Freelance eNewsletter - PANIC IN THE CITY
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Freelance eNewsletter August 2006
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In this issue
-- PANIC IN THE CITY
-- EXTENDED SUMMER PROMOTION
-- CANNONS TO THE RIGHT, CANNONS TO THE LEFT

Welcome to the August 2006 edition of the PMMC Freelance eNewsletter.

If you find the newsletter informative and useful, please feel free to forward it to friends or colleagues by using the link at the bottom of this email. You are also invited to contribute to future editions: if you would like to air your opinion, pass on pertinent information for freelancers or contractors, place an 'advertorial' or simply comment on the newsletter in general, please contact us.


PANIC IN THE CITY
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In the last few days it has been reported that City banks and other financial institutions have been bringing their relationships with freelance IT contractors to a premature end. It is believed that this is a knee-jerk reaction to the outcome of the recent Court of Appeal decision in Cable & Wireless v Muscat.

The Appeal Court ruled that Mr. Muscat was an employee of his client, despite the fact that both parties had signed up to a contract that treated the contractor as an independent business. Mr. Muscat had his own limited company whose services were provided to Cable & Wireless through an agency.

Commentators have pointed out that the Mr. Muscat's situation was not typical of freelance contractors, because immediately prior to the commencement of the contract, he had been a permanent employee of a company that Cable & Wireless had acquired. It was a case of ending his employment on a Friday afternoon and simply re-starting as a self-employed worker on the following Monday morning. Notwithstanding these exceptional features, the Appeal Court's decision appears to have engendered a sense of panic amongst City institutions. Such is the fear and uncertainty surrounding the whole area of employment status nowadays.

Experts in tax status had been warning for some time that any contractors found to be caught by the IR35 rules might be operating under implied contracts of employment with their clients. However, under such circumstances, even if the contractor were to successfully sue his client for, say, unfair dismissal, HM Revenue & Customs would still regard the contractor's own limited company as the employer for tax purposes. The lack of cohesion between employment law and the rules on tax status is clearly nonsensical. There have even been cases where HM Revenue & Customs have tried to claim that self-employed people are covered by the National Minimum Wage legislation. Against this background, a large measure of uncertainty is inevitable.

From the point of view of someone whose job it is to help self-employed workers to retain their status, the general picture is nothing short of tragic. In the case of freelancers who work through their own limited companies, it is in the interests of all parties concerned - contractors, clients and agencies - to enter into contractual arrangements that steer clear of the IR35 regime and protect both agency and client from any suggestion that the worker is an employee in disguise. Nevertheless, we still see many agency contracts that appear to be caught by IR35, and many clients engaging freelance contractors appear incapable of delineating clearly between such workers and their permanent staff.

Keith Preece - Qdos Consulting Ltd

Editor's note: This article first appeared on Contractors Unlimited, the website for freelance contractors in the engineering industries, offering a unique combination of News, Contractors' Guides, Products and Services for freelance contractors and small businesses.

Qdos Consulting are specialists in taxation, VAT, employment law, health & safety and legal fees insurance, with a UK-wide network of associates and clients. Qdos are also the UK's leading authority on IR35 having defended over 560 cases, without having lost one; this has resulted in a saving of over £12 million in tax for clients.


EXTENDED SUMMER PROMOTION
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Need an umbrella?


Wouldn't it be nice to have more time on your hands and more money in your pocket this summer?

Are you still running your own limited company while drowning in a deluge of regulations and wading knee-deep through a quagmire of paperwork and administration?

Maybe you are permanently employed at the moment and fancy taking the plunge as a freelancer, but don't quite know how to proceed or how much it is going to set you back financially.

If so, you might very well be in need of a new umbrella...

This summer, we would like to invite you to sample the ultimate freelance lifestyle with PMMC, where you will find everything a freelancer needs under one umbrella. With our simple and inclusive fee structure and low service charges, it is now even easier to join and our fees are more competitive than ever.

For a limited time only you can also avail yourself of our FREE TRIAL OFFER - join before the end of September 2006 and we will waive our service charges completely for THREE months, allowing you enough time to try out our service without any risk.

For more information, contact PMMC or browse the Services or Our Fees section of our website. You can also sign up online by completing the secure registration form.

PMMC (UK) Ltd. - Much more than just an umbrella company...


CANNONS TO THE RIGHT, CANNONS TO THE LEFT
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In September, 9 AD, Emperor August was behaving like a lunatic. Reports circulated that he was banging his head against stone walls muttering, "Quinctili Vare, redde legiones (Quinctilius Varus, give me back my legions)." The legions had been lost in Rome's worst military disaster since the battle of Cannae. Augustus could have demanded the head of the general responsible, but he already had it. The Germans had sent it to him.

