How to have your interim cake and eat it: Inside IR35
Updated: 6 days ago
IR35 defined: essentially using an individual on a freelance basis to do a piece of work that could be done on a permanent employee basis.
So here we are, months on from the new IR35 rulings coming into force - with all the fanfare of a damp squib. Obviously companies had bigger fish to fry courtesy of Covid. However, most have taken heed, (many still slightly confused, but more of that later), and where applicable have either converted long term contractors to permanent staff, or attempted to secure the specialist skills required on a fixed term PAYE contract. Simples… except is it?
I have long argued with some of my learned colleagues regarding the definition of the term ‘interim’. For me, an interim contractor is someone who either a) fills a permanent role while the full time staff member is absent (maternity leave, illness etc) or b) to temporarily fill a vacant role. What an interim is not - to my mind - is a consultant. A consultant is an individual with specialist skills who is brought in to create and deliver a defined piece of work. Understanding and utilising the difference is where companies can have their cake.
Solution: using a company with a portfolio of clients and various resources deployed to the project as appropriate.
A company wouldn’t approach a management consultancy and request a resource to work for them delivering a project on a PAYE contract, so why do it with any limited company, as the same rules apply.
Let me explain by example:
I was recently asked do a distinct short term project on a part time, PAYE basis. Trying to operate it on a 2-days-per-week PAYE given the tight deadlines wasn’t practical - as well as giving my accountant a migraine trying to sort out the tax. I pointed out that JM Consulting ( my company) has a portfolio of projects and I use a network of associates with different skills and a scale of fees: therefore doing the piece of work would clearly be outside IR35, cost effective and more efficient… SIMPLES.
The client agreed this was the best course of action, but her procurement department wasn’t having any of it - so the poor woman ended up burning the midnight oil, doing it herself.
If this scenario sounds similar to a headache you’re having? Why not get in touch with me at email@example.com