In our latest Proudly Off-Payroll podcast, James Poyser shares his thoughts on why being indispensable is the real key to working outside IR35.
Something we’ve predicted for some time at inniAccounts and OffPayroll.org.uk is the impact of free market economics on IR35 determinations, and specifically the bargaining power of contractors and consultants.
Put simply, if you’re running an organisation that supplies services and the demand for those services outstrips the supply, then your bargaining power increases.
For many consultants and contractors in this position, the bargaining chips they hold are:
- Dictating working practices
- Dictating contract terms
- Demanding a fair IR35 determination
To be clear, the consultants and contractors that we work with are not asking for end clients to ignore the reality of working practices; they’re asking clients to change the reality of the working practice to reflect how they want to engage. They want a robust, outside IR35 engagement.
We predict that we’re going to see a two-track market when it comes to consulting and contracting. This will likely consist of:
- Core engagements:
- The backbone of teams where there is a good supply of labour available. This is likely to include contractors working in first line support, more junior or generalist roles, and potentially those earlier in their contracting career.
- Clients will likely assess these core engagements as inside IR35 or just take a PAYE only route – it’s simply not worth the risk for the client to undertake a fair determination when there is an abundance of resource available to fill those roles.
- This includes contractors and consultants with hard-to-find, in-demand skills. Their bargaining power is much greater and they are much better able to influence the engagement approach with the end client.
- They have a much greater chance of being found outside IR35.
True talent always has a choice
Before Christmas, James was a panellist at an event for recruitment agents with Kingsbridge, the IR35 assessors. One of the other speakers was Anne Swain, CEO of APSco (a professional body for recruiters) and an expert on IR35 within the recruitment industry. She summed up the theme of this article wonderfully, with the phrase: “true talent always has a choice.”
We think this is great advice to contractors and consultants. You want to be in demand and having choices, especially when it comes to your IR35 status.
To do this, you need to be able to exploit market forces. Think about your own personal bargaining power. To borrow from business theory, consider the threat of new entrants to your market.
- How easy is it for other contractors and consultants to enter the market and provide services akin to what you business can offer?
- Do you have niche skills?
- Do you have a good reputation and experience?
This is all about pushing hard to be indispensable to your client. Being at the top of your game, being the one who large end clients will make exceptions for, engaging you and your company outside of IR35. One thing is very clear: mediocrity won’t get you outside of IR35.
How to become indispensable to clients
Here are five observations we’ve made whilst talking to high-performing consultants and contractors.
1. Exceed expectations and over deliver
This doesn’t mean more work (if you are operating outside IR35 your deliverables are in your contract), it’s about delivering sooner to a higher standard. Can you deliver in a way that sows the seed for other improvements and subsequent projects? Aim to leave a long lasting positive impact.
2. Help clients achieve their goals
Demonstrate that you understand the strategic goal that your project is contributing towards. Create an environment for projects to succeed and your clients’ goals to be met.
3. Be reliable, with a positive attitude
This is not about turning up on time, it’s about doing what you say you will. It’s about acknowledging and managing curve balls with grace when they inevitably arise. Be positive and deliver results.
4. Be the expert
Sometimes it pays to have experience from a number of industries and varied roles, especially when you are first starting out as a consultant or contractor. However, to build a reputation as a leading expert you’ll need to specialise. If you are hands down the best at what you do, there can be no quibble that you are irreplaceable. This is also excellent news when it comes to control, which is one of the key IR35 status-determining factors. It is well-recognised that clients have weak levels of control over consultants and contractors if they possess expertise that isn’t within the organisation. Ultimately, it is exceptionally difficult to control something you don’t know about.
5. Invest in yourself
Being the expert and staying the expert are two different things. It’s vital you invest in your development by reading widely, networking with peers and staying on top of the latest thinking, techniques and practices. Remember, from an IR35 perspective, this is self-fulfilling for working outside IR35. Investing in yourself is tax deductible. It strengthens your case for being in business on your own account, which is one of the six factors when it comes to determining your IR35 status.
Master these five traits and you’re on a good trajectory to being indispensable to your end client, which gives you the bargaining power required to demand a fair IR35 assessment.
In our work researching those who are succeeding outside IR35, we’ve identified another five traits which we discuss in more detail in our IR35 Action Planner. This is available exclusively to inniAccounts clients, however we have some VIP 24 hour access passes for our followers.
Simply email email@example.com or contact us on Live Chat for your free 24 hour pass.