IR35 - Changing the Way I Work

If you are a self-employed technical writer in the UK, you've probably heard about IR35 and its impending roll-out to the private sector. In this post, I'm going to talk about why it is bad news and what I'm going to try and do to stay in business.

To find out more about IR35, there's a nice article about it totaljobs.com.

What's so bad about being inside IR35?

Workin' inside IR35, what a way to make a livin'.

Imagine being treated in the same way as an employee, but having no employee benefits. That's the reality of your contract being deemed inside IR35 instead of outside it.

If you're inside IR35, you're going to get:

• No holiday pay
• No sick pay
• No pension contributions
• No other employee benefits

But that's okay, because you get all those from your own limited company, right? Well, if you're inside IR35, you also get hammered with:

• No business expenses offset against tax. So your insurance, pension, travelling costs, etc., cannot be claimed against your expenses
• More tax!

In short, you're going to earn significantly less than before. One technical writer told me he expects to be £12000 a year worse off due to not being able to claim travel and hotel expenses. Another writer told me that they are now forced to only work locally for the same reason.

Increase your rate to cover the difference?

Can you raise your rate to cover the cost of being inside IR35? It's unlikely. According to one of my contacts on LinkedIn, paying a contractor a higher rate to cover the loss of income works out as much more expensive for the client. It is cheaper for them to offer a fixed-term on payroll job. Normal salary, short term, gigs, the sort of thing you see advertised as maternity cover.

Will we see lots of these short-term contracts appear on the job market? Who knows, maybe. And to be honest, given a choice between that and inside IR35 work, I'd take the employment option. But my heart sinks at the prospect of being an employee again.

Go back to being an employee?

Why am I so reluctant to become an employee? I had to think long and hard about this, but I think it boils down to control. I like the freedom of being my own boss, fitting work in around other parts of my life, and not having to commute.

Importantly, it is easier to say "no" too. When you say "no" to a client, the worst-case-scenario is you lose the client. But at least you are already up and running, with a website and everything else in place to get more work. Sure, I could leave the website up, but it has running costs, with hosting, security, etc.

Being freelance is also better for my mental health (as long as I have enough work, that is). I am far more productive on a 4 day week, and it's really difficult to find that flexibility as an employee. Hell, it can be hard finding that flexibility as a contractor or freelancer sometimes.

So if employment is a last resort, inside IR35 contracts are a no-go, what's the alternative?

Working outside of IR35

I'm not qualified to give any sort of legal advice, but I have sought out expert opinion on IR35. From what I've been told,  there are things you can do to stay outside IR35, and these mostly involve:

• Using your own equipment.
• Taking a financial risk.
• Being in control of when, where, and how you work.
• Having a contract with a clear start and end. The contract must also make it clear what you are expected to deliver.
• The right to substitution. You should be able to hire someone with suitable skills to do some of the work on your behalf.
• Show you work on contracts for different clients during the same time period.

For most of these, I'm in the clear. But IR35 does pose a few challenges. Most notably, working for multiple clients at the same time and using a substitute.

Multiple Clients at the Same Time

A good way to prove you are outside IR35 is to have contracts with multiple clients running at the same time. That could pose quite a problem.

For a start, it's hard to find projects that could be worked on for 2 or 3 days a week. Companies are used to hiring people who will work on their content full-time. This is often because they need someone putting the hours in immediately, as they've underestimated how long it takes (but that's another story).

Another issue is that it is mentally taxing to move from one project to another. Learning everything about one product and documenting it can be difficult enough. When you're learning about two or more, you can get overwhelmed with new information and that affects productivity.

How can we get around this? I think collaboration is the answer. More on that later.

Substitutes

Your contract should have a clause that allows you to use a suitably qualified substitute worker. But it looks like that might not be enough. Ideally, you need to show that you use a substitute for parts of your work now and again.  Getting clients to agree to this in reality (as opposed to what's written on the contract) might be a battle, but with the right people on board it could be better all round.

Having someone else to bounce ideas off can be a great way to get around those parts of projects where procrastination creeps in.

Again, collaboration is the answer.

My plan to keep outside of IR35

Okay, here's my plan. It'll mean changing the way I work a little bit, but should avoid IR35 issues.

• Say no to all inside IR35 contracts.
• Get outside IR35 contract template that I can use for Straygoat.
• Get contract template for hiring a substitute/working as a substitute
• Get IR35 insurance with Qdos and get all contracts reviewed by them.
• Working practice review by Qdos if things feel a bit too "employer and employee".
• Collaborate with other freelancers.  

When I'm too busy to take on new work, I'll often pass it on to other writers. Looking after my tech comm and content design brethren. For smaller jobs, I may now take these on through Straygoat, do some of the work myself, then sub-contract to a "substitute".  

I'm also going to try and be a "substitute" for others. This could be something like proofreading a section, offering advice on structure, writing a section of a project, anything like that. I'm wondering if UX writing could be a good option for this?

Of course, this may all end up taking up far more time than anticipated, with a work-life balance that's worse than employment! :)

Perhaps another escape route would be if organisations became more flexible with their requirements. I know many freelancers and contractors who are keen on part-time contracts.

What do  you think?

If you're a freelancer or contractor I'd be interested to know how you are going to deal with IR35. Maybe, like me, you're open to co-working on projects and forming a kind of informal network of sorts? That could be good all round.

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