The battle of Cannae, in which Hannibal faced a Roman army twice as large as his own, and beat them decisively – killing some 70,000 Romans – was already as distant in Roman memory as Ticonderoga is to Americans today. Otherwise, they might have thought twice about getting themselves into the same situation with the German tribes. But Americans no longer remember Ticonderoga and the Romans had forgotten Cannae.

Here follows our brief account.

When Hannibal crossed the Alps to attack the Romans at Cannae, the Roman equivalent of Homeland Security was caught completely unprepared. Even though the Carthaginians had lost many of their North African troops, almost all of their elephants, and many of their mules and horses, and though Hannibal himself had lost an eye, the invading troops still managed to send the Romans fleeing back to Rome – those that weren't killed or captured, at any rate.

But alas, poor Hannibal had his failings. "Vincere scis, Hannibal, victoria uti nescis," said his cavalry commander. (You know how to win, Hannibal, but you don't know how to profit from the victory.)

Instead of gathering his forces and marching straight to Rome, Hannibal dithered, negotiating, while Rome regrouped and raised new armies. Eventually, their time came. The Punic invaders were put to rout, Carthage was razed and the land around the city salted and made infertile forever. Rome went on to dominate the entire Mediterranean for another 700 years.

Hannibal's mistake was a common one. The Confederacy made a similar error when it failed to follow up its victory at Bull Run in 1861 with a massive attack on Washington. It might have dictated the terms of an armistice; instead, it waited for a negotiation that never came. Then, General Robert E. Lee made the mistake that sealed the fate of the Southern cause. He said he thought his soldiers were "invincible" and sent them up Cemetery Ridge to attack the Union forces, even though it had long been obvious that a frontal charge across open space was a losing proposition.

"Remember the stone wall," Stonewall Jackson used to say, referring to the stone wall at Chancellorsville, where, in 1863, he learned the critical lesson that a fortified position is almost impossible to take by direct attack. In almost every battle of the War Between the States, it was the defenders who were the winners. There was a very simple reason: rifles had become more accurate at longer range than they used to be. So important was the lesson and so obvious were the consequences of disregarding it that General Longstreet dared to differ with his legendary commander. Only a fool would attack up that hill, he warned Lee. Longstreet was right. The southerners who charged under General Pickett might have been tough, but they proved that they were still vincible.

Robert E. Lee may have been a legend, but as Gettysburg shows, there is something about camp life that turns even the best men into blockheads. We say that, mind you, in admiration, not contempt. After all, the world needs good soldiers who don't think too much, and a really good soldier would rather die than think. Often he does.

The last thing you want in the enlisted mess is philosophers. They are liable to begin asking questions. Imagine the reaction of a Russell, or a Wittgenstein, or a Camus, had they been in the Wehrmacht in 1942, when the German army advanced on Moscow:

"We're going to march across the biggest land mass on Earth, we're going to fight the biggest army on earth, we're going to freeze our butts off in the coldest, least hospitable place on the planet, across the widest front line in history, with the Soviet Army in front and partisan guerrillas at our rear...and we're going to do this without enough fuel or supplies, led by a bunch of fanatics, who are at least delirious, and probably criminally insane..." Right.

No, you don't want thinkers with guns in their hands. But at the top of the chain of command, thinking might not be such a bad thing...if only it were done right. But it never is. Put a man on a public stage and he gets an almost irresistible urge to make a spectacle of himself. He thinks. Or thinks he thinks. But his thoughts get all tangled up with his amour propre. The next thing you know, he is doing something, but something so absurd that even the theatre mice are tittering at him.

In contrast, a man in his own private life need not think too much. He can get by on instinct and tradition, making his idle mistakes and suffering its petty consequences. Then, after he is in the grave, people may remember him for his kind remarks or the wart on his nose, or they may not...and life goes on just as well without him.

Not so the public man, seduced by the stage on which he struts, he imagines he is a thinker and an actor...on whom the planet depends. All public spectacles begin with this delusion, segue into farce and conclude with a flourish in disaster.

And nowhere are those disasters in sharper focus than in military affairs, where every vainglorious dimwit – from P.Q. Varus to George Armstrong Custer - has left behind him a charred trail of corpses and burned-out war chariots.

There was, for another instance, Lord Cardigan, who having bought his commission in the British Army, was moored in the Black Sea enjoying life aboard his private yacht - attended by a French chef - while his soldiers shivered, starved, and died in misery in the Crimean War. Called to action and never having seen the terrain, he took his light brigade of cavalry on a mad dash in the wrong direction down into the 'Valley of Death'. A thinking cavalryman might have pulled the plug on that operation. Apparently, there were none. Instead, they all rode to their deaths – except, of course, Lord Cardigan, who returned home to England, a national hero.

