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IT contractor jobs agencies plough on with ‘ambiguous, burdensome’ IR35 reform

IT contractors’ recruiters are putting a brave face on Spring Budget 2023 making no tweaks to IR35, leaving them and their clients to struggle on with administering the off-payroll rules.

Agencies appear to be adhering to the letter of the law, even if ‘blanketing’ — all PSCs inside IR35, and ‘banning’ — no PSCs whatsoever, is continuing, typically at large organisations.


Even the government “flirting” a few chancellor statements ago with repealing the 2017 and 2021 rules hasn’t affected the status quo, First Point Group’s Phil Jones told ContractorUK.

“Each contractor role is individually assessed within the guidelines and determined as inside or outside IR35,” said a by-the-book Jones, from FPG’s London office.

Viki Dowthwaite, of Trinnovo Group confirms that “the continuation of these rules” by the chancellor sees clients “continue to assess each contractor’s individual working practices.”

‘Ambiguous, burdensome IR35 rules’

She made no mention of the agency’s high-growth technology sector clients engaging in blanketing or banning, but there was a hint of sympathy should they feel they have no choice.

“These rules present a long-term, ambiguous job and a heck of an administrative burden [for clients who must assess] the different IR35 markets, and the legal wording [of contracts]”.

Like clients, agencies have been given a tool by HMRC to test IR35 status but it’s “not fit for purpose,” continued Dowthwaite, contract lead for Trinnovo’s Trust in SODA and Broadgate.

‘Agencies led by their large clients’

“CEST is popping out 20% of [the time with] ‘undetermined’ and businesses have no further support or guidance provided by HMRC to enable them to make the final determination.

“And often,” she continued to ContractorUK, “particularly in the case of large organisations, agencies must be led by the end-client’s approach to IR35.

“We can advise on why they should take a practical approach, engaging outside IR35 contractors where appropriate, but ultimately, it’s up to the end-client and HMRC to adopt a more user-friendly approach.”

The angst behind her comments will be recognised by the 52% of agencies somewhat or very “concerned” by compliance with IR35 reform, Cool Company has found.

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‘Four in ten encounter difficulties when recruiting due to IR35’

A further 43% of agencies say that IR35 compliance has caused them “difficulties when recruiting for contract [opportunities],” adds a Cool survey of January 2023.

Fresher findings on IR35’s impact will be released shortly by the Association of Independent Professionals and the Self-Employed (IPSE).

A poll from IPSE asking for contractors’ input on IR35 is still open and accepting both tick-box answers and comments on the framework.

‘Some end-users moving away from blanketing, but not all’

The association’s Andy Chamberlain is hoping to see an improvement on the one in five contractors who were subject to a blanket inside IR35 determination (as of October 2021).

“We’re hearing some clients are moving away from blanketing, while others, particularly in financial services, continue to insist on the umbrella route,” Mr Chamberlain told ContractorUK.

Ahead of the IR35 poll closing soon, the IPSE policy director added last night: “It feels like the picture overall is getting better. But that’s not the experience of every contractor out there.”

‘Blanketing is beyond me’

Indeed, one limited company contractor confesses to no longer being ‘out there’ out all, directly due to ‘blanketing’ and despite beating IR35 in a high-profile case against HMRC.

“I stopped contracting because one of the [well-known] companies blanket-banned PSCs,” posted Elaine Richardson, whose ECR Consulting defeated the Revenue in 2011.

“[Blanketing] is entirely beyond me…[but I hope with skills shortages or similar it] comes back to bite those clients who just blanket ‘assess’ as inside for their own convenience.”

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‘HMRC to look for opportunities to improve off-payoll rules’

Responding to a ‘Reverse IR35’ petition this month, HM Treasury said the government has “continued work to understand…how improvements could be made to the way the rules work in practice.”

Adds the response of March 9th 2023: “The government very much values the contributions of flexible workers, including the self-employed, to the UK economy and is committed to the tax system becoming simpler and more dynamic to help reduce burdens on businesses and individuals.

