I would just like to make a couple of points:

The fast track visa scheme is an example of:

1. Cronyism: How big business is on the task forces that apparently run this Government.
2. Incompetence: One measure drives contractors away whilst another brings them in.

However it is so easy to move this from an agenda of examining how Government policy is made, to one of racism. To take a couple of misguided posts and spin this would be to miss the point however. We should not be put off debating these issues, because a cynical spin machine may use them against us.

My own take on this sensitive issue, is that contractors are at the tail end of a long food chain and if those further up the chain move to an area where they can get better/cheaper resources, that will be bad news. I would therefore support any measure that helps the UK economy access the resources needed to compete. I believe, however that the measures recently taken were influenced far to much by big business who, driven by short term profit's, are not advising in the best interests of the UK. For example we should be doing much more on ensuring that existing resources within the UK (Educated and trained at our expense) are reskilled/retrained to provide these scarce resources. There are many Offshore and Marine Contractors sitting at home who would like access to the IT Gravy train. Are we doing enough to ensure their intelligence and energy is not wasted? Is a 5% expense allowance enough

Turning to IR 35
It is my view (and it has been consistent from the outset, see this article dated March 30th 1999 entitled "Hammer to crack a nut") that the key problem with IR 35 is the use of the self employment tests.

What is the solution?
I note the mention of a 50% salary/expense solution.

This was put forward by the ICC in April of last year, withdrawn and then put back in by the 360 group and others. The problem was this. If you are employed, why should you get a tax break. If you are self employed, why are you offering to give up your hard earned dosh? I asked the Revenue for their reasons on turning this down. "We have not" they replied. "You get to keep 5% rather than 50%"! I was of the opinion at the time that tabling this proposal did more to convince the Revenue they were on to a winner than anything else. I can imagine the conversation within the Revenue "You are telling me, that before we have even sat down at the negotiating table, they have given up 50%! It will be like taking candy off kids." We are dealing with people who attended the 'Genghis Khan school of negotiating for mighty hard bastards' (Would we want anything else? Schools and Hospitals need to get built). Maybe if they (ICC and others) had waited, as I had advised, until we had exerted maximum pressure, we might have got somewhere. As it was, they threw away a negotiating hand far too early and in so doing, convinced the Revenue (and Ministers) of their "righteous cause"

You cannot do nothing; the Accountants and Lawyers, prompted by Agents and Clients, are forever coming up with ever more cunning wheezes to reduce the expense of employing someone. This is fuelled by a widening gap between those who are "wage slaves" and those who are "in business". The Tax leakage is rapidly increasing and any Government would have had to take action. The question is not 'should we do something?, but 'how do we do something?'

The answer is not to reach for a hammer, but to decide how we want to define the boundary between employment and self employment. It is very simple: If I choose to give up the security of "employment" fully aware of the risks that I face then I am self employed (or in business on my own account). If I am forced, either through coercion or by misinformation into "self employment" (i.e a Ltd Company) then I am in fact a "disguised employee" and the risks and tax obligations of that relationship should fall, not upon me, but upon the party that caused this.

Sounds simple, but would take a great deal to make happen. Why? Because this Government apparently does not believe we can choose for ourselves and wants to protect us, and secondly they are not prepared to sit down and engage in genuine Consultation.

This is such a complex problem and it relates to a fast changing world. As such it requires all the resources possible to get the right balance. I firmly believe that genuine consultation (Not the "cut and paste" mockery that actually took place) would lead to an equitable solution. The Government would meet their objectives to deliver a Fair tax system and at the same time enhance, rather than damage, the enterprise culture.

I am not so naive to think that is a realistic possibility. I would like to have my expectations exceeded just once however :-). The reality is that this Government drew a line in the sand and said 'Watch my lips, No Tax increase'. At the same time the Labour heartlands are pushing for increased expenditure on 'good causes'. How do they square that circle? By employing experts from the top accountancy firms who know where all the skeletons are and who are motivated by a combination of belief in what they are doing and the promise of a peerage at the end. Then by putting a female Norman Tebbit into the Collectors office, telling her "Go after anyone you want, just do not make me look stupid." She will be a bitter memory by the time the damage she has wrought, feeds through into the economy as a whole.

Do not assume that a couple of posts to a relatively unimportant forum like this, mean that we are all "smug, arrogant greedy bigoted whingers". I spent a month travelling around the UK meeting thousands of contractors, the vast majority of whom are decent, honest, hard working individuals. They are angry, confused and at a loss to reconcile this action with the statements made by New Labour that resulted in the majority of them voting New Labour (including me!) at the last election. The poll results would indicate that is unlikely to be repeated. The problem for New Labour is that, although small in number they will have a disproportionate impact. The "can do, stuff you" attitude that to me sums up the independent attitude of most of us, will be engaged next year (if we are still here) to do as much damage as possible to New Labour.

It is amazing how many pensioners you can get in the back of a Porsche :-)

It will be interesting to see what happens next. Will New Labour respond as you predict? Maybe cut and paste one of your comments to spin their case, for example. Or will they pause, take a breath and say "we might have got this wrong" Or just do nothing.

I know I am interested to find out. Which is why I asked the questions.

Cheers

Andy White - Just to make it clear. These are my opinions and do not represent, in any way, a response or position of the PCG and No part of this, or any other post to this site, is to be quoted out of context without my express written permission (OK Dawn:-)