IR35: one month on
So, a month has passed since the changes to the application of IR35 in the Public Sector came into effect. How have these affected the interim management market?
While there have been some well publicised examples of contractors voting with their feet, those have typically been more junior contractors, perhaps with high (unrealistic?) expectations of their own marketability. As I predicted in an earlier article, the response of true interim managers has been more measured.
In part this has been because of the relatively high (compared to the private sector) number of interim managers engaged in BAU assignments. Many interim managers appear to have heeded the advice in my previous article and decided to bite the bullet, at least in the short term.
Some have found their client favourably disposed to paying a higher daily rate to compensate for the loss of favourable tax shifts, but most have just decided that, for the time being there is little alternative than to accept a drop in net income.
Client behaviour has been less uniform, as I also predicted in my earlier piece. A number of clients, particularly in the NHS - which is the largest user of interim managers - have taken a fairly sophisticated case by case approach to their interim estate. This is encouraging. While many are currently adopting, a ‘one size fits all’ approach of ‘everyone’s inside IR35’, it is good to see a significant number judging things on a case by case basis. I predict this number will grow as clients get to grips with the legislation and realise the competitive disadvantage of a blanket ban.
So, for most it has been a case of ‘keep calm and carry on’. Market forces and economic realities have ensured that in spite of the furore in the run up to the change of legislation, the world of public sector interim management has continued to spin.
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