“HMRC will continue to provide support and guidance to individuals and businesses operating the rules and will continue to look for opportunities to improve the way these rules work in practice.”


At Trinnovo, Dowthwaite believes the improvement is to revert to what the rules stated for 20 years; where they previously placed responsibility, and where the rules today place the decision-making responsibility for PSCs whose clients are small companies.

She told ContractorUK: “Surely it would make more sense, if the person conducting those working practices and contracted by any agreement advises on their own status.”

By Simon Moore

Source: Contractor UK

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Resilient UK tech companies ‘making hay’ from distressed sectors

The UK’s challenging economy, with its strikes, covid hangovers, cost of living crisis and shortages, is clearly troubling tech companies the least.

And more than just shrugging off the challenges, firms specialising in IT and software might even be benefitting from the difficulties which other key sectors are suffering.

SFP Group, a company rescue and MVL specialist, insolvency house Opus Business Advisory Group, and Integro Accounting issued this two-fold analysis to ContractorUK.

‘Highly confident’

Issued on Friday, the analysis is based on a study by Integro, a contractor accountancy firm, showing 89% of tech firms as “highly confident” they can ride out the next quarter.

The finding represents the strongest show of tech company confidence for three years, given 79% and 76% said the same in 2021 and 2020 respectively.

And the high confidence was in contrast to companies in the other polled sectors.

Similarly on sales, more than half (53%) of IT consultancies said they felt their performance would improve during the rest of 2023. Only two per cent forecasted a dip.

‘Covid benefitted tech sector, to the detriment of others’

By contrast, not even a third of housebuilders anticipated an uptick, which was echoed by pubs (not even 20% foresee an increase) and retailers (more than 40% foresee a decrease).

“Covid…accelerated market shifts that have outlasted the pandemic, which has been to the benefit of much of the UK’s tech sector but to the detriment of other sectors”, said Integro’s Christian Hickmott.

Even subsequent to covid, industrial action in the transport sector which is “damaging” retail, leisure and hospitality outfits has “been a boon” for many tech firms.

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‘IT contractors insulated’

Integro’s boss, Mr Hickmott explained his assessment: “There had been a drift back to pre-pandemic working practices, but with transport disruption ongoing, more organisations are entrenching remote working and the associated technology. And this looks set to continue for the foreseeable future.”

Yet it is not only large or established providers that are the tech sector’s unfazed, as individual IT contractors are also often “insulated” from the disruptions, says Opus.

“With low start-up costs and overheads, [and] an ability to work remotely, in most cases, IT consultants stand to be some of the biggest winners from the current difficulties,” says the advisory’s Gareth Wilcox.

In a statement to ContractorUK, Wilcox spoke of “continued demand” for such small, tech-led enterprises from an “economy increasingly forced to diversify, streamline and digitise.”

‘Bruised and battered’

As to those sectors feeling force and pressure, SFP Group said that on top of hospitality, the “bruised and battered” were in the haulage, manufacturing and construction sectors.

“The IT sector appears to remain robust [however],” SFP Group’s senior consultant Patrick Hogan told ContractorUK.

“That may be because, in simple terms, almost anything that businesses do today have a strong IT bias and if you do not keep up with the rapidly evolving technologic advances, you could find yourself being left behind”.

At Integro, Hickmott confirmed “businesses are continuing to invest in digital transformation projects to drive productivity gains”.

The accountancy boss calculates that the gains are being sought as a way to ‘lessen the impact of inflation,’ and the investment will “boost” IT skills-demand further.

‘Inflationary pressures’

But it’s not all plain sailing for technology-focussed companies.

The Integro poll found that more than four in ten IT-led firms have had to absorb the costs of price increases, rather than pass them onto clients.

With only 17% succeeding at passing inflated costs on to customers, “inflationary pressures are clearly having an impact on the overheads of IT businesses,” the firm said.

