Recruiter reveals last-ditch efforts to educate clients on IR35 reform

A recruitment firm’s phone-in to an IR35 reform webinar gives contractors a rare, 11th hour insight into what agents have been up against to prepare for Tuesday’s off-payroll rules.

SThree said it has ditched CEST; brought in the UK’s top contract review firms, held weekly meetings to share learnings, and swapped manual training for digital, “on-demand” resources.

The recruitment firm also said it has had to direct end-users away from IR35 status decision-makers who are “too far removed” in workplaces from the PSCs requiring assessment.

'Pick your battles'

But because it has had to educate clients on many additional IR35 fronts, like advising against CEST and against treating reform as a ‘project ending April 6,’ the firm has had to ‘pick its battles.’

Ahead of saying that compared to 2017’s IR35 reforms, “a lot more emphasis” on making sure clients take ‘Reasonable Care’ has needed to be placed, SThree’s Charlie Cox explained:

 “Ultimately it’s the client’s decision,” he told the webinar, referring to which hue of IR35 status tool gets used by each end-user to test contractors’ IR35 status.

“If the client made a decision as to what it wants to use, [as an agency], you have to pick your battles, in terms of who you want to challenge - and which customers you want to challenge.”

'We give a simple answer on blanketing'

Mr Cox added that he and his consultants have had to tackle ‘cause and effect’ as well, by telling clients who opt for ‘blanketing’ exactly what they are getting their organisation into.

“[With] clients making blanket determinations, the simple answer [we give them] is… ‘If you do that, you’re going to reduce your talent pool and likely increase costs at the same time.’

“[So we also tell them] ‘if you want to make yourself commercially attractive and competitive…and attract the best talent, the inside-blanket set-up is not how to proceed.’”

'Clients were just not ready'

Hosted by Kingsbridge, the webinar also revealed IR35 reform education efforts at the opposite end of the spectrum, in terms of their intensity for agencies.

Notably an IR35 “quiz” for its consultants to take after doing their IR35 online learning (hailed as equally helpful for newcomers to the firm who haven’t heard of IR35 before), the SThree commercial director said, before adding another -- simply trying to educate too early.

“Last time around [before IR35 reform was delayed], we started the [education] process so early that clients were just not ready to do it. We thought we could really prepare them.

“But it was just too early. They said, ‘Don’t worry about it; we’ve got months to go. So we don’t need to worry about this yet.’ And that [- timing], was the issue.

“Now [though], to [our] advantage; we can use the fact that end-users have only got a couple of days left and they need to now make their status determinations -- ASAP.”

'Pretty hard to argue outside IR35'

Elsewhere in the webinar, Mr Cox said it would not take “not too long” (“three-to-six months”) following the IR35 changes on April 6th for PSC usage to moderate and normalise.

That timeframe was issued in spite of some contractor working practices currently being ‘set up solely for inside IR35 working, making it pretty hard to argue for ‘outside’ status,’ acknowledged Kingsbridge’s Andy Robinson.

However Mr Robinson also said he has seen statistics showing that in the public sector, where the forerunner to Tuesday’s rules were introduced in April 2017, PSCs are now more prevalent than they were before the reforms.

'You'll see a big difference'

As to the private sector from next week, SThree’s Mr Cox strongly suggested that all parties should brace themselves for a sea change.

 “The way that contractors engage with customers has been too relaxed potentially, and lots of the key status determination points haven’t been considered on a daily basis.

“You’ll see a big difference in the way clients engage with contractors…” he continued, foreseeing: “You’ll be able to walk into an organisation and very clearly identify an independent contractor working through their limited company compared to an employee of that organisation. Whereas at the moment, and over the last few years, that [differentiation] might have been a bit blurred.”

Editor’s Note: Special coverage of private sector IR35 reform begins on ContractorUK on Tuesday April 6th 2021, day one of the new off-payroll working rules.

Visit contractoruk.com for exclusive material from HMRC, a unique serialisation of CEST Explained (by Rebecca Seeley Harris), and advisories every day next week from qualified experts answering the questions of ContractorUK readers, including tailored guidance, and a never-before-published Q&A showing what end-clients are asking about contractors and what they are being advised to do with contractors under the new framework.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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