Meet Seb Maley, CEO of Qdos. Seb takes this time to address mounting concerns within the industry and share with us what he believes the future holds for contracting.
What insights have you gained from your 17 years working at Qdos?
First and foremost, that contractors and freelancers are an absolutely vital asset to the economy. Organisations of all sizes rely heavily on their expertise as well as their inherent flexibility and ability to adapt.
From the introduction of the IR35 rules back in 2000, HMRC have fixated on what they term ‘tax-motivated incorporation’, which means that they believe that people are incorporating limited companies as a vehicle to primarily avoid tax. For the vast majority of the hundreds of thousands of contractors that we have dealt with over the years, this couldn’t be farther from the truth.
Whilst engagers enjoy and benefit from the transient nature of contract work, it is a lifestyle choice for the contractors themselves. Most of them are proud of the businesses they have created and are fully accepting of the risks that independent working and entrepreneurialism brings.
It is, therefore, a symbiotic relationship between client and contractor, but one which HMRC and the Treasury do not care for. It has been blighted by IR35, alongside numerous other tax measures and legislation for 20 years.
I feel very strongly that people should not be forced into employment, or even a netherworld between employment and self-employment, when that is not the desire or intention of either party involved. However, the complexity and misinformation around IR35 and employment law has made it very difficult for organisations to take a rational or objective view. Unfortunately, that is exactly what is required as we approach such a significant legislative change.
What are the challenges faced by the market approaching reform?
The complications and misinformation mentioned earlier create a major challenge. IR35 and employment status tests are not straightforward, and for many companies, the extent of the challenge and perceived burden may seem insurmountable. This is why we saw a flurry of blanket determinations and ‘PSC bans’ in the lead up to the intended date of reform this year. What a lot of companies do not initially realise is that this will present further challenges, not least in recruitment and retention.
There is also currently an awful lot of noise about IR35 in the market. The complex nature of employment law means that you are left with grey areas and subjectivity. In the last 18 months, a lot of companies have seen IR35 as an opportunity. As such, they have positioned themselves as experts in the field – but this has created a lot of conflicting views potentially driven by vested interests.
For engagers, it can be difficult to know where to turn for advice and support.
Do you have any insights into the future of contracting in light of the pandemic and IR35 reform?
Though a global pandemic leaves us all in a precarious situation, we can find two key takeaways from its impact. Firstly, contractors being genuine businesses and not ‘disguised employees’ should now, in my view, be unquestionable. For organisations looking at saving costs, contractors were the first and easiest population to remove. Vast swathes of temporary workers will have seen their contracts terminated early on. They have then well and truly fallen through the cracks of any meaningful government support. As I mentioned earlier, contractors are well aware of the risks that go alongside running a business, that cannot have been more brutally demonstrated than over the last few months.
Secondly, and on a more positive note, contractors are going to be absolutely crucial in repairing the economy and getting businesses back on their feet. We are already seeing signs of this happening, and the government should take note of the reliance that companies will have on flexible labour.
Of course, the off-payroll changes are still going ahead next year, and they will undoubtedly receive a knee-jerk response of panic to some degree. However, I would hope that many organisations will see the contracting community in a different light when they are deciding how to approach the reform this time around.
Keeping on top of compliance is tricky, we can help you navigate IR35. Take a look at our dedicated page for Preparing for IR35 Reform, contact a member of the team, or get in touch directly with Seb on LinkedIn.