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The Team at Laudale

Alec Laurie
Alec Laurie
Managing Director
alec@laudale.com

Event Summary. IR35 Changes 2020: How prepared are you?

Last night we co-hosted an event with the Institute of Interim Managers (IIM) at the splendid Mere Resort in Knutsford.

It was a relatively intimate gathering – a good number of guests, but not too many, with everyone engaged in a lively discussion.

Guest were exclusively interim managers and professional contractors (Ltd Cos, PSCs…) so, whilst it’s the end client that will be “on the hook” from April 2020, the content was aimed at educating ‘interims’ about the changes.

The main speakers from JMW, Brookson One, Armstrong Watson (panel listed below), provided thoughtful insight and, from what I gathered, everyone went home with food for thought.

Here are some of the highlights from my perspective (the below is purposely brief – seek professional advice if you would like greater clarity on any point).

Think Statements of Work (SoW) are the answer? Think again.

One guest wanted to know if having a clear SoW, with a contract tied to deliverables, meant she operated ‘outside of’ IR35. The answer was an emphatic, “no”.

SoWs are not a clear solution. In fact, a panel member even pointed out “one person’s deliverable is another person’s performance target!”.

As with most of the individual points, it really depends on additional circumstances that play into the overall test of employment. Furthermore, the requirements and obligations in the SoW will come into play.

There’s no substitution for genuine substitution.

“I’m OK, I have a substitution clause in my contract”. I’ve personally heard this a great deal over the years – substitution clauses are seen as a ‘must have’ for all truly independent contracts.

However, case laws have failed where there is a written right of substitution, but in practice it doesn’t happen.

Think about it; if you introduced an equally capable substitute to perform the assignment, would your client be OK with that? Or, in reality, is your client contracting with you, personally?

The reality of the assignment is more important than what is written in the contract.

At the same time, as with the other points in this post, it isn’t clear cut! Substitution is only one of many factors considered in the overall assessment.

“To be deemed ‘outside’, I can’t manage staff…”

In the recent past, I’ve had interims and contractors tell me they can’t manage staff on engagements anymore due to the changes. However, line managers and even officeholders can operate outside of IR35.

It comes back to supervision, direction, and control of the ‘contractor’ (i.e. is the manager being managed?).

The overarching message

Remember, nothing has changed about the IR35 status. If you are operating as a true independent consultant now, you will be post-April 2020.

The difference is that your end client is potentially on the hook, now. Which, as we’re already seeing, brings both negative implications and big opportunities.

Thanks to the Panel:

Paul Chamberlain, Head of Employment at JMW

Andy Holt, Senior Account Manager at Brookson One

Karen Thomson, Partner, Head of Payroll & Employee Services at Armstrong Watson

Alec Laurie, Founder & Director at Laudale

Charles Stuart, Regional Director and Company Secretary, Institute of Interim Management