There’s a whole lot of news hailing IR35 as the end of contracting as we know it. It’s certainly understandable why so many contractors are concerned – just take a look at all the red on offpayroll.org.uk – but it’s also certainly not the end of self-employment by a country mile.
IPSE's latest study showed that the number of self-employed people in the UK is the highest it's ever been (a whopping 5 million), despite the looming changes to the off-payroll rules, an epidemic of blanket status determinations, and the will-they-won’t-they game of Brexit. From where we stand, contracting’s hardy enough to weather the IR35 reform, and those companies that do prepare for it fairly and reasonably will enjoy the cream of the crop when it comes to highly skilled talent down the line. For underdogs in the tech, finance, and pharmaceutical sectors, a contractor-positive approach to IR35 could prove business-defining.
However, we put the question out to the industry for some expert opinion on the run-up to 6th April.
What has been your personal experience with IR35 so far?
“I was involved when the changes to IR35 came into the public sector back in 2017, and legislative changes such as these are always a challenge for any business, as well as the individuals involved,” says Kirsten Logue of Edge Testing, a software testing resource supplier. “It always involves a period of uncertainty which can only be controlled and managed by understanding the circumstances, your client’s needs, and the solutions you can provide, as well as preparation and planning."
“There appear to be a number of strategies being pursued by private companies, though,” Logue continues. “Some are simply removing all independent contractors from their books, others are passing the responsibility to their suppliers and asking them to confirm the PAYE status of any resources provided in order to protect themselves from risk. For us, our experience has been that by maintaining a dialogue with our customers and engaging and planning as early as possible for the change, we are able to ensure a smooth transition.”
There have been a lot of knee-jerk blanket status assessments and mass push-to-PAYEs from private sector corporates. What's the right way to prepare for IR35?
“The hallmark of businesses approaching IR35 correctly is excellent communication,” states James Poyser, CEO of inniAccounts and Provestor, plus author of the aforementioned offpayroll.org.uk. “As long as the end client has shown willing and kept the process transparent, contractors are generally happy regardless of the outcome. The businesses most successfully tackling IR35 are also providing extra information surrounding the off-payroll rules and offering reassurance to the contractors they work with.”
Grant Speed, Global Managing Director at Odgers Interim, agrees. He says: “These [blanket determinations] are not only illegal but completely inappropriate. Each freelancer, contractor or interim employee must be assessed on a case by case basis. The organisations that are getting it right are the ones who are reviewing roles and whether they should be permanent positions or remain as contractual or interim assignments.”
What do you think is the most important aspect of approaching the IR35 reform correctly?
“It is critical that organisations apply IR35 on an individual basis and don’t take a blanket approach,” continues Speed. “The working arrangements, tasks and responsibilities will vary from assignment to assignment so each needs to be taken on a case by case basis, instead of organisations lumping them all together and applying a blanket assessment – which is illegal. For example, you might have two programme directors working for an organisation and the right of substitution may be contractually different for each of them – meaning that one role falls inside of IR35 and the other doesn’t.”
Jaman Hussain, Senior Accountant at Dolan Accountancy, once again reiterates that communication is the golden key to getting IR35 right. “Having spoken to many contractors along the way, we would definitely say that having a clear line of communication between the hirer and contractor is a key factor to account for,” he says. “Contractors can, at times, be left in the dark by the hirers/agencies, which can then result in them losing interest and pursuing alternative routes, such as employment with a different hirer.”
“For us, we would place a lot of importance on hirers to ensure the contractors they are engaging with are being notified in a timely manner and are being provided with sufficient backing information on how any decisions are being reached.”
How Larsen Howie can help you prepare for IR35
There are steps you can take, no matter where you sit on the supply chain, to make sure you’re ready for the changes; contract and working practices reviews are the first port of call while educating yourself about what the off-payroll rules mean for you is crucial to staying on the right side of the legislation.
Larsen Howie offers a range of contract and working practices reviews – you can find out which option would be best for you here. We also offerIR35 investigation insurance with representation from Andy Vessey, should it go to tribunal.
For any further information or advice, please call us on 01163 800 400 or drop us an email. Alternatively, take a look around our Knowledge Hub for more IR35 advice, industry news and contractor guides.