Recruitment experts advise on upcoming changes to contractor legislation

Mike Stirton is Director of Interim, Temporary and Contract work at Core-Asset Consulting

FLUSTERED firms wary of upcoming changes to contractor legislation could avoid damaging breaches and wholesale talent loss by ensuring genuine self-employed contract staff are treated “akin to a tradesperson carrying out work on your home”.  

The advice, from recruitment experts at Core-Asset Consulting, comes ahead of April’s introduction of controversial reforms to the off-payroll working rules, commonly referred to as IR35.

The changes are designed to shift the responsibility over the correct use of self-employed contractors onto businesses, with a view to cutting tax avoidance and exploitation.

With a recent survey suggesting that four in ten businesses are considering phasing out contractors when the legislation is introduced, Scotland’s critical financial sector, which has seen a major move towards the use of interim, gig-based specialists – is being braced for the changes.

Mike Stirton is Director of Interim, Temporary and Contract work at Core-Asset Consulting, an Edinburgh-based recruitment company that last year facilitated the introduction of many self-employed contractors into key financial and professional services in Scotland.

He said: “Despite the clamour, in truth not a whole lot is changing to the rules that determine whether an individual providing contractor services should be deemed and employee or not.

“What is changing is who is liable if an individual is incorrectly operating outside of IR35 consideration.  This is switching from the contractor, who is currently responsible, to the end hirer.

“This has meant hirers are having to educate themselves on the reforms pretty quickly to decide whether or not they are comfortable with continuing existing self-employment relationships or if the way forward should be a switch to switch to a PAYE payroll model.

“There is a lot of advice and tools circulating online that can help firms with this decision but in truth, they are time-consuming and often the hirer finds it difficult to answer the questions they pose with confidence due to the complexity of how the subject is presented.  

“One piece of advice we like to give to our hiring clients is to think about their contractor as having a similar relationship to their firm as that of a tradesperson carrying out work in their home.

“If they are comfortable with the individual getting a specific job done, whether this befitting a radiator or managing a financial reporting project, under their own steam, at their own risk, in their own way, and indeed with their own team, then there is likely to be little issue with them being a bonafide self-employed contractor in the eyes of HMRC, operating outside of IR35 consideration.

“If they are uncomfortable with this approach and would prefer to ‘hover over the shoulder’ of the individual telling them what to do, how to do it, where and when to do it and who should do it – then they need to consider looking to a payrolled PAYE resource.’’

With close to 20 years’ experience in temporary recruitment, in 2011 Mike joined Core-Asset to establish Core-Asset’s Temporary and Contract division that provides contractors and temporary hires within the financial services sector. He is uniquely positioned to assess impact IR35 is already having.

He added: “We are seeing wildly different responses to IR35 from firms within Scotland’s financial sector, with this discrepancy mostly a result of fear and misunderstanding.

“Today’s workplaces require the use of genuine interim consultants – and that demand will not go away.

“With the increasing tax burden, the cost of hiring interim talent is now likely to rise when a simple mentality shift from the end hirers, in how to engage with the self-employed may have been and will continue to be the simplest and most cost-effective solution’’

Formed in 2005, Core-Asset Consulting is a leading independent recruitment company dedicated to financial and professional services in Scotland. A specialist recruiter based in Edinburgh, it offers its client’s tailored solutions for permanent, temporary, contract and interim positions.

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