Question Time With IT Contractor Sam Akinola

Sam Akinola of Sam Zoe Solutions caused a stir throughout the contracting community when he took the opportunity of being an audience member on the popular BBC programme, Question Time, to ask MPs what they were planning to do about the dire state of current off-payroll working rules. His zealous questioning went viral on LinkedIn, with contractors from various sectors praising him.

Just like many others, I connected with Sam on LinkedIn to commend his efforts. With a mutual interest in the state of IT contracting, I asked Sam to participate in a Q&A with me to discuss his struggles as an IT contractor, how changes to IR35 have impacted his business and what he believes needs to happen for the sake of the UK tech market.

Tell us a little about yourself, Sam…

I am a digital transformation consultant within the IT consultancy space. I’ve worn many hats across change management and agile consultancy, working in sectors including finance, insurance and the public sector. Some might call me a jack of all trades and a master of some!

I’ve been contracting for 10+ years now, so I’ve seen the impact of how off-payroll working rules coming in has affected my business and my peers.

Why did you choose to get into contracting?

One of the main benefits for self-employed people like me is that contracting provides flexibility. There is a lot of versatility in contracting; you can utilise and develop your skills and expertise, whilst building your business.

How have you gone about building your business in the current market?

My company is on the DOS 6 framework, so I take the time to bid for public sector work.

I have formed consortiums with my peers and bid for contracts, however, it is a struggle when you’re competing with the big boys in the industry. I think there needs to be more done to push a proportion of public sector work onto small-medium size companies. At the moment, we’re just seeing the big boys get bigger and we only have access to the contracts that are left.

Many contractors simply rely on recruiters to introduce them to work contracts, but I find balancing this with being on a framework allows me to liaise with the public sector and win bids directly, which can be fruitful at times.

Do you think being a contractor is worth it at the moment?

A lot of people have the notion that as a contractor you earn a lot. I’m not denying that contractors can make a good living, however, as soon as you go beyond the tax threshold, you lose your personal tax allowance. Since most contracts now fall inside IR35, the earnings no longer make sense, as it feels like one is working primarily for the Taxman. Many of us fall into a so-called 60% tax trap due to being higher-rate taxpayers. Once you exceed a certain threshold, you pay the highest tax rate of 45%, and you also lose your personal allowance. When combined, this results in losing 60% of your income to HMRC.

I’m happy to pay taxes when I’m enjoying the benefits, but not when I’m being fleeced of my hard-earned income, taxed as an employee for tax purposes, but with no benefits as an employee. Nor am I entitled to the job seekers benefit when out of work.

Why did you choose to put up your hand when you were a Question Time audience member?

Like I said on Question Time, I hadn’t earned for 3 months at that point in time. I had spoken to DWP to ask what benefits I was entitled to. I have a two year old, so I asked about the 15 hours of free childcare I believed I could utilise. Despite me contributing over £150K to the UK economy  over the last 2 years, I got the same answer over and over again – “You do not qualify”. So I’m taxed as an employee through Inside IR35 determinations, but there are no benefits to back us up.

Secondly, there are no benefits to me as a working professional. When it comes to learning and development, as an employee I would expect my employer to train me. Being self-employed, I’m meant to train myself. For me to stay on top of my game, I’m expected to cough up thousands of pounds from my own pocket, from the same money I’ve been taxed on, which would have been a business expense if I was contracting through my PSC.

IR35 rules are having a detrimental impact on our economy and people’s lives. I know people who have been out of work for 2+ years who can’t pay their mortgages. Many have been forced into permanent roles or to take early retirement. So to answer your question, that’s why I raised my hand. To add my voice to those cries that the current situation is wrong and that if nothing is done, our economy will suffer.

What was your opinion of MP Daisy Cooper’s response to your question?

We have a lot of educated people in the government and across other political parties. I expected people on the panel to jump on my question, but they didn’t have a clue what I was talking about. MP Daisy Cooper was smart enough to have a little bit of knowledge on the subject, but it’s not enough. The knowledge about what we’re fighting for simply isn’t there. How can they enact changes when they don’t understand our argument?

Unfortunately, MP Daisy Cooper quickly jumped onto another audience member’s question around tax. So whilst I commend her for trying to answer my question, I don’t think the actual know-how is there.

With the debate moving on quickly to another topic, was there anything else you would have said if you’d had the opportunity?

Absolutely. I wanted to make the point that the government doesn’t know the impact IR35 rules are having on the freelance market and self-employed in this economy. Looking at the IT space in the UK, we have a huge market with over 4m self-employed individuals contributing billions to the economy each year, but the UK is not advancing because of senseless restrictions like IR35.

There is no understanding of the impact of policies like this and the positive impact the self-employed can have with their niche skills and knowledge

Every major economy in the world relies heavily on the self-employed. As a matter of fact, it has been estimated that freelancers contribute over $ 1 trillion annually to the US economy.  For the UK to maintain its status as a global leader, it is imperative that IR35 is repealed. If not, there will be a significant loss of skilled professionals to other countries, as we are already witnessing.

Take the NHS, for instance, where senior consultants are leaving in droves. The same trend is now occurring within the IT sector, leading to a severe brain drain. This will lead to a domino effect whereby we can’t bring down net immigration because the skills gaps need to be filled and so we have to keep on attracting professionals from other countries.

What changes to IR35 would you like to see implemented by the new government?

It seems to me like the government are scared to tax the big companies, so the government is forced to look to us smaller players.

In my opinion, if they want the economy to grow, IR35 in its current state must be abolished. We have many highly trained professionals in this country, but people are leaving for Australia, Canada and the Middle East etc. If action is not taken, the UK is going to suffer from a huge skills loss.

If IR35 remains, what do you think the longer-term impact to the wider UK economy and contractors will be?

Off the back of Question Time, I’ve had lots of contractors messaging me saying that they’ve already left the UK workforce or plan to in the next 12 months. We’re already experiencing a brain drain, and it’s only going to get worse in the IT sector. We need more people in our sector, not less!

On the flipside, I think this could lead to clients being forced to pay premium prices. Consultancies will have more control over organisations which will lead to them charging premium prices, which doesn’t always equate to premium delivery. In my experience, as an independent consultant brought in to address the aftermath of some major consultancy errors, this has been evident. Increased spending for organisations can’t be good for our economy and it will make the UK less attractive to our self-employed/freelancers. As it stands right now, many contractors have been forced to close down their PSC’s and businesses because of IR35.

You took the brave step to raise your hand on TV. What do you think the everyday contractor should be doing to have their voice heard?

We all have a choice to make in the upcoming election. So I would urge everyone to look at all of the parties with an open mind and read up on their manifestos based on the change they want to see.

Secondly, I would strongly recommend writing to each local candidate to see who writes back. We must raise awareness and if every IT contractor in this country took 10 minutes to do this, I think it would have an impact.

To view the full episode featuring Sam’s question, please search ‘Question Time 23/05/2024’.