Contractors’ Questions: Will IR35-hit clients shift to agencies and consultancies?

Contractor’s Question: Will clients pass off the IR35 assessment work to recruitment agencies instead of doing it themselves? And to reduce their risk, or if they cannot shift the assessment, will they simply move contractor work to large consultancies?

Expert’s Answer: In answer to your first question, in our experience of the public sector IR35 reforms, there has been very little evidence of this ‘assessment shifting’ since the reforms were introduced in April 2017.

The reason this shifting has not appeared to happen to any great extent is because the legislation clearly makes the status determination the responsibility of end-clients. Moreover, recruitment agencies have no appetite to take this assessment on, either from a risk or cost perspective.

What we do not know, of course, is how private sector end clients will respond once the April 2020 framework takes effect. They may react differently. At this stage, we think these commercial engagers of contractors are less likely to apply ‘blanket’ decisions when it comes to IR35 status. Given their entrepreneurial spirit and desire to make profits, we believe they are more likely to want to take reasonable care and be actively involved in the decision-making process.

Regarding any shift to consultancies, this clearly is going to be an option for end-clients. However, ultimately their overriding concern will be to ensure that they can engage with contractors that offer the skill-sets they need. There are no guarantees that by moving to a consultancy-type arrangement they will be any better able to ensure projects are properly manned or efficiently completed.

The expert was Helen Christopher, operations director at contractor accountancy firm Orange Genie, and the host of a private sector IR35 reform survival webinar on ContractorUK.