Depending on where you get your news from, will determine how you view this change to IR35. Certain groups feel this could lead to the end of the contracting market in the UK. Others see it as an inconvenience but understand the reasons for the working with the new reform.
As mentioned, in my last article, from April 2021 the client receiving the services from the PSC contractor will now be responsible for determining if the assignment can be performed by a PSC contractor. Before I explain the impact let me give you an overview of the standard contracting structure.
A client identifies it has workload above the capacity of the current permanent headcount. They have 2 options at this stage:
- Hire a new permanent employee to take on this work
- Hire a contractor to take it on
Both options have benefits and drawbacks, but the challenge for the client is that the work may only be for a short period or for so specific it’s only required for this one project. Additionally, there are no guarantees the additional support will be required once the project ends. And due to this, they opt for a contractor as this allows the flexibility as the project requires it.
Now for 20 years (in the private sector at least), this has worked, the client would engage a contractor via their own PSC to complete the required tasks. This worked so well that flexible workforces have delivered some of the UK’s biggest projects in industries such as IT, Energy, Engineering, Banking, Insurance the list could go on.