So, Tuesday’s news that the proposed change to IR35 legislation was to be delayed by 12 months was met with much celebration and back-slapping amongst the contracting and agency communities.
But what does this delay, brought about by the unprecedented effects of COVID-19 pandemic rather than a change of heart from the UK government, actually mean to the world of contracting?
We need to remember that IR35 legislation has been in existence for some 20 years and is unlikely to be going anywhere fast. So it’s important that all parties use this 12 month delay to get their respective acts in order and come up with a transparent and workable solution ensuring fairness to all and maintaining access to the flexible skill base that the energy industry specifically requires.
In order for this to happen we need to look at each scenario in turn:
INSIDE IR35 – like it or not a lot of roles, currently being undertaken by individuals working through their own Ltd Companies, will be classed by the engager (client) as falling within IR35. The result of this being that the individual carrying out the role will be taxed as an employee. Surely, then, they should receive the same benefits and protection as an employee? Yet, at the moment this is not the case. To me, this anomaly is the biggest problem with the government’s plans and simply needs to be addressed before next year’s changes are rolled out.
OUTSIDE IR35 – the energy industry needs flexibility more than ever and contracting remains an attractive option to many industry professionals. The simple blanket ban on individuals working through Limited Companies - which we have seen many adopt - will, in my view, cause the energy industry a real issue in retaining the experience and highly sought after skills as well as attracting the next generation of gig workers we require to fulfil our commitments for the Energy Transition.
For contracting to work successfully and compliantly with IR35 both parties need to ensure that the engagement is about providing specialist services against an agreed scope and that the relationship is clearly business-to-business. Adding substitution clauses into contracts for services is simply not enough. In addition, individuals looking to continue to work through Limited Companies will have to demonstrate that they are behaving as companies, delivering services to agreed scopes without supervision, pitching for contracts, taking on financial risk and having sufficient insurances in place.
At Nudge we are developing a revolutionary platform that will manage the entire engagement process for the future flexible workforce; from matching client scopes to individuals with required skill sets, right through to final payments for the services successfully delivered. As we continue to progress with development through industry support from the TechX program, we very much welcome feedback and suggestions from all parties to ensure that we provide our industry with the solution it requires.
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