Then, there's the Italian ace, Italo Balbo, was given the command of Italy's forces in Libya in 1940. He flew to take charge...and was shot down by his own troops.

A British general, whose name we don't recall, thought it rather un-manly to duck. Touring the trenches in WWI, his lieutenants urged him to put his head down. No, said he, if we all go crouching around all the time we'll never be able to fight the war, let alone win it. He had just finished his sentence when a German marksman shot him in the head.

Of course, some commanders are simply mad. Confederate General Richard S. Ewell, who had a bald head and a beaked nose, believed he was a bird. Reports circulated that he pecked at his food and made noises as if he were chirping. The Prussian Fieldmarshal, Leberecht von Blucher, tiptoed around his room, claiming the French had heated the floor. He also believed that he had been raped by a French soldier and was pregnant with an elephant.

But most military commanders the gods destroy without bothering to make mad. We turn back to Publius Quinctilius Varus and Rome's great defeat at the hands of the Germans.

Varus's father was a high-ranking Roman, holding the post of quaestor, but apparently not a smart one. After the assassination of Caesar, Sextus Varus chose to back the wrong side in the civil war that ensued, aligning himself with Brutus and Cassius, Ceasars' murderers. At the battle of Philippi in 42 BC, Varus' team was thrashed. It was Roman tradition that the leaders of the losing squad committed suicide. Varus turned to his slave and asked the man to kill him with his own sword. We don't know whether the servant was delighted or appalled. All we know is that he did what was asked of him and Varus disappeared from history.

His son, P.Q., married carefully – that is to say, in a way that brought him to Emperor Augustus's notice. In fact, he married twice, each time bringing himself a little closer to the imperial household. Given the governorship of Syria, he came to it as a poor man to a rich province. He left it as a rich man leaving a poor one. Longing for more glory, he saw his opportunity east of the Rhine River, where the Germans had not quite been brought into the empire.

In the Romans' view, the Germans were a wild, unruly and uncivilized group of tribes. When they weren't getting drunk and fighting with each other, they were just getting drunk. They were regarded much in the way as Iraqis today are seen by senior American military leaders – as incompetent and disorganized. The Romans, on the other hand, were well organized, but their contempt for the barbarians and their general arrogance towards all subject peoples made them prey to error.

Varus's first mistake ws that he trusted the young leader of the Cherusci tribe, Arminius, who spoke Latin and had ambitions of his own. Arminius told him that the Chauci – a tribe to the east of his own Cherusci, far from the Roman fortresses along the Rhine. Varus couldn't resist the opportunity for glory. He gathered three legions together – along with several cohorts of Germanic auxiliary troops – to put down the rebellion.

His second mistake was not listening to Arminius' own uncle who warned him of the trap.

And his third mistake was to take his troops through a narrow defile where they could be easily ambushed.

Varus was probably riding along happily, imagining the triumphal march he would make through Rome when he returned, when he first heard the 'baritus'. It was a sort of war cry, made by the Germans before a battle, a kind of low moan produced by roaring in a deep voice against their own shields.

It began at Kalkriese, near today's Osnabruck, and is called the battle of the Teutoburg Forest. Varus was so confident that he had brought with him a whole caravan of women, children and supplies. The army was stretched out along a narrow road through the forest. To make matters worse, it rained. Roman archers found that their bows were almost useless. Foot soldiers could not form up properly. All their training, tactics and careful administration were of no use.

Arminius had managed to bring together the Cherusci, Marsi, Chatti and Bructeri – all the local tribes – and set them on the Romans. They may have been no match for the Romans on open ground...but here in the forest, they were having a picnic. They wiped out the baggage train first. Women and children were killed, or taken as slaves. Then, they went to work on the Roman soldiers. Soon, the auxiliaries not only deserted but went over to the enemy.

For several days, the legions held together – out of discipline and desperation. They even managed to build impromtu fortifications. But they had no way out. When it was clear their situation was hopeless, Varus must have followed family tradition. He probably buried his sword in the ground and fell upon it. The Germans picked out among the dead, cut off his head and sent it to Rome. Arminius was later defeated by Roman forces sent to get even, but Germany was never subdued...and never part of the empire.

Bill Bonner

Editor's Note: Bill Bonner is the founder and editor of the Daily Reckoning (where this article first appeared). He is also the author, with Addison Wiggin, of the New York Times and international best-seller: "Financial Reckoning Day: Surviving The Soft Depression of The 21st Century" (John Wiley & Sons).


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    Published: 31/08/2006 (NL00016) ©2004 - 2006