IR35 is coming to the Private Sector.
But in what shape?
The reason for asking is that the government has now said it will “review its implementation”. Even before this additional layer of uncertainty, some organisations with large contract workforces demanded all Interims ‘flip’ into PAYE by March 2020. Such a decision, although a logistical and administrative nightmare, is simple and derisks the situation for businesses. However, whilst it increases the tax take for Government, it does not address the reason why there was an external, short term resource need in the first place. The change in legislation will not suddenly eradicate the demand for independent Interim Executives who can quickly provide Senior Leadership Teams with additional bandwidth, expertise and objectivity to deliver, for example, a major change and transformation programme. There will still be assignments clearly outside IR35 in their origination, content and delivery. However, the contracts and how Interims engage with businesses will be different. It is this aspect that clients need to consider.
Having Interims integrated into your business via the provision of equipment, email, staff responsibility and anything that may describe them as a ‘disguised employee” will negate the independence and the considerable benefits they bring. Is the assignment controlled by the Client … is the assignment deliverable by the stated Interim or will a suitable substitute be acceptable … and is there a mutuality of obligation for employment to continue on an ongoing basis through an open ended contract and long notice period?
Norman Broadbent Interim Management is working with clients to review the structure and deliverables of all contracts. But whist there will be some assignments clearly caught within IR35, there will be others that are not and it’s important all parties recognise this. For assignments in process which run past March 31<sup>st</sup> 2020 and likely to qualify under the impending legislation, we are working on a variety of solutions. Thankfully, both Clients and Interims are being pragmatic. Clients in particular are mindful of the benefits a speedily introduced Interim can offer. These may be additional/new expertise to successfully execute a project or solve a problem, or the flexibility of only needing a set of skills for a qualified period of time. These are just some of the reasons why the Interim Executive market continues to thrive.
However, the change in legislation has proven to be a real opportunity for organisations to review their short term/ temporary workforce. Out of the woodwork have come those contractors that were invisible, have never been included in any headcount, and have been with the organisation for many years. Some may be in business critical positions where there is no obvious successor were they to leave due to IR35. For some companies (estimated at more than 80%), the review has yet to begin. And once it starts to open up an organisation’s true exposure to contractors and the IR35 risks associated, the questions begin.
As a 40 year old Talent Advisory and Acquisition business, Norman Broadbent Group is supporting clients through this process. April 2020 is only a few months away and failure to act now could result in increased costs, loss of freelance professionals in critical roles, and significant disruption to your business, budget and people. The risks are high. If contractors leave, a significant amount of IP may exit the business too. Existing staff may have to take on additional tasks, stretching an already maxed out workforce further. Some may be in business critical positions where there is no obvious successor …
As we approach April 2020, Norman Broadbent Group has devised a series of actions which can be deployed to help manage IR35 Risk. Examples include:
- An end-to-end review of contract work force and solutions for mission critical contractors. Many organisations do not know the extent of their exposure and the impact to business
- Research and Insight into how other organisations structure and shape areas such as Technology and how they are changing their Target Operating Models in light of pending legislation
- Deploy Project Hires which will see the permanent recruitment of teams in functions where there were high contractor populations
- Introduce experts in Outsourcing to advise on solutions and run RFI/RFP processes.