Since IR35 reforms were introduced in the private sector by HMRC in April 2021, it has caused significant challenges for both companies and contractors.
For companies to pay a self-employed contractor the equivalent net income ‘inside’ IR35 versus ‘outside’ costs around 25% more, a level that is not sustainable and leads many to being forced to decrease their net rates of pay on offer, resulting in a struggle to attract the right calibre of contractor.
Since the April 2021 reforms, an estimated third of UK contractors have left self-employment, according to research from The Association of Independent Professionals and the Self Employed (IPSE).
Four out of five contractors (80%) working inside IR35 said their income had dropped by an average of 30 per cent, coupled with very limited rights of employment. This has left companies with a major skills shortage; unable to recruit highly skilled contractors to work on business-critical projects.
Gattaca is partnering with IR35 Pro to offer the UK’s first end-to-end fully managed service for IR35, enabling companies to attract and recruit the most talented contractors whilst removing the risks in doing so.
Founded by legal expert Martyn Valentine, IR35 Pro manages large contractor volumes proactively and safely, drafting all associated paperwork and providing a robust audit trail. It also satisfies HMRC’s requirement for ‘reasonable care,’ which further reduces the risk for their clients.
Paul King, Gattaca Chief Operating Officer said, “HMRC expected two thirds of contractors to be unaffected by the April 2021 reforms, continuing to work ‘outside’ IR35 compliantly, however this hasn’t yet transpired. Many companies don’t have the legal expertise to understand how to effectively manage the changes, often adopting a blanket approach of only hiring contractors ‘inside’ IR35. This has led to an exodus of contractors, exacerbating a skills crisis. This is particularly relevant in the STEM sectors we serve – where customers are unable to get the project-critical response they need.
Through our partnership with IR35 Pro, we will be able to offer our clients a fully managed service that removes their IR35 headache, providing the reassurance their self-employed contractors can be engaged safely outside IR35”.
Martyn Valentine, Chief Legal Officer of IR35 Pro said, “Whilst IR35 is generally perceived as a risk for UK companies, in reality it should be seen as a major opportunity. Forward thinking companies like Gattaca who embrace IR35 will give themselves a huge competitive advantage as they will attract the very best talent on the market for their clients.
“It’s a false economy for companies to try and self-manage IR35, it invites unnecessary risk and, in our experience, too many contractors are incorrectly classified ‘inside IR35’. In the post-Covid business environment, more than ever companies need skilled experts to help them recover economically and financially and by embracing IR35 proactively, they will be able to attract the very best talent to drive their growth and success.”