With a budget in February 2020 looking likely, we’re likely to find out soon if the IR35 tax reform laws are to go ahead for sure. However, the advice is still to plan and prepare for the new legislation as if it is certain.
But, what exactly does it mean to ‘prepare’?
Some well-known corporation have taken the rather radical and unnecessary decision to sack their long-serving and loyal contractors ‘en-masse’. At the time of writing, yet another global giant giving marching orders to all but it’s gainfully employed.
Knee-jerk reactions like this do nothing but pouring petrol on an already raging fire by contributing to a sense of panic that’s already engulfing the contracting economy.
After all, rightly or wrongly, smaller businesses without the resources of the corporate giants often look to these businesses and follow their lead. This means corporations do have a responsibility to take a level and considered approach to any changes coming their way.
If the corporations are seen to take radical action and panic, then the chances are other businesses will panic too – and this can be highly detrimental to a business’s health.
Leaving a void
The irony of all of this is that it’ll pay to approach IR35 in a more rational way. Sure, it might seem convenient to try and avert a bureaucratic storm by getting rid of your contractors, yet ditching a dynamic and skilled talent pool in order to save some short term effort seems a rather big baby to throw out with the bathwater – especially when the skills void that’s been left behind could take years to fill.
For a start, HMRC claims only 30% of contractors will be affected by the new legislative change, so getting rid of entire teams is evidently too heavy handed.
Rather than run away from the inevitable, the preferable approach when it comes to IR35 is for both contractors and hirers to seek ways of turning the new legislation into an opportunity.
Where do you begin with this, however?
Use it as a reason to get closer
Having already facilitated the transition of thousands of public sector contractors to IR35 compliance in recent years, I’ve seen how IR35 can be applied to unite teams rather than divide.
It forces both hiring company and contractor to review the placement in hand, and consider why a contractor’s perspective and set up is vital to the role moving forward.
Why is this important? Contractors are often bought on board because they are dynamic individuals that are brought on board to work outside of the confines of the company. This gives them a unique perspective.
In short, sometimes the biggest contribution a contractor can make is that they are not an employee. However, after a time working in the same company and being treated on a par with the employees or that company, it’s natural for contractors to start slowly sliding into the culture of the company, thus losing that unique perspective and edge.
This can then lead to a lack of accountability and flair – the very thing the contractor was brought in to deliver from the start.
Slide into employee territory
IR35 provides the platform for contractors and hirers to get together to review these boundaries and explore ways in which the contractor/hiring party working relationship can be further enhanced for the benefit of both parties.
In short, IR35 forces people to re-evaluate expectations and think about the future. Rather than be seen as something detrimental, it can provide contractors with that well-overdue review meeting they‘ve been waiting for, but never requested – and vice versa.
There’s every reason to hold onto your talent
With digital skilled people in ever increasing demand, embarking on a journey of ‘review and improve’ has surely got to be a more attractive proposition than destroying the status quo and starting from scratch. It’s therefore a mystery why some global names have ended up taking such drastic action.
Help at hand
Are you a company that hires digital contractors and that is worried about staying compliant with IR35 law? Or are you a technical contractor that wants some advice about how to review their status?
Either way, you can give Digital Skills a call for some straightforward answers.
Or, if you’re after some quick tips in the meantime, download one of our check sheets that spell out what you need to know in ten clear points. They will give you an idea if you’re on the right track.
About the author:
Mike Cheeseman is the founder and managing director of Digital Skills – a specialist digital talent and resources provider based in the Thames Valley.
He has a degree in government and politics and an extensive background in digital and business transformation.