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‘Costs and shortages possibly yet to peak’

Another barrier to growth – skills shortages – continues to impede technology businesses too, but according to the study, potentially to a lesser extent.

In fact, the chunk of tech business not suffering from a shortage of workers they need has expanded by five per cent, from 62% at the end of 2021 to 67% currently.

“Covid has retreated for now, [but] many other challenges around rising costs [and] labour shortages…persist and are possibly yet to peak,” cautioned SFP Group’s Mr Hogan.

“This does unfortunately mean more challenges ahead for many businesses.”

‘Making hay while the sun shines’

But Integro points out that strong demand for software and IT services puts tech firms in a “relatively stronger position” if they can get clients to the negotiation table on prices.

At Opus, Wilcox recommends acting sooner rather than later:

“Given the difficulties being felt elsewhere in the economy, it could be a case [for tech companies] of making hay while the sun shines.

“[After all,] the strength of companies [including those which were polled] is often defined by their current contract,” he said. “And inevitably, contracts will be up for renewal at some point”.

A tad more optimistic is SFP’s Mr Hogan, who reflected: “It is [clearly from these findings] not all doom and gloom. Indeed, as insolvency practitioners, it is true that we rarely find ourselves dealing with distressed tech operators. That surely must tell a compelling story about the strength of the IT sector.”

By Simon Moore

Source: Contractor UK

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High inflation boosted IT contractor jobs market in May 2022

High inflation appears to have boosted the less quickly growing IT contractor jobs market, as the slowdown in growth in temporary technology billings paused in May.

In Report on Jobs, the REC suggests that rising costs made employers scrutinising the bottom line turn to temps rather than add members of staff to the payroll on a full-time basis.

REC chief executive Neil Carberry gave this assessment in the report on Friday, potentially part explaining how demand for IT contractors shot up in May to 66.1 from 63.7 in April.

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‘Inflation-induced caution’
Mr Carberry said: “The market for temporary work is stabilising faster than for permanent staff, which could suggest a little caution creeping into employers’ thinking in the face of high inflation.”

Kate Shoesmith, the Recruitment & Employment Confederation’s deputy CEO returned last week from a hiring expo in Brussels, only to similarly acknowledge inflation’s tight grip.

“We have been through tough times [chiefly due the coronavirus pandemic], followed by record-breaking successes. But the economic headwinds are [still] there,” she said.

‘Rethinking growth plans’
As to inflation’s effects, Claire Warnes of KPMG spoke of employers “starting to rethink their growth plan” as — like candidates — they face ‘the greatest costs in recent years.’

“And these are expected to increase, at least in the short term,” said Ms Warnes, KPMG’s head of education, skills and productivity.

As well as “rising business costs” for both candidates and end-users alike, she sounded more sympathetic to the latter, by pointing out organisations also face “supply chain disruption.”

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‘IT Operations and Helpdesk keeping pace with inflation’
But only last week, Indeed said that as “the economy starts to weaken,” the phenomenon of “soaring inflation” was eroding the pay gains of “most” workers.

The jobsite found exceptions though – seven occupations in total, including IT Operations and Helpdesk where pay has climbed by a healthy 7.1% in the 12 months to April 2022.

“A handful of occupational categories are seeing wage growth keep pace with inflation, largely the ones facing the most acute hiring challenges”, said Indeed’s Jack Kennedy.

The jobsite’s economist, he added: “Employers in these sectors are having to raise pay to deal with the combination of high vacancies and falling relative jobseeker interest.”

‘Hot market for the sector-qualified’
Compounding the situation, candidate availability is falling too, the REC found in May, and one consequence is “it remains a hot market for those well-qualified in their sectors.”

But another consequence of lower candidate availability is frustrated recruiters.

“Jobs that are paying well for super companies = no applicants. No amount of hunting is getting responses. Very, very few if any candidates,” posted recruiter Roseanne Stockton.

