When is the best time to set up an IT contracting business? This is an almost impossible question to answer, as it largely depends on your individual circumstances. But if you’ve assessed your current situation and decided that you’re ready to become a contractor, then as far as the industry is concerned, 2018 could prove to be a stellar year.
Research from TechMarketView, discussed in a Contractor UK article, has urged the public sector to make more use of freelance consultants this year, in a bid to address the persisting digital skills gap. The market analysis firm said that public organisations will have to think of ‘more creative ways’ to gain the skills they need, ‘including the use of public freelance marketplaces.’
TechMarketView acknowledged that taxpayer-funded bodies may find it difficult to conduct business efficiently ‘without looking beyond their own four walls.’ This news comes after an IR35 update last year and its ‘off-payroll rules,’ which many believe has dissuaded freelancers from providing their services to the sector.
‘Fled in droves’
Mike Gibson, Managing Director at Ethical Consulting, who has been petitioning against IR35, argued the above point to the government’s business department, after it published a strategy on IT provision to its staff, ‘and the people and businesses we serve.’ This strategy is, in Gibson’s words, “[beautifully] written and composed, professionally created and ultimately pointless.
Delivery will be dependent on a veritable army of flexible and temporary resource – who have fled the UK [public sector] in their droves as a result of IR35 changes in April 2017.”
Gibson said that for the government department to achieve its aim – which is, to ‘make the best use of digital, data and technology (DDat) in our everyday work’ – then either one of two things need to happen:
The first option is for the body to pay 22% more to PSC contractors who possess the necessary skills, to counteract the hike in tax the IR35 reforms result in. Alternatively, it must accept that DDat-related work will be carried out by ‘inside IR35’ consultants willing to take a 22% cut to their wages. But, referring to the latter, Gibson said, “I don’t see the top-drawer [DDaT] people doing that when they don’t need to.”
It will be interesting to see how the next few months pan out and if any proactive steps are taken by the sector to address the continuing IT skills shortage. In the meantime, if you’re thinking of contracting and want to know how IR35 legislation affects you, contact the experts at Intouch Accounting now…
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.