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Becoming a contractor programmer in the UK

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Re: Becoming a contractor programmer in the UK

#131

As a contractor of many years standing (I started contracting when the internet appeared in 1994) I started reading the article hoping it was correct and finished it with my fingers covering my eyes in fear. Sadly I don't have time to correct many of the misconceptions and total inaccuracies it contains. Its a shame really as good articles are hard to find and I'm sure many americans would find the differences betwee…

> agencies have been legally barred from employing people as self employed since the 1970s Do you happen to have a source for this? The reason I ask is that I've written to HMRC regarding this precise issue, since I haven't been able to find any official statement to that effect. While there are structural differences between a 'sole trader' (ie. self employed) and a 'limited company', it's up to the contractor to de…

Here you go

The original legislation is tucked away in section 6(1) Employment Agencies Act 1973.

http://www.legislation.gov.uk/ukpga/1973/35/enacted

6.-(1)Except in such cases or classes of case as the Secretary of State may prescribe,a person carrying on an employment agency or an employment business shall not demand or directly or indirectly receive from any person any fee for finding him employment, or for seeking to find him employment. (2)Any person who contravenes this section shall be guilty of an offence and liable on summary conviction to a fine not exceeding £400.

Re: Becoming a contractor programmer in the UK

#132

Earlier quoted context omitted.

No it won't.. IR35 is explicitly contract by contract based... In theory (and in practice) you could be working at 3 places at the same time and 2 of them would be outside IR35 and 1 would be inside it... There are a lot of old wives tales and myths around IR35 http://www.contractoruk.com/ir35/top_ten_ir35_myths_debunked... shows a few of them. And sorry for posting links to the same two sites but that is where the r…

You're right and I glossed over most of it but the killers are concurrency, substitution and fixed deliverables. With concurrency, if you can prove that during the contracted period you had billable work outside the contract then that goes in your favour if you get nabbed and the contract is borderline. With substitution, the contract should state that you can provide a substitute on demand so you're contracting out…

Concurrency was part of the HMRC's Business Entity Tests which were so hilariously inaccurate compared to IR35 actual rules its was funny.

I guess if you had a small battle and that won it that battle wasn't with HMRC but instead with the Cabinet Office or another government department / quango...

Re: Becoming a contractor programmer in the UK

#133
post #79
post #74

Earlier quoted context omitted.

It would be a lot more useful if said what these misconceptions and inaccuracies were. It seemed generally accurate to me. I think you should either back up this comment or delete it; otherwise it's unfair to the author. (I don't mind to sound snarky here; the rest of your comment is genuinely helpful).

You should absolutely not have your business bank with the same bank you use personally. If your business account ever gets frozen (for litigation, tax investigation, etc.) many banks will also freeze any personal accounts you hold with them. IMO many of the services he recommends also suck. I've used Crunch before and wouldn't recommend it and Barclays Business banking has a terrible reputation. £50 cashback isn't a…

I used Nixon Williams for about five years, they were very good.

Re: Becoming a contractor programmer in the UK

#134

My advice would be to use an umbrella company and let them deal with all the tax hassles - they have an entire staff purely for this. You will take home slightly less (no opportunity for tax "optimisation" but I disagree with that on principle anyway) but then also have no exposure to HMRC coming after you 6 years later saying "Where's our £10,000?" (has happened to several people I know.) (edit for spelling)

Oh the joys of IR35 and its old ability to attract people into tax avoidance schemes instead of setting up limited companies.... My advice and I've repeated it continually on Contractor UK for years is to only use a proper umbrella company or use a limited company. If someone says you'll receive more than 65-70% of you contract value from a umbrella company or more than 80% from a limited company they are just lying…

Good advice.

I contracted for about 10 years in the UK, finance mostly. Had my own Ltd, took home about 65% of my day rate. No funny business, happened to move clients about every two years which helped for IR35.

Nothing more complicated than that. Yes that means I paid 35% tax, which is pretty much the equivalent I would have paid if I could have ever found anyone who would pay me my day rate as a salary.

