Information Technology Recruitment

Are you working in a Public Sector role ‘deemed as being inside IR35’ but don't really understand it? I am writing this article (or rant) for 2 reasons – 1 – to give some basic guidance and understanding to anyone that has not yet got to grips with the legislative changes, and 2 – to vent some personal frustration – it still astounds me that this legislation was pushed through in any form, never mind with the muddled contractor/employee relationship that it has been. It does not help the public sector, the contractor community, the flexibility of the UK workforce, or the agency community caught in the middle, trying to calm the parties on either side. I was hoping that by September, we may have seen some settling down of the impact of the new Off Payroll in the Public Sector legislation, primarily in the understanding across the contracting sector of the changes, and how they affect the way ltd company contractors (and Umbrella workers for that matter) are paid. Unfortunately, and perhaps, understandably, this is not the case. I believe this is due to the fact that most contractors just can’t quite get their head around the legislation, the lack of employment rights afforded to those who are now paid as employees and therefore taxed as employees, the fact that rates for those working through their own PSC (personal services company – their Ltd company) will be (or certainly should be if the rules are applied properly) less than those working through an umbrella. It is this last point that troubles the contractors most, but it is all simply a matter of timing. For anyone deemed to be caught by the legislation, they will be classed as an employee and, as with any company paying an employee, there are HMRC payments and deductions to be made. (It’s worth pointing out here that if a contractor had previously deemed themselves within IR35 (IR35 rules have not changed, but who decides when they apply has), they would have to pay themselves from their Ltd company as an employee on the whole gross amount earned – their PSC would pay Employer’s NI (and submit to HMRC), then deduct Employee’s NI and PAYE form the pay, to come to a net pay amount.) Under the new legislation, it is the agency that has to submit the Employer’s NI directly to HMRC before any payment is made to the PSC/contractor, then deduct Employee’s NI and PAYE before submitting payment to the PSC/contractor (VAT on the original gross amount, before deductions, is also paid if VAT registered). If the contractor works through an umbrella, the same deductions are made but the quoted contractual pay rate includes the Employer’s NI as this is deducted by the umbrella after they are paid by the agency. Good chance I’ve lost you at this stage, probably because you’re busy huffing and puffing at the idiocy of what you’ve read so far! Essentially, the difference between the rate to an umbrella and the rate to PSC is the Employer’s NI, which will still be paid over to HMRC by the umbrella. An employer (the agency is the 'deemed' employer) cannot take Employer’s NI from an employee’s pay so the quoted pay rate has to be lower than the Umbrella to account for this, rather than it being the same and the agency then simply making all 3 deductions (ERNI, Employee’s NI, PAYE) which would be much easier to follow. The simple table below shows the timings of deductions – the figures are a representation and are not accurate. UMBRELLA PSC (YOUR LTD COMPANY) Quoted Umbrella Pay Rate £300 Employer’s NI submitted to HMRC £40 Less Employer’s NI deducted (£40) £260 Quoted PSC pay rate £260 Less PAYE and Employee’s NI Less PAYE and Employee’s NI Net take home pay Net take home pay (plus VAT on full PSC pay rate if VAT applicable At this stage, you probably simply want to know if you are better off working through your PSC or an umbrella. It could be marginal either way. And not something answered easily. You would need to consider accounting costs, umbrella costs, tax codes, hassle costs, what else you do with your ltd company (ie pension payments etc) etc etc etc. If the only thing you use your PSC for is to pay yourself, then an umbrella may be a simpler option. And finally, there is still misunderstanding from public sector bodies and contractors as to who has to make the decision regarding whether or not the legislation applies, and how, and when this decision should be made. One of my colleagues recently received an angered email from a contractor containing the following, which conveniently throws up a number of points: “Please also read up on how the new IR35 rules work – you cannot make any decision on a contract being outside of IR35 without the contractor taking the questionnaire.” Firstly, we do not make the decision, the client does. Secondly, the client can make the decision without using the HMRC toolkit. The toolkit is an aid to making the decision and apparently HMRC will stand by the decision given by the toolkit, providing the information entered is ‘accurate’ (now there’s a good wriggle out for HMRC). It is worth noting that the end client should take ‘reasonable care’ in making the decision, so using the toolkit would certainly support this approach. Finally, the decision has nothing to do with the contractor using the toolkit. This may give the contractor a case for a discussion with the client (or supporting a case against incorrect tax with HMRC in the future??) but the output is certainly not final. And breathe...

