Perceived IR35 Risk Avoidance Exposes a More Insidious and Probable Risk in its Place

Another high profile defeat for HMRC, namely Gary Lineker, has prompted me to again raise the topic of misled and misinformed clients in the IR35 compliance domain.  The perennial conundrum of how to get so many heads out of the proverbial sand. We've updated the content on our website, especially on our home page, to try to clearly explain how we can properly address and almost totally mitigate IR35 compliance risk for clients. At no cost to them. If you're a recruiter or a contractor, and you know a project sponsor or compliance or HR leader that is insisting on no outside IR35 engagements, even if they're seemingly utterly intransigent, why not direct them to our home page? And we'd love to talk to them. Our chances of shifting their position, of helping them avoid the peril I discuss here, may be slim, but better than no chance at all.

34square is unlike any other IR35 compliance provider, service or platform available. Contractors have unique capabilities on our platform that substantially bolster outside IR35 credentials for our member contractors, which directly benefits and protects clients. So we don't just assess IR35 status. With those contractor capabilities, we actually provide a change in the working practices and engagement attributes that drives our IR35 status assessments to a stronger and much safer outside IR35 conclusion.

I'm talking to recruiters a fair bit right now and am sensing too many clients are replacing perceived IR35 compliance risk with a very real and far more insidious one. Too often I hear about struggling and failing projects and transformations, with massive timeline and budget overruns. What causes these issues? People. Resources. Not having the best, most experienced ones available. Or not retaining them.

One highly probable cause of this is a reluctance to engage contractors outside IR35. I have heard recently of a number of cases where clients have lost key transformation resources that were hired on a fixed term contract or engaged inside IR35. If a project is going really well, with few bumps in the road, then maybe those people are more likely to stick it out. But when the going gets properly tough, the temptation to jump to something else that pays maybe 25% plus more, especially given escalating costs of living, is doubtless far harder to resist.

The harsh reality is that most significant projects, programs or transformations are inherently complex and fraught with often profoundly challenging issues and risks. It's why talented, experienced, resilient leaders and top quality expert resources are a fundamental critical success factor. And yet clients are willing to seriously compromise in this area to avoid the arguably far more improbable and innocuous risk of an HMRC IR35 dispute. They probably don't know the statistics of how HMRC fairs in such disputes. Perhaps if they did, they could make better-informed, quality decisions about how to best mitigate their wider risk exposure. If only they read

Surely the vast majority of leaders in large companies understand the value of talent? Its potential to drive their success? To save them from failure? Surely they understand that a talent drain, in fact any compromise in the race to secure the best talent, is handing the edge to their competitors? And yet many are squandering it. IR35 compliance is straightforward and takes minimal effort, with the right capabilities, support and advice.

I've said it before and I'll say it again. Compliance. Don't park up, get out of your car and walk when you see the 30mph sign. And fall behind your competition. Just drive at 30mph. It really is as simple as that. Especially don't park up, get out and walk if it's the company selling walking shoes that advised you to do so. The myth that is the impenetrable complexity and intolerable risk of IR35 compliance is propagated to a large degree by those with a vested interest in the demise of outside IR35. Your compliance leaders have an opportunity to deliver material, success-driving value through actual compliance in favour of walking away and suffering the surely sub-optimal consequences.