IR35 - Let’s find new ways of working
IR35 - Let’s find new ways of working
There is no denying that the IR35 legislation is ill thought out, potentially destructive and haphazardly executed. It has already caused financial difficulties for individuals and companies. One of the worst examples being HRMC suing NHS Digital for applying the rules using HMRC’s tools. It is a mess; this is a piece of spiteful and pointless legislation that will do more harm than good. HMRC it seems is not able to go after the big boys (they have better and cleverer lawyers and accountants in flashier suits) so instead they have chosen to kick the metaphorical cat.
Contractors contribute billions of pounds to the economy each year, imagine what this loss will do to companies small and large and to the government coffers. Imagine what the NHS could do with that money, universal credit could be improved and overhauled the list is endless on what good that money has done and could do.
So, we are stuck with an uncaring government backed by a powerful tax authority. They are not going to change this legislation in any meaningful way (they said they would before the election – but I can’t see that happening!).
"The rules are written by people who do not understand how contracting works."
The rules are written by people who do not understand how contracting works. They do not understand the relationship between contractor and client. They do not understand the underlying security structures that are required or basic technical infrastructure (otherwise having a client email address would not be one of the criteria’s for being employed!). All they see is people who are not paying the tax they believe is due (even though contractors will be contributing far more to the economy than just their tax money). This is small minded and choses to ignore many valid arguments to improve what we have rather than use shock and awe tactics.
We can all sit back and accept it, or we can look at new ways of working.
To me this potentially presents a great opportunity for contractors and employers to reset and even improve their working relationships.
Contractors can club together to form their own boutique consultancies. As contractors we are working directly with customers, we have a much clearer and more nuanced view of what customers actually want. When you are sitting in the client’s office you can see what does and doesn’t work and you also have a better view of emerging trends. I believe that small consultancies run by contractors can be much more agile and can also help clients in more ways. We don’t have to go to a labyrinthine corporate structure to get something done. A simple conversation or a direct phone call can get things moving almost immediately (rather than email ping pong and a lot of meetings in three weeks’ time).
We should also start looking at work packages instead of whole jobs. Do you need a new process designed, to upgrade a piece of software, some training or behavioural change embedded? All of these could be large projects, or you can look at them and break them down into their component parts. Perhaps the training could be designed by the consultancy but delivered by inhouse staff or vice versa. Maybe the initial research on the software upgrade can be done externally (perhaps there is even a better solution you hadn’t thought of). This has the advantage of keeping your internal staff more involved in projects and processes whilst really getting the support you need from experienced contractors. For both sides it is a win/win especially when it comes to skill sets and technology.
So perhaps IR35 is an opportunity for contractors to create small, agile consultancies which can really give clients what they want. Maybe clients will also have a chance to develop more honest and productive relationships directly with contractors. Contractors banding together will be able to pick up more skills and increase their skill sets from their colleagues as well as their clients. This could be an exciting and empowering opportunity for both sides of the equation. It would be the ultimate power play to get something positive and forward looking out of an essentially negative situation.
I don’t think I have any of the answers yet, but I do think in the current climate we have to start a conversation about what comes next. The country and the economy cannot afford to lose this flexible and talented segment of the workforce.