IR35 in the Public Sector – still not understood (by the public sector) Many of you may have read a couple of recent articles I wrote titled ‘The (un)intended consequences of Off Payroll changes in the public sector!’ and ‘The Farce that is IR35’. Something I mentioned in these articles was the lack of clarity provided to the public sector by HMRC, with almost zero time for the entire industry to be ready, and thus blanket decisions being taken on contractor statuses. Many of our NHS trust clients pushed out communications something like this: We have already undertaken some work in this respect. Initial assessments of placements have indicated that they are all deemed to be caught under the new IR35 rules. We, therefore, consider the most prudent approach to take post April 2017 would be to treat all engagements/placements as falling within the scope of the new rules. This will significantly reduce the level of administration and communication between us. What I hadn’t mentioned was that most of these communications were based on direct advice from NHS Improvement, the body responsible for overseeing foundation trusts and NHS trusts, telling the trusts to make these blanket decisions and deem ALL contractors inside the legislation. We then had to spend weeks and weeks working with our clients to unravel this misunderstanding and ensure that they took reasonable and proper care in making the decisions on status. Now after battling through the first couple of months of the wrong status, unfair and incorrect taxation, contract rate changes, contractors leaving roles, trusts losing critical contractors etc etc, NHS improvement has now released new advice, completely contradicting what they originally advised (I am pleased to say that this is a necessary and correct contradiction!). This just compounds the frustration felt regarding the handling and implementation of this entire fiasco, the lack of communication across government departments, HMRC, public sector bodies, and the entire contract community, and also highlights that fact that this legislation was clearly ill-conceived from the start and certainly should never have made it to statute. I just pray for those that benefit from the fact that the UK has a tremendous pot of skills in our flexible workforce, that some sense is seen before someone decides that this has worked and it’s time to push it through to the private sector. That will be an even greater disaster. Some simple guidance can be found here.

A blank document in front of you and a CV to write – painful isn’t it? Firstly, recruiters, that’s people like me, will make a snap judgment based on what they see on a word document. Sad, but true Secondly, that CV needs to get past the recruitment team or HR, who, in large organisations, see hundreds of CVs every day and are usually tasked on ensuring every job spec criteria is matched before sending a CV to the hiring manager Thirdly, your CV goes to a hiring manager, and if you are lucky, to your hiring manager’s manager How to write a CV that goes the distance Read your CV back to yourself and be honest: does this reflect me, what I do, what I’m good at, and most importantly, your achievements. The paper round you had when you were 14 is unlikely to get you a CIO job, don’t include it. I am sure you will be proud of your very 1st job but is that job the job you want now? No? Then list it at the back without pages of detail. Make a profile. This is so important for so many reasons, but the main one is that your CV will be put in front of people who don’t know you. They might not phone you about a job as they may assume from something in your CV that you wouldn’t be interested. Tell people who you are, what you do and what you are looking for; nothing as basic as “works well in a team and individually”, but tell people why you are good. Name at the top with your phone number and email address, you would be surprised how many people don’t bother and that can make it incredibly hard to reach out to you. Your profile should come next Then straight into your career summary. Include dates, job title. No Gaps, if you went trekking across the Himalayas then say. In your job summary, list responsibilities and achievements separately and be concise. Repeat for every role that you feel is relevant to your current search. Once you get to a point where you don’t think the role is relevant, just list out in summary At the end, list the systems and software you use in detail. The thing to remember is that everyone has their own idea of how a CV should look and feel, so you won’t please everyone. But if you can make it as readable as possible then you stand a better chance. Your CV will be one of the most important documents you ever create, so spend time on it and get it right.