Let us remember that avoidance of tax isn't illegal, the media seems to forget that.
There is poor understanding of the issues involved and a lot of knee jerk reactions are being voiced on TV and late night chat shows with little substance behind the rhetoric.
The interim manager, a phrase that means lots of different things to different people, is under scrutiny at present from many different perspectives. The term and definition of an interim is actually is the source of the problem - it is just so poorly understood not just by the media, but by interims themselves which doesn't help us here.
The contractor/interims, again overlapping and highly debated labels, fight back with claims of running their own business and the need to transfer fees from active assignment to marketing periods and the like.
There is clearly a difference from people employed on short term assignments, short is also debatable - is two years short? who operate within the organisation as a controlling person making decisions and implementing commend compared to a consultant working on a project for a few months maybe in parallel with other client work.
The former are employees really, ducks and quacking come into mind here, but what goes amiss here is the lack of understanding of the costs those individuals have to maintain to stay engaged.
The fixed term contract option fails to allow the hotel bill to be offset against tax and the cost of operating way from home is a serious issue as most of this work never seems to be in one local area London excepted . MPs seem to get funded to work away from home don't they?
The tax man then gets the income tax and NI as an uplift on the expenses i.e. a hotel bill gets paid from taxed income and either the rate to the client has to go up to accommodate the situation or in more likely reality the employee, sorry interim, suffers. The answer here has to be that the fixed term contract must pay a salary through PAYE that fits the costs and situation of the temporary member of staff, if of course we are going on with this definition.
Many H.R. managers seem to think that they can pay the same salary as they would a permanent employee forgetting the engagement commitment and feel good factor of belonging with some degree of longer term commitment. Fixed term contracts from the contractor/employee point of view are the worst option possible. No commitment beyond the term with no ability to transfer income to new business work after the event or protection of expenses.
This is a complex subject and the variations and issues are so diverse one stop solutions and over arching tax rules fail to address the problem with sufficient care. For example individuals sometimes take interim positions, sometimes take contracts, fixed term or day rate through service companies and sometimes trade with multiple clients simultaneously. Thus people are interims, contractors employees and freelancers at different points on the timeline. The employment status changes from one from to another; this is not easy for individuals or the tax-man.
The current media frenzy on this matter is going to change the shape of the interim contractor landscape in 2013 no doubt. especially in the public sector. Like everything in life a minority have stretched the rules and unleashed a fire storm for which the majority are now paying for with interest!
All this is not helpful to true freelancers trying to eke out a living in difficult times with pressure on rate and clients trying to get value without paying for it properly by leveraging the difficult market to their own benefit.
"Heh Fenester. what's your definition of a freelancer!!!" :-) Doh.....