Could the IR35 reform indirectly harm companies access to tech talent?

[cojak]

Then they’d better start treating contractors as proper businesses and pay them on deliverables rather than BoS working hours.

[webberg]

Start ups are going to have an interesting dynamic and economic situation to manage.

Most start ups want to be lean and mean in terms of cash out of the door.

This means that many will want to have contractors as at the very least they save employer NIC on the cost.

The reforms to the private sector mean that they can engage an agency to find and manage the financial aspects of hiring a contractor. The agency becomes the fee payer and is in theory responsible for tax and NIC, especially if the inside/outside IR35 decision is overturned by HMRC.

We have already seen changes to contracts between contractor and agency that say if the agency is wrong and ends up with a tax/NIC bill, then they will seek to push this on to the contractor.

Leaving aside issues such as whether this is commercially sensible or in line with what the tax legislation wants, the leverage is usually all with the agency and many contractors will either not be aware of these clauses or be forced to accept them?

What happens though where the start up engages the contractor directly, becoming the fee payer as well as end client?

[Ron@Clever Accounts]

I'm currently working with a startup - they will be unaffected for now, as they are a small company (< 50 employees, < x turnover/assets whatever the magic figure is). I imagine most startups will be the same.

I agree it's still early days and in general, startups tend to be more flexible in terms of workforce changes; as long as they have the right financial backing.

[TwoWolves]

Yes, it will lead to a shortage of tech talent. The government will "solve" that problem by inviting 5 million more immigrants.

Classic problem-reaction-solution.

They started this process early.

I'm currently working on a project that was outsourced but after two years produced not a single line of working code, so now they have brought in the local contractors to get it working before top brass realise it's DOA.

[OneManBand]

Yes, it will lead to a shortage of tech talent. The government will "solve" that problem by inviting 5 million more immigrants.

Classic problem-reaction-solution.

[Ron@Clever Accounts]

You might want to read this...

Bulletin Board Terms and Conditions

When you're right you're right..

Should be fine now, NLUK.

[mudskipper]

Some good points raised in this article.
Obviously, contractors are a major ingenuity driver in the digital sector, but I wonder if that contribution could be quantified?

Can UK tech start-ups thrive with the IR35 tax reforms? | theHRD

I'm currently working with a startup - they will be unaffected for now, as they are a small company (< 50 employees, < x turnover/assets whatever the magic figure is). I imagine most startups will be the same.

[jamesbrown]

Some good points raised in this article.
Obviously, contractors are a major ingenuity driver in the digital sector, but I wonder if that contribution could be quantified?

Can UK tech start-ups thrive with the IR35 tax reforms? | theHRD

Do you wonder that? I wonder if you wonder that, or if you were wondering something else...

[northernladuk]

You might want to read this...

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6. No advertising or marketing of any kind, including non-profit organisations, not even subtle stuff, ever. Please use your company name as a user name to identify yourself when offering unbiased, expert advice only. We will not accept any "hard sell" on your services or products within posts or touting for business via private message (PM). No URLs, contact details or sales spiel on sigs either.

[Ron@Clever Accounts]

Some good points raised in this article.
Obviously, contractors are a major ingenuity driver in the digital sector, but I wonder if that contribution could be quantified?

Can UK tech start-ups thrive with the IR35 tax reforms? | theHRD