Anderson Quigley

IR35 – Lessons from the public sector’s successful navigation and why interim managers should not be concerned.

IR35 – Lessons from the public sector’s successful navigation and why interim managers should not be concerned.

Posted on 21 July 2021

Managing Partner John Laycock talks to Grapevine Leaders about why private and not-for-profit interim managers shouldn’t be concerned about IR35 and how we can learn from the public sector’s experience.  Read the full article below and here.

As a (reluctant) veteran of the public sector interim management market for more than 20 years, I have witnessed many periods of uncertainty but none more so than the changes to the IR35 legislation in 2017.  Dire predictions in early 2017 suggested that the interim industry in the public sector would be irreversibly damaged, there would be a huge brain drain from public to private, seasoned public sector interims would just simply retire and most worryingly public services would not be delivered.

To my colleagues in the private and not for profit sectors who have recently been impacted by the same IR35 changes as of April this year, fear not!  The scare and doom mongers have again been out in force and like their predecessors in 2017, I believe they will be proved wrong in their forecasts of Armageddon for the interim market.

Yes, there was undoubtedly turbulence in the immediate period after April 2017 as intermediaries, clients and candidates adapted to the new regime, but this was relatively short lived.  It became apparent that although the contractual and payment method may have changed for many interim managers, the crucial point was that demand for their services had not (and this remains the case four years on).  Vast numbers of professional interim managers did not just simply retire but adapted to offer more IR35 friendly consultancy / project focussed services so they could continue to support public sector clients – of course staying within the boundaries and assessment of operating a contract outside IR35 and remaining liable for paying the right amount of tax.

Candidates in the private and not for profit sectors will now face the choice of operating within scope (e.g., fixed term contracts, etc), working under an umbrella contract or simply insisting they will only consider assignments operating outside IR35, where they will continue to receive a gross day rate.  But what became clear from the public sector experience was that if you wanted to continue operating as say an interim HRD within Higher Education, you would need to do so on a fixed term contract basis.  The realisation that the interim market had changed irreversibly dawned quicker for some than others and many interims operating at senior level within the public sector have continued to be in constant demand for their services since 2017, many negotiating a premium fixed term contract compared to the permanent salary (danger money I call it!).

Whilst some will complain incessantly that the ‘pure’ interim market has been permanently hindered by the recent IR35 changes, the compelling evidence from the public sector suggests that once candidates and clients have navigated through the initial fog of uncertainty, the need for interim managers, the value they bring to organisations and the flexibility and variety an interim career can offer remains and is arguably strengthened.  Go forward with confidence!

by John Laycock