The closer IR35 reform gets, the more we’re hearing about blanket PSC bans from large and medium enterprises. It seems that many “reputable” companies have lapsed in their opportunity to prepare for IR35 (even with the additional calendar year), and are now opting out of engaging with the legislation completely. Social media is becoming ever more populated with dismayed contractors who now find themselves unable to operate as they have for years, as large clients are deciding that PSC’s will not be a viable way of operating within their framework come April.
Of course, this approach will mean less administrative dedication, and less expense on an adaptation of business practice – but, are these organizations making a short-term decision for the sake of efficiency that ultimately could cost them much more in the long run? Contractors are free-thinking individuals (it’s their nature), therefore, being pigeon-holed into operating through an umbrella or going permanent will not sit well with their “create your own destiny” outlook. A blanket PSC ban can be viewed as an insult to the individual contractor, it shows that the end-client (many of whom will have benefited from the services of this contractor’s PSC previously) is not willing to consider the slightest notion of a fair determination process that could enable a contractor’s PSC to continue trading as their supplier.
It is unquestionable that some determinations undergoing fair process will result in an inside IR35 status – but if the evidence is there to support the decision then the contractor is provided with some substance for the decision at very least. Without a due process in place, are companies leaving themselves in a position of being judged negatively for simply dismissing the potential operating options that a contractor has rights to?
It could be very easy to paint the end clients as the villains here, but in reality, many are choosing to opt for the blanket PSC ban because they don’t want to get things wrong. The liability will fall upon them and this could cost them dearly.
For many, IR35 is still the ‘beast’ that is lurking out there in the background; the internet is flooded with warnings of its impending arrival, webinars full of technical jargon still leave many none the wiser as to what course of action to take. Many have heard negative comments about the HMRC CEST tool, but there are so many companies out there offering determinations, it can be overwhelming. Could these organizations be wanting to ‘play it safe’ temporarily, until society has adapted to these new legislations and it becomes the norm?
In the long run, the blanket PSC ban could very well damage the reputation of the organization in the eyes of the contracting world. Contractors provide talent, specific, finely-tuned talent that is highly sought-after. By announcing blanket PSC ban procedures, are companies leaving themselves in a position that they will no longer have access to the very top tier of the talent pool?
It’s important to consider that those at the very top of this scale are not short of options – their skill set is undoubtedly unique and can provide exclusive advantages to any business that engages their service. It is highly doubtful that a blanket PSC ban will result in companies retaining contractors of top-talent – they’ll simply move their operation to another company that is taking the time to consider fair IR35 determination procedures.
Are you still unsure about IR35 and the implications on your business? We would be happy to have a chat with you to discuss things and explain our product to you. If there is something you don’t understand, just ask!