Scenario:
I am a business, and I find I have a requirement for specialist consultancy for a skillset nobody in my business has. I look to engage such a consultancy business and enter into a business agreement with them. After our initial discussion, we agree the period of consultancy might take 6 months but allow for a month of notice on either side just to keep it fair and allow for variability. We know what we want so the requirement is quite tightly scoped. It would be logical to have a series of meetings with the consultant on my business site at first, so we meet daily initially to help familiarise them with our systems. After that we just meet occasionally for status updates and talk on the phone. We agree that the chargeable rate is around £500 a day and anyone in the consultancy can do the work as long as they have the skills.
Now, my business isn't very good at finding other businesses, so I pay an agency to help with the search. They specialise in looking for small consultancy firms who can offer at least one full-time worker that fits my requirement. They facilitate the introduction and make the consultancy aware of what we're looking for. Saves us time.
The consultancy is a real business, although at the present time they only have one worker who also happens to be the director.
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ok you see what I'm saying - that sounds very much like the typical engagement but why isn't it really considered a proper B2B relationship? The problem I see is that agencies are thinking about it as if you're an employee, and talk to you about a 'role', they send you a 'job description', they put you forward for an 'interview' with the client. The client wants you to work on their site because they unwittingly think they're getting an employee who just gets paid in a different and more expensive way.
What I mean is, why isn't IR35 simply mitigated by getting agencies and clients to realise that they need to engage on strictly B2B terms, rather than an almost identical process to a permie hiring process where the permie just happens to work through a limited company? Isn't it just a case of adjusting the terminology and processes? and not even by much...
Like so:
to my mind the net result of all this is that the client still gets the talent they require and the consultancy still earn the money that their business wants. Nothing about this even remotely looks like an employer-employee relationship. Nobody at any point in the chain has even referred to anything approaching that. How can IR35 even apply?
I say this because there are plenty of large organisations that get consultancies in who provide multiple people - like a team of 6 guys who work there for a month or two on a project, they're all permies for the consultancy, and then they go again. None of that is under fear of IR35. Aside from the number of people provided why should a contractor engagement be any different? Yes it requires shifting things around from how it's done now, but it seems straightforward to properly align the business relationship to make it more clear cut that it's B2B.
I am a business, and I find I have a requirement for specialist consultancy for a skillset nobody in my business has. I look to engage such a consultancy business and enter into a business agreement with them. After our initial discussion, we agree the period of consultancy might take 6 months but allow for a month of notice on either side just to keep it fair and allow for variability. We know what we want so the requirement is quite tightly scoped. It would be logical to have a series of meetings with the consultant on my business site at first, so we meet daily initially to help familiarise them with our systems. After that we just meet occasionally for status updates and talk on the phone. We agree that the chargeable rate is around £500 a day and anyone in the consultancy can do the work as long as they have the skills.
Now, my business isn't very good at finding other businesses, so I pay an agency to help with the search. They specialise in looking for small consultancy firms who can offer at least one full-time worker that fits my requirement. They facilitate the introduction and make the consultancy aware of what we're looking for. Saves us time.
The consultancy is a real business, although at the present time they only have one worker who also happens to be the director.
----
ok you see what I'm saying - that sounds very much like the typical engagement but why isn't it really considered a proper B2B relationship? The problem I see is that agencies are thinking about it as if you're an employee, and talk to you about a 'role', they send you a 'job description', they put you forward for an 'interview' with the client. The client wants you to work on their site because they unwittingly think they're getting an employee who just gets paid in a different and more expensive way.
What I mean is, why isn't IR35 simply mitigated by getting agencies and clients to realise that they need to engage on strictly B2B terms, rather than an almost identical process to a permie hiring process where the permie just happens to work through a limited company? Isn't it just a case of adjusting the terminology and processes? and not even by much...
Like so:
- Don't ask for a CV of an individual. Ask for a business profile that lists the services and skills available to the business. I don't need to know the names of any worker you might send. I don't care.
- Don't "interview" an individual, arrange a feasibility meeting with a representative of the consultancy providing services. Establish with that representative whether a consultant can be provided to do the work. The consultant might change over the course of the engagement if the company has to switch them out as long as there's sufficient continuity planning for that eventuality.
- Don't send the consultancy business 'job descriptions' or talk about 'roles'. Talk in terms of the project-scoped business requirement that needs fulfilling within a set time period.
- Don't talk about needing to work on site, be practical about whether you need the consultant present on a daily basis so they can execute on the project.
- Don't ask to perform background or reference checks on an individual. You don't do that for businesses, only your own employees. Of course you might ask the business to assert that all provided employees have been checked, they can provide the evidence. Fine.
- Perhaps don't even have a client-based contract. Instead do something similar to what you'd do if you were an accountant - send your client a letter of engagement that details the services that will be performed and the terms under which your company will perform for them. They sign it.
- Avoid using terms that incorrectly make any reference to the consultant as an employee. For example, they don't have a line manager in your organisation. You don't give them a branded name badge or t-shirt. Don't try to include them as part of your huggy-snuggly 'team' culture. They don't come to your Friday team beers - why would they? They're probably not even on site.
- The consultancy itself isn't a faceless legal construct. They have a branded website, a list of services, and can take on as many other clients or undertake other services as they wish.
to my mind the net result of all this is that the client still gets the talent they require and the consultancy still earn the money that their business wants. Nothing about this even remotely looks like an employer-employee relationship. Nobody at any point in the chain has even referred to anything approaching that. How can IR35 even apply?
I say this because there are plenty of large organisations that get consultancies in who provide multiple people - like a team of 6 guys who work there for a month or two on a project, they're all permies for the consultancy, and then they go again. None of that is under fear of IR35. Aside from the number of people provided why should a contractor engagement be any different? Yes it requires shifting things around from how it's done now, but it seems straightforward to properly align the business relationship to make it more clear cut that it's B2B.
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