How IR35 is sharpening sourcing strategy in change
Is dealing with the looming IR35 legislation changes simply about re-contracting contingent labour onto an ‘employed’ basis? Well, no. Any organisation adopting this approach risks being left behind by the market. More enterprising competitors are using IR35 as a trigger to adopt a more strategic approach to sourcing the expertise they need to manage and deliver change.
IR35 presents both a cost and risk challenge to the delivery of change. From a financial perspective, the imminent change in legislation due in April 2021, requires businesses to change the contracting basis with contingent labour, to protect themselves from the risk of tax liabilities. Equally, IR35 significantly increases the delivery risk around major programmes and projects. Key team members could choose to leave, and key skills could be harder to source creating disruption, delays and ultimately further cost exposure. Over the last few months, these threats have prompted many organisations to undertake reviews of their contracted workforce and implement new measures to mitigate the challenges.
Furthermore, whilst the current COVID-19 pandemic had caused the implementation of IR35 to be postponed for 12 months, if companies didn’t take action before, by asking suppliers for IR35 indemnities, they need to prepare now.