Boss at Nu-Recruit, she added: “Candidates….are excellent. But in the main, up to that point [of meeting them], I cannot find many. [There are just] two candidates per job [opening] at the moment!”

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‘None of their clients would touch a career-breaker’
However some recruiters aren’t helping themselves by excluding professionals who have CV gaps due to taking a career break.

The disregard of individuals with lives beyond just work disappoints agents like Kieran Boyle, owner of CKB Recruitment, who took to LinkedIn.

“Spoke to a candidate this morning [with] bags of experience, [but] taken nine years out to have children.

“The [candidate] was told by a rather well-known insurance recruiter that they didn’t want to work with her, and none of their clients would touch someone whose had a career break”.

“What a load of poppycock,” Mr Boyle continued online, reflecting in his own post. “The industry faces an unprecedented skills shortage, so why would you not try and help someone back into this amazing industry, and help one of your clients fill a role at the same time?”

‘Flexibility trumps pay’
The shortage in the IT sector in May was severe for Developers, Software Engineers, and IT and Technology generalists, as these four were scarce on both a permanent and contract basis.

No other IT contractor skills were “in short supply” in May according to REC’s member agencies, which struggled to find full-time applicants for Analysis, CAD, Data, Digital, Software and Technical Sales positions.

But the confederation has repeated its advice to employers that cash is no longer king.

“Flexibility [now] trumps pay, “ said the REC’s Ms Shoesmith. “[And that’s] closely followed by [company] culture in [terms of] candidate job search [preferences] right now.”

By Simon Moore

Source: Contractor UK

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IT contractor demand ‘remained very high’ in August

Roaring demand for IT contractors was a touch fainter in August 2021, an index shows, but still came in at an extraordinarily high level not seen since early 1998.

In fact, given 50.0 signals monthly growth, the market adjusting from 71.3 to 71.0 indicates IT contractor demand “remains very high,” the index compilers, the REC, told ContractorUK.

The staffing body’s CEO Neil Carberry said August experienced “record levels” of candidate shortages, “super-high” rates of temp billings growth and “fast-rising” daily rates.

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‘Mercenary contractors’

Online, such premiums inspired a post last month on “rate-chasing contractors,” with an agent saying his client called contractors “mercenary” after they quit for better pay elsewhere.

But the agent, who places transformation and change contractors at London-based insurance companies, suggested that end-users themselves had only recently been exploiting record contractor availability.

“A lot of clients were keen to take advantage of the excess contractors during the pandemic, and rates were slashed so contractors had to flex if they wanted to pick up work.

“However [now, just] a matter of months [later],” the agent said, “the market has flipped on its head and there is an under-supply of quality talent on the market, driving rates back up.”

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‘Still a job-seeker’s market’

Writing in the August Report on Jobs by the Recruitment & Employment Confederation (REC), its co-authors KPMG confirmed that “it remains a job-seeker’s market.”

And the professional services firm’s Clare Warnes hinted that while the pendulum of demand may of course swing back to favour end-users, it will remain with candidates for the foreseeable.

“The winding down of the furlough scheme at the end of September…potentially bringing more job-hunters to the market, could…add fuel to the labour shortage fire,” she said.

‘Tight labour market for the next decade’

Also writing in the report, the confederation’s Mr Carberry said a number of factors meant that the labour market would “remain tight for several years to come.”

Taking to LinkedIn after the report’s publication, the staffing boss appeared to upgrade his forecast, saying that the tight labour market would be around for “the next decade.”

“Attracting and retaining staff”, continued Mr Carberry, “requires a serious assessment [by end-users] of why workers want to work with the firm; from management approaches to facilities, as well as pay.”

‘Cannot expect contractors to work for sub-market rates’
Agreeing that money remains a vital part of the mix, the London insurers’ agent said: “Clients have to be fair, competitive, and flexible with their rates and if not, cannot expect contractors to work on rates significantly under market rates.”

In August, automation testing was the only technology skill uniquely scarce in the IT contractor market.

