How IR35 can impact positive change within your business

ir35-the-positives

* This article was written before the date of implementation was pushed back to 6 April 2021*

The media is full of speculation that the IR35 roll out to the private sector is a bad idea.  Whilst the legislation will undoubtedly bring with it certain challenges, we believe that, if handled correctly, it could be beneficial to businesses. 

The latest draft IR35 regulations were published as part of the Finance Bill 2019-20 on Thursday 11 July. You can read our full summary here, but in short there were no real surprises. The main message was that the government is carrying on with the reform, full-steam ahead.  

So, anyone who still had a lingering hope that the Government would change its mind will be disappointed; IR35 reforms in the private sector WILL take effect from 6 April 2020. End-user clients will need to determine whether IR35 applies to any of their existing contractors as at 6 April 2020, and make sure their processes are watertight for any new off-payroll workers engaged.

However, whilst so much of the commentary around IR35 seems to be doom and gloom, we see IR35 as an opportunity for our clients, our contractors and the industry to make positive changes. 

We’ve listed the Top 3 reasons why IR35 could benefit your business. 

1)    Get the low-down on contingent workers in your business

For one thing, the new responsibility of determining ‘inside/outside’ status forces companies to do one very important thing: identify your contingent workforce. We work with many clients who don’t know how to capture the disparate management of contingent workers across their business, and IR35 requires you to do this. Reviewing how your company engages contingent workers, as well as how many you’ve got and how much you spend on them, is a good thing. Knowledge is power: the new legislation provides an opportunity to audit your resources and ensure you have the right processes in place to support your business whilst becoming IR35 compliant. 

2)    Your burning platform for change

As mentioned, many of the clients we talk to don’t have any easy way to identify and classify their contingent workforce. Many more of them know this is a problem, but up until now wished they had the ‘burning platform’ to spark a change project within their organisation. IR35 gives you just that: an opportunity to implement a solution in your business that helps you more effectively track the identification, sourcing, screening, engagement, payment and management of your contingent workers. This change programme can help you gain a competitive edge in the market, especially if delivering time-critical projects is important for the continued successful operation of your business.

In addition, the IR35 legislation provides an opportunity for business leaders to shift their company’s thinking by challenging their hiring managers to think more strategically.  For example, moving away from contracting on a ‘time and materials’ (T&M) basis towards an outcome-based Statement of Works (SOW) will deliver significant business benefit, as well as IR35 compliancy. Whilst an outcome-based SOW may sound complicated, it is actually quite simple to deliver and could have a positive impact on efficiency, cost and the ability to govern the output of the service provider.

IR35 could just be the prompt needed for hiring managers to reduce their reliance on T&M driven day-rate contractors (with no guaranteed quality and ‘grey’ deliverables) and look to SOW to manage their outcomes, avoid project overruns and control of costs.

3)    Engage the best off-payroll talent

After the reforms, contingent workers will still fulfil a valuable role in your business. You want the best contractors, who can provide the most value to your projects.

Companies with a forward-thinking approach to IR35 and the engagement of their contingent workers are likely to capitalise from the reforms, whilst others will risk both non-compliance and poor access to the contingent workers community. 

Whilst competitors are scrabbling about to figure out their approach to IR35, you could become a magnet for the best off-payroll talent. They will be looking to work with organisations with clear, compliant IR35-related processes. 

So those are our top 3 reasons, but there are plenty more. We are confident that the changes will generate excellent opportunities for those that have started to plan and take action for IR35, but it will be important to act early. 

If you want to find out more, explore our IR35 Hub, and learn more about the changes as well as how Gattaca can help you. 

Some of our key services include: 

Please feel free to contact us at any time about anything to do with IR35 – ir35@gattacaplc.com

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