may be rephased as ‘So that we don’t duplicate applications, have you been put forward for any positions recently?’ but the upshot is that you should remain tight lipped about your leads and ask them to name the client to see if you are already represented. If they genuinely want to represent you then they’ll tell you or at least give you enough of a hint to let you know if it is someone you are already speaking to via another agency. If that’s the case then there’s no harm in telling them.
  • Before I can represent you I need you to provide some references – really?
    • Again, this may sound innocuous but be careful what information you give out. I was recently asked for references (including a name from the company I was currently contracting for) BEFORE a recruiter would pass my details onto his client. Apparently this was to maintain a high level of quality in the candidates that he represented. Fair enough I thought. The client I was working for at the time said that they normally didn’t do this for contractors but was prepared to provide some basic information if required. However, the phone call he received had little to do with me, the recruiter was really asking whether he had any upcoming need for any more contractors!
    • Essentially the recruiter was phishing for points of contact that he could call to offer his services – he had no opportunity for me and I never heard from him again (which may be a good thing)
  • Automated Emails
    • One you are on the recruiters databases you will start to get automated emails containing opportunities that may interest you. At first you think that this is a good thing but that opinion soon swings around to thinking of this messages as little more than SPAM.

      • Many of the automated emails I receive are of such low quality that it beggers belief. Many are for Permanent positions (see above) and others are so irrelevant as to be comical – I received one for an ‘Underwater Product Engineer’ and have no idea why the system thought I may be interested.
      • Some appear to come from individual recruiters but if that’s the case then it’s an even sorrier state of affairs than I thought.

With all that said, I have encountered a number of recruiters that have not only secured contracts for me but also shown a level of professionalism that many of us would expect. This handful of recruiters will be my first port of call in future when my contacts are coming to their conclusion – I’ll not reactivate my CV on the Job Boards in the first instance. They have gone that extra mile, delivered on their promises and above all earned my respect and more than likely that of the many clients they can introduce me to.

So there you have it – my survival guide for dealing with recruiters. Now I’ve been pretty hard on recruiters here but i speak as I find and frankly that’s what I’ve found. If you are a recruiter reading this and wish to respond then please feel free to do so. If you are a contractor with some tips or experiences of your own then I’d also like to hear them.

Contracting – A Year (Almost) After Taking the Leap

So it was about this time last year that i decided to move out of Permanent employment and into the cattle market that is Contracting. Looking back I have to say that I’m happy with my decision and have no regrets on that front. That said, the last year has not been plain sailing and in this post (during which I will try not to rant too much) I’ll try to paint a fair picture of the good and the bad from the last year.
Contrary to what many people may think, my decision to enter the Contracting market had nothing to do with charging huge day rates. Yes money is important but, as people who know me will confirm, I always say

“If you don’t like what you are doing then do something else”

I cannot understand (nor tolerate) people who complain endlessly about the fact that they hate their job but are still happy to take a salary for doing it.

I am in the fortunate position of loving what I do. I enjoy Software Development and want to be the best that I can be; although I may never end up working for Google or Facebook. The problems arise when you are working in an environment which cannot (or will not) keep pace with the changing technologies and practices.

One of my previous employers still has not adopted any form of source control beyond just creating a new folder for the next version of the application and copying the current code into it!

I know it is not possible for companies to simply adopt every new thing that comes along but by not moving forward they are not just standing still, they are moving backwards and the technology divide between them and the bleeding/cutting edge only increases.

Looking back at the companies/organisations I’ve worked for on a permanent basis I can see that the point at which I decided to leave was when I saw no more room to grow as a developer. When I’ve suggested using some new technology I’ve normally been told that there is no business need to do so and that they are happy with what is being produced with the current one. The fact that I was not happy is what has caused me to look elsewhere and ultimately leave for a new role within a company that is adopting the new technologies – or at least so I thought. After a few years I found myself once again hitting the hard ceiling of progression and start to look elsewhere.

Now that I think about it, isn’t this just contracting for the long term, i.e. years instead of months?

So, the decision was made – I’d go quit my job and go contracting..!

I took a lot of advise from a friend of mine who had gone down the same road and within a week of so I had formed a limited company to trade under, secured the services of an accountant specializing in contractors and setup a business bank account – what I didn’t have was any work!

During my notice period I revamped my CV and posted it onto about half a dozen job boards. This generated numerous phone calls from recruiters, between 6 and 15 a day – every weekday, but most of these came to nothing. As a fresh faced contractor I didn’t really know what to expect but this certainly was not it!

In terms of promising much and delivering little I’m afraid that many (not all) recruitment agencies are up there with politicians

Yes there are many good ones out there but you have to sift through the rest to find them. I’m writing another blog post (to be published later in the week) on my experiences of dealing with recruiters but suffice to say that I have found this aspect to be the biggest burden of contracting in my opinion.

Over the last 12 months I have found some good ones and now feel happy that I do not have to tout myself on the Job boards in the first instance – I’ll contact these recruiters who have shown themselves to be professional and actually follow through on their promises – even if this does not result in me securing a contract at the end of it all.

Each of the contracts I have secured to date has been a challenge, without exception. Each has exposed me to new technologies or to those that I only had a small understanding of – I’ve had to come up to speed very quickly indeed. I felt the need to prove myself very quickly, to show them that they made the right decision in hiring me and that I am worth the day rate that I’m charging. So far each of my contracts has been extended so I guess I must be doing something right.

This year has certainly raised my skill levels and fed my desire to become a better developer. Using new technologies and techniques as well as working in different environments has been a boost to my professional development and I hope to see it continue during the next twelve months.