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IR35- the implications for specialists in the contractor market

The countdown to the private-sector IR35 reforms has begun. Come April 6th, organisations will be responsible for determining whether a contractor is ‘inside’ IR35 – i.e. deemed an employee for tax purposes – or if they sit outside the legislation.

While clients and contractors are understandably apprehensive of the reforms, what’s encouraging is that many companies are reaching out to contractors to guide them through their assessments.

Clients have been asking contractors whether they believe their work falls in or outside the scope of IR35. This empowers contractors to make decisions for themselves, leaning on the support of an agency like Talent when necessary.

This means that we all guide and support one another. After all, we’re all in this together.

Contractors assessing their own status can also prevent clients from making blanket inside decisions, something that could result in them losing highly-skilled workers who wish to work outside of the legislation.

 

Making fair assessments

Ideally, we’d like to see more companies making case-by-case assessments. Many of our contractors will be outside of the legislation due to the nature of their work – they are employed to deliver a set project using their niche skills, then they move on. Assessing each contractor on an individual basis opens the door to fairer and more accurate IR35 decisions.

The most important thing, though, is to make correct assessments. HMRC’s CEST tool is a good place to start, but we can also sit down with clients and contractors to go through the determining factors involved in an assessment, including things like duty of care, deliverables and equipment. We can help clients grasp these principles and advise on how to ensure contracts remain outside IR35.

 

Adopting a neutral stance

Here at Talent, we consider it our duty to help both clients and candidates navigate the post-IR35 landscape, equipping them with the tools and information they need to make fair and accurate assessments – and feel confident in doing so.

This involves us adopting a neutral stance. Not every client will be able to offer contracts that sit outside of IR35 and we must advise on the right strategy for each individual case. We’ve been praised for taking an impartial approach.

It’s helped that the public sector went through this recently in 2017. I worked in the sector at the time and it only took a few months for the dust to settle after the changes were implemented. The benefit now, of course, is that we’re more informed – and thus prepared – than we were in 2017, having already gone through the process and learned valuable lessons from it.

 

Changing times

It would be naive (and simply wrong) to say that things aren’t going to change after April. We could see more contractors go permanent, fewer permanent roles may be available as a result, and clients might initially offer fewer contracts. There’s likely to be a huge shift in the dynamics and perception of contractors.

The market may be changing, but one thing that isn’t going to change is the value high-skilled tech contractors can add to an organisation. I recently spoke to a client who said that they’d have to hire two permanent employees to cover the work of one of their current contractors – this is testament to just how instrumental skilled tech contractors are to businesses.