IT staffing agency Certes recently hosted a 'think tank' session for its clients to consider the potential impact of IR35 on companies, and the complications of changing contracts.
According to David McCormack, commercial director at Certes, the briefing - which was delivered by Anne Redston of tax advisors Ernst & Young - attempted to increase clients' awareness of the legislation, and the need to develop more flexible working relationships with contractors, while complying with the law. He says Redston warned companies that contracts cannot simply be amended to avoid the obligations of IR35, and that the reality of the working relationship will carry more weight with the Inland Revenue than the wording of the contract. She also advised that any changes in the contract between the client and the agency should be mirrored within the contract between the agency and the contractor's company, and examined issues such as the right of control, substitution, and financial risk.
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"While it's going to require test cases to clarify exactly how to evaluate who is affected by the legislation, genuine contractors are going to have to be more consultancy and project-based than before," McCormack points out.
He adds that while Certes has noticed an increased interest in permanent positions by some of its contractors, this is likely to be a "short-term reaction" to IR35. "Once contractors have had a chance to fully consider all aspects of the legislation, it is likely that many will realise the benefits of contracting still outweigh the cons," says McCormack.