HR · 14 December 2021

How You Can Protect Your Business Against IR35 and a Shrinking Contract Workforce


It’s been a strange few years for businesses that rely on the contract workforce. On the one hand, Covid-19 has amplified the demand. On the other, IR35 has left many contractors and employers unsure of their footing. Some employers have called a complete halt to their usual outsourcing, uncertain of how to avoid falling foul of the legislation. Others have reduced the amount of work they outsource and are finding new ways to balance their workload. This has created a time of turbulence for both businesses and contractors they work with. And many fear that there is worse to come.

What is the problem with IR35?

If your company utilises the skills of contractors, you’re probably already aware of what the IR35 legislation has meant for business. There has been the need for independent advice and a restructuring of your standard workload. And the same has applied for the people you have been working with. According to research conducted by Cool Company, following the announcement of the IR35 legislation, 86% of contractors sought specialist advice to prepare for the changes. Each spending an average of £764 on this advice – no small sum for an independent worker. And with many (74%) contractors concerned that the IR35 legislation is likely to change again in the near future, some have decided this is no longer the path for them. The disruption businesses are experiencing can’t be overstated. And this is a point that has been underscored by the UK HGV driver shortage. So, with more disruption likely to come, what can you do to protect your business?

Is there a way to protect your business from the continuing effects of IR35?

IR35 throws up two main threats for businesses. The risk of a fine or other sanctions, should you be found to be incorrectly determining statuses and managing your contract workforce. And the inability to access the talent you need to successfully run your business.

The Government recommends the use of the HMRC CEST tool as the safest way of guaranteeing that you’re working to the letter of the law. However, with well-publicised stories of penalties being levied despite the use of this tool, there is a growing reluctance to rely upon it.



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.

Business Law & Compliance