1. I believe in a progressive tax system and public services 2. I don't believe in working for an umbrella based in Norther Cyprus which is owned by a Trust of which I am a trustee which pays me loans on a semi-regular basis of 80-88% of my day rate with absolutely zero tax paid by me.

HMRC is cracking down on IT Contractor loans anyway, and quite a few people are rightly being hit up for quite large amounts of tax.

If the UK public had any idea how many (roughly 50k contractors in the City) avoided paying so much tax (billions) while they were being mugged by PAYE there would be a total bun fight.

Me. I'm still wealthy, my dad was a teacher, my mum a stay-at-home mum. Went to state schools, drove on state roads, took the benefit of people who actually paid tax.

To all the "I could pay some of my extra money to a charity / local school" brigade. Sure, but you never did - you parasite. Feel free to thank me for providing all those public services for you if you like.

Re: Becoming a contractor programmer in the UK

#135

I've heard that in the UK, it's much more advantageous to work as a contractor than a full-time employee. Is there any truth to that? What advice would HN offer to a US-based developer looking to move to the UK?

London is a world of her own, my advice relates to her.

The only thing you need to be an IT Contractor in London (other than some skills) is confidence.

I worked a number of contracts over ten years in the finance sector in London. I never had a client pull a contract on me, I always left on my terms. On average I lasted two years until I moved on. Major Retail, Funds management, Investment banking was my progression.

My background was Java (I work almost exclusively with Clojure now, and love it). Java was the language of business in London and I presume it still is. If you want to get a well paid gig in a smart office for a bank or funds management firm then Ruby is not your friend. Why was I motivated to move towards Investment Banking? Well, I'm competitive and it's the hardest market to crack, and it pays a premium. That's it. If you want to stay pure to one language or another and not use your rare skills for the best economic result for yourself that's another choice.

The market is huge, once you've got a recruiter who likes you you'll be offered work fairly continuously.

My contractor rate was roughly double what I would have earned permanent. The contractors I worked with were no better or worse than the permanent staff I worked with, they just had the confidence to strap on their contractor pants and go to work. That. is. all.

Advice like this article is useful enough I guess, but in reality you either have the confidence to go for it or not, and once you have you will never imagine why you waited so long (as long as you've got the ability to land work and impress people).

IR35? Just move every couple of years. Tax? Don't take the piss and HMRC will not bother you. Accountants? Have a crap one for a while and swap. Recruiters? Don't piss them about, realise they are all liars, but necessary. Find a good one and impress their clients. Timing? There's a couple of luls towards Xmas and the EOY, but there are always projects looking to spend money.

It is all confidence, you either do it or you don't, all this other crap follows.

Re: Becoming a contractor programmer in the UK

#136

My advice would be to use an umbrella company and let them deal with all the tax hassles - they have an entire staff purely for this. You will take home slightly less (no opportunity for tax "optimisation" but I disagree with that on principle anyway) but then also have no exposure to HMRC coming after you 6 years later saying "Where's our £10,000?" (has happened to several people I know.) (edit for spelling)

Completely!

If transitioning from PAYE to contractor life (filling in timesheets and other tedia) then the umbrella route is the way to go. You can focus on the job in hand and whatever comes of it. On subsequent contracts there is the opportunity to become your own book keeper and accountant, if you really can be bothered with such things instead of the coding you enjoy.

IMHO the chores of managing timesheets and getting paid are best left to other people, hence umbrella.

As for how much money is needed to get going, with umbrella companies there is an option to be paid early for a small fee, so long as invoices are being paid somewhere down the line. So you don't need to have six months of life savings and insurance stacked up somewhere. You can survive until payday without all that even if the experience is not fun. However, by not spending money you will have more when payday arrives.

Re: Becoming a contractor programmer in the UK

#137
post #100

You guys need to learn some accounting. Don't be afraid of book-keeping and be keen on any rule that helps you save on taxes. Overall, a limited company can save you around 20% on taxes over a salaried worker. That alone makes it difficult to go back to full-time employment.

