A great new TV comedy series called Duck Quack’s Don’t Echo that light-heartedly explores unusual facts or urban legends caught our attention. What got us hooked, was that the first episode investigated whether or not dog pee glowed under UV light. (It does).
In the same episode, the premise that individuals will copy stupid actions of a group was also explored, which got us thinking about this so called ‘lemming phenomenon’ that actually does exist within the world of contracting.
‘Mass action’, particularly around tax, compliance and other legislative details, seems to define what is ‘acceptable’, ergo ‘legal’ for many contractors. To explain this better, let’s first take a look at contractors’ lemming tendencies.
Please don’t be offended at being likened to a small furry rodent that tends to end its life by hurling itself off a cliff. Lemminghood (we swear, there is such a thing) is ‘an innate psychological phenomenon present in most mammals and observable in common people as well as the most sophisticated and educated elites.’
Apparently, we behave like lemmings (or collectively) as it is a necessary survival trait, an inborn instinct. Without it, we would not have achieved great things as a sector. In the industry our mass mobilisation towards self-employment and lax tax habits brought progress in the form of IR35 and CIS!
However, while the lemming effect enables progress towards the constructive end of better governance, the same principal is used by bad people and companies to manipulate contractors.
For example, because an umbrella company uses a Travel & Subsistence (T&S) dispensation scheme to provide better take-home pay to its contractors does not make these schemes (especially those that reduce a contractor’s taxable pay below national minimum wage) moral or legal. It does not matter how many contractors sign up to benefit from this shoddy practice – mass mobility in this instance does not legitimise it. And when HMRC comes looking for its money, it won’t suffer from the same herd mentality and will be single-minded in nailing the individual contractor that owes it tax.
IR35 is another area that sees contractors lulled into a sense of false security. Because so many get flawed advice to take the ‘do nothing’ strategy, they tend to think that together they create some sort of tipping point that addresses the IR35 issue – either that because so many don’t stick to the rules, it will be revoked, or believing that because others have swerved the bullet, a precedent has been set that will indemnify them. IR35 is law, it does not matter how many contractors break it – individually, they will each be responsible for the financial burden of payback that will be incurred by breaking this rule.
We didn’t get to the end of the programme to find out if the hypothesis that individuals will copy stupid actions of a group was true or not as we already think this is self-evident in the contracting world. And, to be honest, how can you top the fact that pee glows in the dark.
