Following the Government’s decision to abandon the ill-thought out ‘controlling persons’ proposals last week, perhaps the most relieved group of consultants are interims – who are often hired to influence board-level decision-making for end-clients.
The ‘controlling persons’ proposals were created in response to the perceived tax avoidance by consultants who provide services to organisations via their own limited companies.
The proposals were roundly criticised by industry groups, not only because the IR35 rules already exist to tackle instances of ‘disguised employment’, but also because the plans seemed to be hopelessly unrealistic. If organisations were forced to tax interims and other contractors at source, this would reduce the pool of talented consultants available in the marketplace, and those who would accept payment on this new basis would simply put their prices up to compensate.
In its supporting Annual Statement summary, the Government stated that an ‘upgraded’ IR35 should be sufficient to police instances of tax avoidance.
Jason Atkinson, Managing Director at Russam Interim and Chairman of the IMA, expressed his delight at the abandonment of the proposals.
He said that the interim sector should continue to thrive as a result. There have never been more interims working in the UK – and the downturn has actually benefitted the profession, as clients are less willing to hire senior level staff on a permanent basis during this period of economic uncertainty.
“The market for interims is now worth £1.5bn and growing significantly. It is an industry where Britain leads the world. Increasingly public and private sector organisations are turning to interims as they offer a low risk, immediate resourcing alternative to recruiting permanent senior level staff – it is an option that is both affordable and effective.”
“With a shaky economic outlook for 2013 and a ‘long hard’ road to recovery, interim managers will play a valuable role helping businesses recover and move forward through the recession.”