We’ve now passed the one-year mark since the amended IR35 regulations were implemented.
As a considerable amount of time has passed since then, confidence in the contract market has started to rise once more. However, we’re still seeing some companies working with blanket bans on Outside IR35 contact roles.
Last year, in order to meet the April deadline, many contractor-dependent organisations chose to implement a blanket ban on working with Personal Service Companies as a seemingly simple solution. As a result, contractors were forced to be engaged with a business via an umbrella company.
I can see why these companies initially chose to go down this route. It ultimately allowed them some time to understand the legislation and plan accordingly. To still be enforcing them one year on, however, seems short-sighted.
In fact, insisting that your contractor workforce operate on Inside IR35 roles isn’t the best way to secure high-calibre contract workers at all.
Contractors have now been pushed into the umbrella process, which could see businesses challenged for inaccurate determinations from experienced contractors that understand the legislation.
Despite there being some really professional operators in the umbrella world, it still has a relatively poor reputation – and the lack of regulation in the market has created a lot of headlines recently.
Contractors have been providing details of their experiences with umbrella companies over the past few months, and evidence is being shared with HM Treasury via specialist groups. When the details have been reviewed, it could make for a difficult read for the umbrella industry – but regulation is long overdue.
There will always be genuine Inside IR35 contract roles, but these will have been accurately determined and will attract contractors and workers happy with this arrangement. By taking the right advice and working with suppliers who understand the contract market – and who appreciate that there are no shortcuts – you can still successfully hire for Outside IR35 roles.
The result?
We see the impact of these blanket bans and Inside IR35 roles on a daily basis. Almost every conversation we have with a contractor starts with the question, “Is the role inside or outside IR35?”.
Despite Inside roles becoming more common, we still experience around 70% of contractors refusing to work Inside IR35, so companies are now having to hire from a drastically reduced resource pool (unless the rate has been significantly increased to ensure take-home pay isn’t affected – and clients aren’t usually willing to do so).
The knock-on effect is that although blanket bans or Inside IR35 roles seem to be the least risky route, they could actually be damaging your business by making it more difficult to hire contractors. This, in turn, can lead to delayed project delivery timeframes due to resource shortages.
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