KNOWLEDGE SHARE

The Impact of IR35 – Providing a Service, Not a Person

Luke Foster

Have you considered the impact IR35 will have on how you resource your procurement team? Is your organisation already preventing you from engaging PSCs?

As access to high-calibre contractors will become limited, Oculus Procurement offers an alternative solution to engaging the top procurement talent and resourcing your team. We will; deliver a project, not a role, provide a service, not a person.

With April fast approaching, now is the time for limited company contracts or personal service company’s (PSCs) to review their options. Contractors will be considering the following questions;

  • Do I take a full-time role?
  • Do I accept a reduction in my take-home pay? Does my lifestyle allow that?
  • Can I achieve a higher pay rate to cover the loss? will organisations be willing to pay this rate?
  • Should I only take on contracts that are outside IR35? Do I accept roles may be harder to find and there could be gaps in my income stream

The top talent will likely seek to maintain their take-home pay by demanding a higher rate or seeking contracts that remain outside IR35. What it means for hiring managers is that something has to change.

So, as a hiring manager, what are your options?

Your options may have been limited already; many organisations have already rolled out blanket bans on the use of PSC’s. So, dependent on whether your organisation has taken this route or not, your options are likely as follows;

Increase your permanent headcount – This is the most likely scenario for hiring managers who need to retain resource within their team. This will reduce resource flexibility and access to certain candidates.

Work inside IR35 – This option presents a range of issues, primarily whether the current pay rate will be acceptable to the contractor given the additional tax they will now be required to sacrifice. It will also fall to the organisation to ensure they do not fall foul of the legislation and ensure they remain compliant.

Pay higher rates – This will cost you. You may find no other alternative than to increase the pay rate to counter the additional tax costs if you wish to retain resource. However, to maintain the original take-home pay, prepare to review your budget.

Find an alternative solution – This is where engaging an organisation like ours can help. It will require a change in your historical approach to engaging this type of resource. However, there is no reason the same outcome cannot be achieved in a way that 1. doesn’t expand your permanent headcount, 2. avoids all IR35 issues and keeps you compliant, and 3. doesn’t require you to rip up your budget.

So, What Is Our Approach? Delivering a Project, not a role, Providing a Service, not a person.

Our approach to providing organisations with high calibre procurement resource remains unchanged. Through our ‘Procurement on Demand’ and ‘Managed Service’, we challenge the historical approach to accessing flexible procurement resource through contractors. By providing an output led service rather than input led, this removes the need to hire individuals and the IR35 implications that these engagements will now entail.

Our service offering wraps up projects into a statement of work that focusses on the output rather than the input. What you get is highly experience resource, delivering a specified project with certainty of cost.

For any advice or information on resourcing your flexible procurement resourcing requirements, contact us at info@oculusprocurement.co.uk and one of the Oculus Procurement directors will be in touch to discuss.

ABOUT THE Author:

Luke Foster

Luke Foster

Having graduated in Procurement and Supply Chain Management from Liverpool John Moore’s University in 2012, Luke commenced his career as a Graduate Procurement Manager at one of the UK’s largest third-party logistics organisations, before moving into financial services and then founding Oculus in 2017. Luke’s roles have all been within centre-led procurement functions leading significant, business-wide procurement transformations, gaining significant experience of the design and implementation of procurement policy.

As one of the founders of Oculus, Luke has worked with clients from a variety of industry sectors such as manufacturing, insurance, financial & professional services, and retail.  With experience across a wide array of spend categories, primarily focusing on HR, facilities, and professional services.

Luke’s key specialism is in spend data analytics and cost modelling. Offering the ability to unravel vast quantities of data to build simple yet effective reports providing the insight required to support a drive for change. Through effective Power BI dashboards, Luke is able to offer a level of insight, previously unavailable, to support the identification of areas of focus within an organisations spend profile.