Contractors’ Questions: Can clients prepare for private sector IR35 reform?

Contractor’s Question: In terms of recruitment, is there anything that private sector end-users like us can do to prepare for the likely introduction into the private sector of the public sector’s recently reformed IR35 framework?

Expert’s Answer: With the introduction of updated IR35 legislation in April 2017 in the public sector and its imminent application to the private sector, those hiring technology contractors may be impacted with high costs and unnecessary risks if they do not adequately prepare now.

This is all the more important because remember that public sector organisations were only given four months from publication of the draft legislation to its implementation, meaning those affected had very little time to review the intended changes and to plan accordingly.

As similar changes (to those made in April 2017) will eventually be introduced into the private sector, organisations in this sector could be exposed to new risks as well as greater difficulty in finding cost-effective contractors to undertake high priority projects such as digital transformation. This would clearly be a strategic issue for any organisation which relies on technology contractors.

While the changes to IR35 are going to change the way private sector organisations use off-payroll resource, they should look at it as a potential opportunity to examine their processes and see if there is a more efficient way to use this workforce.

We believe there are three steps private sector organisations can take to successfully prepare for, or optimise their approach to, IR35 reform:

1. Future-proof your organisation

There is no doubt reform will be introduced into the private sector at some point in the near future and, give the potential changes in behaviour organisations will need to adopt in order to continue to access skilled talent, it is prudent to develop plans to manage and implement the change.

The lessons drawn from the public sector tell us that using the time the private sector has now to prepare means your organisation will be less vulnerable to avoidable cost and unnecessary risk, and will be able to continue to access highly sought-after contractors in a compliant fashion.

2. Assess your level of risk

Talk to recruiting experts who can undertake a health check in auditing your organisation and ascertain your level of risk from the changes to IR35.

3. Change the way you think about interim contractors

Contractors offer access to skills and expertise that is not typically carried in organisations on a permanent basis, but who are usually brought in to deliver key programmes and projects. Consider how you engage this flexible workforce, how you treat them and how you will maintain visibility to ensure they continue to be utilised in a manner that does not evolve over time into an arrangement that could put each party at risk.

The Expert’s Answer is based on written guidance issued to private sector clients from recruitment agency Hays IT.

Tuesday 5th Jun 2018
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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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