Entrepreneur · 30 May 2022

Fast-Growing Businesses and IR35 – Is a Contract Workforce Still Possible?

The solidification of the contract marketplace resulted in accessibility for businesses when it came to hiring new talent. It offered them access to an ever-growing bank of workers, red tape-free, with massively reduced administration processes.

With the introduction of IR35, businesses with more than 50 employees, eager to take the next step, now must navigate new legislation that includes contracts, worker rights, and taxes. This has left many companies in the dark, with neither the resources nor expertise to tackle the requirements of IR35.

What Options Exist for Growing Start-ups Navigating IR35?

Businesses affected by the IR35 legislation have three main routes to consider when moving forward with contract workers.

The first, and somewhat easiest, the route is to rely on existing in-house skills and talent to produce work that was previously being outsourced. This may also result in taking on more permanent staff if the budget allows.

The problem with this route is the strain it can put on a workforce, as well as stifling the growth of the existing employees and the company.

The second route is investing the time and money in ensuring that the HR, recruiting, and accounting departments are fully aware and comprehensive of the new legislation to prevent your business from breaching IR35 rules.

The third and final route to consider is working with contractors through an established compliant umbrella company, that takes care of all the administration and legislative considerations.

What Do Umbrella Company Solutions Mean for Medium-Sized Businesses?

In a nutshell, umbrella companies act as the intermediary between businesses and contractors.

Once a business has found the right contractor for their project needs, the business pays the umbrella company the contractor’s agreed fees and from there, the umbrella company pays the contractor, relieving the business of any admin or compliance concerns.

The key benefit of an umbrella company is that they also handle administration; they ensure that contracts are signed, the right tax is paid, that the contractor’s rights – sickness and potential holidays, for example – are observed, and that the legislation is adhered to.



Kris Simpson is the Head of UK B2C for Cool Company and is responsible for operational and compliance in the UK, with over 10 years experience in Umbrella Payroll and the Recruitment sector.