Out of the Ashes

Consultant vs Contractor Post IR35

Since the introduction of IR35 regulations there has been a marked change in the temporary contractor market space. There is no doubt that many companies were historically utilising self-employed contractors in leu of permanent staff for prolonged periods of time. As the Tax regulations came into force the pendulum of engagement swung and the contractor market narrowed significantly. However, during the prolonged and somewhat perplexing IR35 introduction, the boundary between contactor and consultant became somewhat vague as interested parties, sometimes intentionally, blurred terms of engagement in a futile attempt to work round the impending regulations. This obscuration seemed to backfire when on the eventual introduction of IR35 this confusion and lack of clarity on status over contractor vs consultant, created an engagement hangover in the market with businesses reticent to engage outsourced services.

We are now seeing a clearing of the waters and businesses opening once again to the engagement of consultancy operating outside IR35. Of course, the demand for the services never disappeared, the perceived risks and lack of clarity led to the contraction in the market. Those consultants that weathered the storm are now reaping the rewards of this regulatory clarity comes back and are once again providing expertise and support across a wide range of business disciplines.

Consultants, generally operate with several clients at one time some even deliver multi-disciplined services, this business profile provides economy of scale for the consultant and reduced costs for the client. Indeed, often referred to as Fractional Consultancy, there are a number of advantages to clients when operating on this model (Firth, 2023):

• Cost-Effective Solutions: Clients benefit from accessing top-tier consulting services without a hefty price tag, as fractional consultants offer their expertise on a part-time or project basis. This makes their services more affordable compared to full-time employees or long-term contracts.

• Flexibility: Clients can engage fractional consultants only when needed, allowing them to scale consulting resources according to their changing business needs.

• Specialised Expertise: Fractional consultants often possess deep knowledge in specific industries or functional areas, enabling clients to access specialized expertise that might not be available in-house or through a traditional consulting firm.

• Fresh Perspectives: Fractional consultants provide unbiased, objective insights and recommendations, free from internal politics or preconceived notions, helping clients identify innovative solutions to their business challenges.

• Quick Results: Experienced fractional consultants can quickly understand a client's needs and deliver actionable recommendations, allowing clients to achieve their goals and see results faster than with in-house resources or traditional consulting firms.

• Network Access: Fractional consultants often have extensive professional networks that clients can leverage to identify potential partners, suppliers, or customers, or to gain valuable market insights.

• Reduced Risk: Clients can minimize risks associated with hiring a full-time employee or entering into a long-term consulting contract by engaging a fractional consultant, with minimal financial or organizational repercussions if the engagement is discontinued.

At Ceterus Consultants we deliver consultancy in Business Management, Quality Assurance and Export Controls. Our services and rates are tailored to customers requirements.

Reference: Firth, K. (2023). The Mutual Benefits of Fractional Consulting. https://www.linkedin.com/pulse/mutual-benefits-fractional-consulting-karen-frith/