April 6<sup>th </sup>2021 is a date which has been cemented in the calendar for the a last 12 months for interims and employers alike. The implementation of IR35 by HMRC is widely viewed as a negative change, but are there positives which are being overlooked?
It is no secret IR35 has felt like a tough challenge to organisations and Interims since the new guidelines were announced by HMRC in 2019, with a lot of rhetoric surrounding the topic being both divisive and negative. However, on closer inspection the legislation may drive some positive changes in the market both for the business and the Interim.
What are the benefits?
Out of IR35 came significant changes in contingent workforce and target operating models as organisations ‘took stock’ of the ROI long term contractors brought into the business. Numerous clients of Norman Broadbent have delivered savings for the organisation out of these changes, ensuring that the employment strategy surrounding contractors going forward is watertight and robust. Not only does this protect the organisation from falling foul of IR35 compliance but it also ensures that maximum value is derived from the interim during an engagement, regardless of whether that is on an inside or outside basis.
Historically, the scope and scale of executive interims has differed massively, from originally joining for a piece of ‘small’ advisory work to then morphing into a management role with line responsibility and board visibility, often going far beyond the original brief. With the Status determination requirement coming into force within the IR35 legislation, clients are legally required to clearly define the deliverables or objectives of an assignment to ensure its ‘inside or outside’ status is binding and compliant. This ensures the interim can remain on task, as well as to clearly understand the challenges faced by the organisation, increasing productivity for the defined objectives.
Furthermore, relationships between Interims and the organisation will change. For a clear status determination, interims are now required to ‘distance’ themselves from an organisation if outside IR35, meaning they will be able to act more consultatively and possess clearly defined access to stakeholders. This should enable a more transparent engagement for both parties and a more consultive, and productive, relationship. On the other hand, for organisations determining a role inside of IR35, it gives the interim an increased likelihood to receive permanent benefits and greater internal engagement with stakeholders, like those an employee would benefit from, which in turn could lead to longer term work or a permanent position. Norman Broadbent are seeing a trend in this area with many of our interims being offered permanent contracts once their initial contract comes to an end. This shows numerous organisations are interested in developing internal transformation functions off the back of these changes.
So, although IR35 is a divisive change to the contract market, which has understandably led to numerous challenges for clients, our experience at Norman Broadbent is that organisations who have taken a proactive and pragmatic approach to the adaptations are able to take advantage of the benefits discussed, whilst also attracting the best interim talent. This is enabled by a streamlined and well thought out employee strategy and onboarding process. Companies which fail to meet the requirements of the new legislation, for example, organisations who take a ‘blanket approach’ to the change and determine all roles ‘inside’ will lose out on high impact executives who can bring immense value to the organisation not only for change and transformation projects but consulting and advisory work also.
If you are interested in understanding how Norman Broadbent can assist you in developing a robust IR35 framework or bringing on high impact senior executives on an interim basis, please reach out to Mike Davies – mike.davies@normanbroadbent.com