You never know who
you might meet on a train!
I remember it so well. It was Thursday,
29th April 2010. I had booked a reserved seat on an early train (usually
standing room only) from Stockport to Birmingham to visit one of our
contractors working for max20 at The Queen Elizabeth Hospital, Birmingham. As the train stopped and I attempted to get
into the reserved carriage I was greeted by a couple of “heavies” and politely
told to “find a seat somewhere else, sir!”
No one seemed to be able to help, I tried looking through to where my
seat was and just saw a carriage packed full of people. The “heavies” kept “politely” asking me to
move away from the door and find another seat!
Imagine my surprise when, who should get off the stop before mine, but Gordon Brown who stepped down on to the platform surrounded by his entourage and “heavies”.
This was the day immediately after Gordon called a lifetime labour voter 'a bigot' just because she stood up to him! Read more about this in The Guardian article of the time here.
And now Mr Brown was disrupting my carefully planned business
journey just because he could!
Who came up with the idea of IR35 anyway?
Of course, Gordon Brown seemed to make a habit of disrupting things just because he could and the most famous example (or infamous depending upon whether you are a permanent employee or a contractor) was IR35. For those of you who didn’t realise it GB started the whole thing off nearly 20 years ago in 1999. See the excellent Contractor Weekly article here.
For the first few years nothing much seemed to happen other than accountants and lawyers jumping on the IR35 bandwagon by creating IR35 proof contracts and providing IR35 advice. As an ex-HMRC inspector once told me “there is no such thing as an IR35 proof contract”. I presumed he meant that no matter what the accountants and lawyers did to make things IR35 proof HMRC could always find a loophole.
Government inspired “bombshell dropped”
So the whole IR35 debate rumbled on until April 2017 when the Conservative government (not Labour this time) dropped their bombshell re.IR35 and the Public Sector. Overnight all public sector organisations, including the NHS, were told they could no longer hire contractors through their UK limited companies.
“Introduced into the public sector in
April 2017, the reforms have caused unprecedented damage....“ So said Contractor Calculator
at the time – read the full article here. Overnight the effect on companies like max20 (who only recruit
for the NHS) was dreadful with many of our limited company contractors “voting
with their feet” and moving back into the private sector. We also heard that several other recruitment
agencies had all but closed their public sector divisions for the same reason.
I still want to work in the NHS - what can I do now?
So the immediate effect on the NHS back in April 2017 was a national, blanket
ban on the use of contractors who were working through their own limited
companies and this did cause huge problems as you may imagine. Rumour has it that even HMRC (the instigators
of IR35) were faced with potential mass walkouts as they didn’t even know how
many limited company contractors they had working for them!
Option 1 - Umbrella
One immediate effect was to boost the numbers of people working through
Umbrella Limited Companies. If you are
not familiar with the concept these are independent companies, usually run by
accountants, who will make up your pay and pay you on a weekly or monthly basis
and keep you on the right side of the tax man by paying all your tax and
national insurance directly to them for you.
I believe this is the preferred option for HMRC as it’s the best way for
them to be paid tax and NI accurately and quickly. Its also a good option for contractors if they
are worried about being caught out by the very confusing IR35 legislation. max20 works with several umbrella
companies, one of which is BSL which, although being one
of the smaller umbrella companies, prides itself on providing a very good,
value for money service. Umbrella
companies like BSL can advise you on all manner of tax queries and help you set
up and run your own limited company.
Option 2 - UK Limited Company
Having your own UK registered limited company is still a very good option provided the work you are doing in the NHS (or other public sector organisation) is OUTSIDE IR35. The only way you can be sure is that your job must be classified as “outside”. The government has published a handy check list here. If the tool classifies you as being “inside” then I’m afraid you won’t be able to use your UK limited company for that assignment. You would need to use the services of an umbrella company like BSL – co-incidentally they can also help you with setting up and running your limited company if required. You will notice I keep referring to UK limited companies because they are the only type of limited company an agency in the UK can use. HMRC are not too keen on offshore limited or offshore umbrella limited companies as can be seen in this article.
Option 3 – Deliverables / Consultancy
Consultancy projects, once the exclusive domain of the Big 4, are now becoming more commonplace amongst companies like max20. Agreed, the size of the projects we manage are nowhere near the size of the ones managed by the Big 4 but then neither is the cost! max20 Project Solutions offers a more project-based solution than its sister company max20 Recruitment. Under our Associates Programme we can offer our NHS customers individual specialists who work for us and deliver an agreed service against strict deliverables. Where this is different from the more traditional “time & materials” timesheet led contract is that with deliverables, we (and therefore you) only get paid when we all deliver what has been agreed. Payment is also monthly in arrears compared with weekly pay of the max20 recruitment approach. Also, there is no notice period allowable under a max20 Project Solutions project as you are committed to delivering the whole project. These are exciting times for the NHS whereby max20 Project Solutions are delivering and managing an increasing number of projects and highly experienced digital specialists.
We hope you have found this article of interest and if you need any assistance getting your next NHS assignment please get in touch. With the widest range of working options available we believe max20 covers all the bases!
Don Tomlinson, MD max20