Paul Dack's Blog

One of the first in 'aspects' of contracting I encountered when I started in 1995, was the comments from permanent ('permies') colleagues regarding my new status. In their eyes, I was suddenly earning vast amounts of money and paying little tax. I responded to the these comments then as I still to today, "if it's so good, why aren't you doing it?"

In their eyes, I was suddenly earning vast amounts of money and paying little tax.

These remarks were correct on several aspect of contracting, yes, the earning are higher and yes, generally you do pay less tax percentage than an equivalent permie role. However, what many fail to fully appreciate about contracting, is the many risks involved.

These risks take many forms, from HMRC legislation (IR35, Section 660a, BN66 to name but a few of the latest), zero job security, higher client expectations and the risk of your agency (as most contractors do work via an agency)  going bust.

I've been living with these risks since I started contracting but lately, I fell victim to the later of these – agency liquidation!

The writing had been on the wall for for a few years. The regular fortnightly payment schedule suddenly became erratic. Email and phone calls to the agency were either not returned or fobbed off with the promise of a "payment soon".

A few days later, the agency entered into voluntary liquidation.

Things cam to a crunch in November 09 with several weeks invoice outstanding, the agency phoned me to inform that they would be '”relinquishing” my contract with the client.  A few days later, the agency entered into voluntary liquidation. I ended up losing some ten weeks of payments with several other contractors losing similar amounts.

This is one of the risk of contracting and if it’s not something you’re willing\able to tolerate then contracting is not for you.