Distinguishing Contractors for IR35 Purposes
The PCG (now IPSE) once asked their members what the did to aid distinguishing themselves as contractors from employees in their own daily work.
Distinguishing contractors is not so easy after IR35. It was set up to catch ‘disguised employees.
The PCG asked “Which of the following, if any, do you do in order to distinguish yourself from permanent employees?”
Distinguishing Contractors from Permies
Here are the results for IT Contractors with the Other Contractors in brackets.
49% – I work different hours (60%)
42% – I don’t try to position myself away from permanent employees (40%)
36% – I never attend the Christmas Party (34%)
19% – I eat my lunch separately (19%)
18% – I do not take part in office banter (18%)
11% – I position myself away from permanent employees (15%)
IT Contractors and other Contractors
Except for working different hours there doesn’t seem to be a significant difference between IT Contractors and Other Contractors.
It’s good to see that 42% say that they don’t try to position themselves away from permanent employees.
Indeed one wishes it was more.
OK, one understands that contractors don’t want to look like permanent employees for IR35 purposes.
But eating ones lunch separately and not taking part in office banter hardly takes you outside IR35.
Distinguishing contractors from employees is one thing. Becoming a social outcast is another.
IR35 Non and Renewal
Indeed the most likely outcome of this is non-renewal of contract.
So, perhaps I’m wrong as short contracts are more likely to take you outside IR35 than contracts with many renewals. This distinguishes contractors from employees.
Geek Contractors
Perhaps this quantifies the ‘geek factor’ amongst contractors.
People on the outside assume that everybody who works in computers is a geek and a bit lacking in the social graces.
However, those on the inside know that, while there is a geek factor present, it is very much the minority of those that work in the industry – and even less so for contractors.
Christmas Party Poopers
“I never attend the Christmas Party” seems quite high at 36% but very often contractors don’t get invited anyway as it’s seen as a perk for the permies.
I’m surprised that ‘I work different hours‘ is so high at 49%.
I would have thought that most UK Contractors are doing the same standard hours as permies.
Perhaps it is wishful thinking as this is a factor that may help to take contractors outside IR35.
Distinguishing Contractors – My History
I must say that I used to attend the Christmas Party when invited (unless I had to pay and the permies didn’t), I used to sit among the permies at work.
There was seldom a choice so I don’t see how the ‘noes’ managed that.
I used to START a lot of the office banter and I often ate with permies if they were ‘good craic’.
In fact over-participation in office banter might have cost me the odd contract – especially when it was at the permies expense.
Outside IR35 and Save Tax
I can’t imagine what the daily grind would be like if you sat all by yourself, ate by yourself and didn’t take part in office banter just to distinguish contractors from permies.
Imagine doing that all day long every day of your contract – perhaps in the forlorn belief that it might take you outside IR35 and save a bit of tax.
After all you spend a lot of money to enjoy yourself outside work – why not forego a bit (if you have to) to have as good a time as you can at work.
It does take up most of your day so you might as well make it as pleasant as possible.
Are you one of the 18% to 19% that eats separately from permies and doesn’t take part in office banter or are you one of the 42% who doesn’t try to position themselves away from permanent employees?
Distinguishing contractors from permanent workers is all very well. However, it can spoil your fun.
See IR35 Factors and how to stay outside IR35