Also in “short supply” according to REC agencies, on a temporary basis (but on a permanent basis too), were Development, Software Engineering, Technology/IT.

The agents said the full-time market was additionally short of applicants with Azure, C#, Data Science, Software, Digital, Social Media and CAD.

Source: Contractor UK

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Demand for IT contractors hits highest level since March 1998

The UK’s runaway demand for IT contractors smashed another record last month, soaring to 71.7 – its highest level since March 1998.

So not for 23 years has appetite for IT contractors been so sharp, although the peak in June represents only the fifth month in a row where the demand increased.

Unveiling these figures, the REC said the market was now “improving at the fastest pace we have ever seen,” but cautioned, “it is still an unpredictable time.”

‘Technology sector doing well’
Although the agency body was describing the labour market as a whole, the reading largely applies to the IT contractor market too where the buoyancy but also the pressures are similar.

For example, while IT is “doing well” as is most “skilled work”, it is “difficult to know what the picture will look like” very soon, because the furlough scheme is winding down.

Speaking before the figures but in a period covered by its Report on Jobs, the Recruitment & Employment’s Neil Carberry also said shortages were acute in IT, just as they were generally.

‘Slowing the recovery’
So acute that, against the backdrop of general candidate availability dropping to a 24-year low, technology was identified as one of four sectors requiring “more [government] support.”

“[It’s likely] needed to avoid slowing the recovery,” warned Mr Carberry, the REC’s CEO, pointing not just to IT, but also to Hospitality, Food and the IR35 reform-hit Driving sector.

“[The] HGV driver shortage [is] intensifying. [So in] summary, we see a labour market that is lumpy right now — with high and unmet demand in some sectors.”

He continued: “For the longer run, a tighter labour market and fast economic change is inevitable. So employers need to be thinking about their workforce strategy much more practically, and what their offer is — but not just on salary — also on terms, and the perm-temp decisions.”

‘In short supply’
Across the perm-temp IT space, the skills “in short supply” in June according to REC member agencies were BI, Development, IT, Digital and Technology.

Unique to the permanent technology staff market, the shortages were of Automation Testing, C#, Data, Media, Software Engineering and Technical Sales.

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Whereas specific to IT contractors, opportunities requiring CNC, Cyber, Scala and Java were the hardest for the agencies to place.

‘Agents working flat out’
Elsewhere in the June report, the confederation says both businesses and government should “take action” to “reskill and upskill”, amid recruiters currently “working flat out.”

Sounding definitely flat out, and exasperated at trying to raise an ‘Open for Work’ LinkedIn user, a tech boss posted: “Why is it OK for candidates to ignore messages and reach outs?

“I just don’t get it. You set your status as ‘Open to work’ which is a signal that invites people to contact you, and then you choose not to respond to messages. Not even a simple polite ‘thanks but no thanks.’”

‘Nine-stage interview’
But candidates sound frustrated too, especially if interviews turn into marathons. A software engineer said: “I pulled my name for consideration for a company I was interviewing with.

“This was a company I did the first three [interview] rounds with two weeks ago. [And] this was for a role I wanted. [But] I decided to pull my name for consideration, because they were [next planning on] working to schedule rounds FOUR to NINE of the interview process”.

A specialist in Enterprise Architecture, the consultant added: “For the types of jobs I’ve been looking for, the number of interviews has been getting higher and higher.

“Companies think they are building processes that ensure picking the right candidate. I don’t think that’s true. I think it’s due to fear of picking the wrong candidate.”

Not all of the interview stages are always face-to-face, however, as a Microsoft recruitment partner clearly forgot.

Taking to social media, the recruiter admitted: “A client just asked me to book second interviews and I was baffled! The candidates hadn’t even had their first interview.

“[But] then I remembered we had sent videos across as their first stage, using the client’s interview questions [and getting the candidates to answer them].”

Written by Simon Moore

Source: Contractor UK

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