I agree with you in principle, but not in practice. Outsource your bookkeeping to Xero or Bench or wherever. As a consultant, accounting is a cost centre. You should be focusing on sales, marketing, or service delivery. As a consultant, you are now a business. Ring the freaking bell or deliver service. That's your new job.

"As a consultant, accounting is a cost centre."

While I can't claim to know every jurisdiction, this is a very naive way of looking at things. Situations in which I was first-hand witness to people making (lots of) money from knowing the books well (i.e., much better than if someone else would do it):

- subsidies (like for 'innovation') - in case of a tax audit - some junior accountant who gets tasked with the small clients at a firm isn't going to be able to defend some stuff as well as someone with skin in the game - on bankruptcy or when talking to a bank

And I'm sure there are more.

Re: Becoming a contractor programmer in the UK

#138

Finding a good accountant isn't easy, but I would recommend looking for something better than Crunch. They were the default option "just pick Crunch", but I had to do a lot of tax research myself and recommend favorable approaches to their accountants on certain non-standard things. I also felt their first line of support is spread very thin and they put a lot of bookkeeping work on me. Then a lot of services cost ex…

I would also recommend not using Crunch. They're OK if you stay on the beaten path, but if you start veering off it their juniors don't have a clue. It was a painful experience for me.

Re: Becoming a contractor programmer in the UK

#139
What this does not touch on is be prepared to be a grease monkey, roll your sleeves up and get your hands dirty and most importantly learn how to make recommendations but not take it personally if they’re ignored for seemingly irrational reasons. Organisational dysfunction is the norm, not the exception.

Broadly speaking I’ve seen most of my work fall into these categories:

a) Help we need someone competent to aid us in a murky project b) We are a dysfunctional organisation, who require transient developers to put up with their modus operandi. c) We need your experience and expertise for a gap in our project

I’ve found (c) is best but (b) pays best though it can be stressful if your passionate about quality, engineering practices or process and (a) is often relatively short term but can garner kudos and create better opportunities.

Most companies don’t hire contractors because they’re doing swimmingly. Often it’s because they have some degree of dysfunction. For example large institutions in the City regularly operate as a parody of the Mythical Man Month. Expect Waterfall, PMO, silos of BA, Dev, QA; UAT (manual), Cookie Cutter templates to everything. Expect most “business” interaction to be via a PM and scrums to be lengthy tortious ordeals. (This is why companies like Thought Works do so well and why I expect some serious disruption in the coming years from Startup targeting City companies).

Expect people to ask you your advice and for you to mentor less experienced developers. Do not expect your advice to be implemented, or rather expect it to be watered down with compromise by non-technical councils.

I really like contracting. I enjoy the flexibility, variety and the challenges. I enjoy the people and skills I learn and now my network has expanded and I have earned a reasonable reputation I enjoy the better projects.

I second the sentiment about going IPSE and of hiring a decent accountancy. Don't worry about their portals or how shabby a website may look, pick them based on their competency.

Bite the bullet. Go for it!

Re: Becoming a contractor programmer in the UK

#140

In terms of the recruiters section, whilst I appreciate you may not have had a good experience, this is probably the way a lot of people get contracting work, at least until you have a fairly big network of contacts. I'd be more interested in knowing what agencies do have a good reputation / good developer experience along with the note to beware of the cowboys.

In general the big ones suck and have a boiler room mentality. Good ones in my experience: Oxford Knight Functional Works GQR Hays (They're big but have been good to work with) I'll add more as I think of them. If you're looking for work in finance - you will almost certainly be going through a recruiter.

Funny. I've had lots of problems with Hays. Cancelling cheques, unenforceable and ridiculous clauses in contracts for example.

The best agencies? None. Don't use them if you can help it. If you have to the smaller the boutique ones tend to be better, if nothing else because they'll have the better clients and more interesting projects.

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