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What the end of lockdown means for the contracting industry

There’s been no one left unscathed by the coronavirus lockdown, but it’s fair to say that the contracting industry has…

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There’s been no one left unscathed by the coronavirus lockdown, but it’s fair to say that the contracting industry has been hit particularly hard. Whether you’re a recruiter, accountant, or are amongst the self-employed yourself, the pandemic has wreaked havoc on the UK’s flexible workforce and all those that work with them.  

However, as lockdown eases, we may start to see a change in demand for contractors. Some industries have been affected worse than others, while other aspects like the private sector IR35 reform have impacted all of those within the contracting community in a different – but no less potent – way. There has certainly been improvement in projects starting up and end client budget movement, but we’re still not out the woods yet.  

So, what will the end of lockdown mean for the contracting industry? 

How has contracting been impacted as a whole? 

There’ve been a few particular sticking points that’ve made the lockdown particularly worse for those in the contracting industry. From end client budget cuts – where the peripheral self-employed within the company are naturally the first to go – to projects grinding to a holt, meaning specialisms are not needed for the time being, there’s a multitude of reasons why we’ve seen a decline in contractor demand over the last few months. However, there are two reasons in particular which stand out. 

Lack of gov support for PSCs 

A lack of government support for limited company contractors is the first – and arguably the most prominent – culprit. Even the <most recent measures> the Chancellor of the Exchequer announced didn’t accommodate PSCs, despite widespread criticism since the first financial help schemes were implemented back in March.  
“It’s disappointing that there still seems to be no help for the self-employed,” wrote Kingsbridge Head of Tax Andy Vessey in a LinkedIn reaction post to the latest measures. “Contractors are right to feel kicked into the long grass, with minimal support having been made available to them since the start of lockdown. Having spoken to PSCs myself, it’s heart-breaking to hear many are quitting self-employment – which is one of the most rewarding ways to earn an income – because they’ve simply run out of money, and no rescue appears to be on the horizon.” 
“I’d implore the gov to review support for the self-employed, but it’s too little too late,” he continued. “Instead, I turn to businesses; those that can afford to should use this time and any grants awarded to invest in projects that will help boost their own income, as well as supply work to our invaluable contractors.” 

Private sector IR35 reform 

The second is the private sector IR35 reform. Pushed back to 2021 from its original April 2020 deadline, this piece of legislation has decimated the contractor recruitment sector and continues to disrupt the UK labour market – and by no means in a good way.  

“It would appear that, despite all the campaigning, concerns from MPs of all colours, rife myopic blanket determinations from end clients, and the scathing report from the House of Lords, the IR35 reform will be going ahead in April 2021,” said Vessey upon learning of the April 2021 date being cemented for the reform implementation.  

“That PSCs will naturally continue to gravitate towards the greener pastures of the private sector should there be another reform delay is accurate, like HMRC states, but why is the public sector such an inhospitable environment for flexible workers in the first place? Why, the IR35 reform,” he continues. “Therefore, we must level the playing field to leave no viable shelter for contractors or it would be ‘unfair’ – not so sound logic.” 

How can we begin to move forward and build business back up again?  

We know that certain industries have felt the effects of the lockdown more keenly than others. While aeronautical, engineering, and trades professions have taken a huge hit, the energy and IT sectors have, generally speaking, been on the rise over the last few weeks as lockdown has eased. The IT industry in particular saw a boom as businesses made the transition to homeworking and are most likely due another as projects start rolling again as the UK continues to adapt to the new way of living.  

So how can we work with our contractors, partners, and end clients to start building our businesses back up again? As with anything, communication is absolutely key. Reach out to whoever it is you work with and sound out where they’re at with demand. Find out how they plan to tackle the easing of lockdown, and whether you can help elevate any strategies they may have to boost performance over the coming months. 

Being prepared for the IR35 reform will also put you miles ahead of the competition when it comes to attracting both end clients and contractors alike. It’s crucial that all points of the supply chain understand their IR35 position with every contract taken on or filled. Getting a professional IR35 employment status determination is pivotal to making sure you know where you stand, while IR35 investigation insurance is also a worthy investment and can provide a lifeline should you fall foul of an HMRC enquiry. 

A good policy will include an IR35 status determination, as well as cover for the unpaid tax debts, interest, fines, and legal fees, and will flex with the reform roll out to cover the contractor, recruiter, and end client. Our IR35 Protect product offers the above in one comprehensive package. 

For more information on how Kingsbridge can assist your business in preparing for off-payroll 2021, or for a demo of our award-winning status determination tool built specifically for recruiters and end clients, please email  

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