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Pres Pillai

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Part qualified recruitment market unaffected by IR35
Part qualified recruitment market unaffected by IR35

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Finance & Accounting

Content Type

General

17/05/21

Summary

If you have been living under a rock over the last few years, you might have managed to avoid the term IR35. IR35 is the name given to tax legislation in the Income Tax (Earnings and Pensions) Act 2003. It’s legislation created by the government to reduce tax evasion amongst non-permanent workers on self-employed contracts. They are often referred to as disguised employees who are doing the same work as permanent employees, however under their own company to enable them to claim the same tax efficiencies of a business. Considering the many areas that IR35 has had a direct impact on the market, from limited contractors to companies changing their recruitment polices, it has not had a significant effect on the part qualified and transactional level so far for the following reasons: Traditionally part qualified accountants haven’t used personal limited company payment structures as there was only marginal benefits on offer to them for doing so. Instead, the majority of these candidates have been paid through daily/hourly rates via PAYE basis or umbrella companies, so IR35 has had little effect on their take home income.Generally part qualified accountants tend to get paid a premium for performing contract roles, so they’re still in a strong position and normally provided with enough of an incentive to elect for contract roles over permanent opportunities through the added benefits.Organisations still have a strong need for flexible resources to cover many different situations that occur, such as maternity covers, illness, projects and many other uncertain situations that present themselves from time to time.Many companies have a preference to outsource payroll for contractors rather than dealing with it themselves and therefore elect to hire candidates on daily/hourly rates, as the agencies will take responsibility for the admin and all other areas that come with that coverage. However, some organisations do not fully understand the rules around contracting, and the after-effect of IR35 have led to some companies taking a blanket approach to recruitment and deciding to recruit roles on a fixed term contract basis instead.As an experienced part qualified recruitment consultant here at Marks Sattin, I predict that in the long term, competition for talent will dictate the market and lead any companies taking this blanket approach down the route of using temporary workers again. Otherwise, they will risk not accessing the best temp professionals with the right skills and experience for their business at the time when they need it most.You can read our previously published article here on how IR35 will impact contractors and employers. If you would like to discuss any of the above from a candidate or client perspective, please don’t hesitate to reach out to myself.

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Considering the many areas that IR35 has had a direct impact on the market, from limited contractors to companies changing their recruitment polices,

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Jamie Smith

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Jamie Smith

Jamie Smith

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Jamie Smith

How part qualified accountants will add value to your business
How part qualified accountants will add value to your business

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Financial Services

Content Type

General

07/01/21

Summary

Having spent two years at a Big Four firm and three years working in the part qualified market for Marks Sattin, I have a vast amount of market knowledge and have worked with a variety of clients within financial services. The part qualified market forms a big part of our business, however some of our clients have never recruited a PQ candidate before or are unsure of what this candidate pool looks like. So, we thought we would answer some typical questions/opinions regarding PQ recruitment below. ‘We are a small team and cannot afford to lose a member of our team to study for weeks at college’This is a common misconception from clients who have no experience in study support for junior accountants. If you are a practice-trained ACA your personal experience will be very different to accountants who have qualified in industry. It’s important to note that typically candidates don’t get sent to college for vast amounts of time, and there is always the opportunity to offer candidates online courses or evening/weekend courses taken outside of core working hours. A typical study support package towards ACCA/CIMA would look like this:-           Exam and membership fees -           Study materials-           An additional one or two day’s leave for revision plus the exam day, per exam ‘We don’t want to invest in someone and then they leave our company’ Investment in candidates is always rewarded with harder work and longevity which are key attributes clients look for when hiring!  The ultimate goal for aspiring accountants is to become qualified and have steady career progression, and without investment by their current business, they may be more likely to seek investment from a competitor who will provide study support. " When offering a study support package most clients can protect themselves with a clawback clause, meaning if an employee leaves during their studies or a short period after qualifying, they will have to pay back a percentage of  the fees incurred by the employer. ‘Why would good candidates be on the market for a new role before they’ve qualified?’ This ties in well with the above point, whilst study support is very important to candidates, equally to that is career progression and continued professional development. I am sure if you are reading this then you will be able to relate, especially when thinking about your own decisions and choices that you have made to get to where you are today!  Coming from a big 4 background myself, I know how uncommon it is to leave an ACA training programme before you are qualified - you could even say it is frowned upon. There is a completely different culture to accountants who train and ones who qualify in industry. Just because they are on the market as a part qualified accountant does not mean they are underperformers. In fact it just means they actually are committed to bettering themselves! ‘We are looking for a smart and ambitious graduate but we don’t provide study support’ In short you’re saying you want the best of the best without giving them anything in return. Smart and high achieving graduates will be sought after by many businesses. From my experience, these types of candidates can usually end up with more than one job offer on the table. For example one of my candidates recently graduated from a top university (University College London), and within a week had three offers on the table! In this scenario, more often than not, money is not a key motivator. By contrast these candidates will favour career progression opportunities, study support as well as the culture of the business. You need to make yourself competitive to win over ambitious candidates, unfortunately a good salary isn't enough. ‘We would prefer a newly qualified accountant’ Depending on the type of role a good question to ask is: Why do they need to be qualified to do this role? Part qualified candidates ultimately show value for money. A part qualified accountant with 2-3 years experience, will know how to do the job itself. For example, processing invoices, journal entries, bank recs, preparing management/financial accounts. Their salary expectations range from £33k to £44k. You can then compare this to a newly qualified accountant coming from an audit background that may never have performed a hands-on accounting role, only external audit. Their salary expectations are usually around £55k if they’re big 4 or around £50k outside the Big 4. Alongside the savings you could make, PQ accountants tend to be more willing to take on some of the transactional tasks which qualified accountants want to move away from, recently qualified ACA candidates typically do not like financial reporting roles, instead they’re looking for more ‘commercial’ roles. This is proving to be  a massive challenge in recruitment. You can achieve greater longevity from a part qualified accountant as they work towards becoming qualified, especially with the help of clawback clause. ‘We prefer to hire directly for junior roles’ With everyone looking to cut costs now more than ever, it also means there are an abundance of candidates and more people applying for jobs. One of my adverts received over 2,000 applications! This may seem like the ideal situation with plenty of options to choose from but the reality is that the majority of applications are candidates who are not suitable for the role. A lot of job seekers have the ‘throw everything against the wall and see what sticks’ kind of approach. And the reality of finding the right CV becomes ever more daunting. By using a recruiter who specialises in this industry, and who spends their days building relationships with these candidates, you can cut this down to receiving a few top quality profiles tailored to your business. Not only will this save you time, but you will also receive an extra level to the interview process. Speeding up the entire hiring process (especially if you are looking to replace a team member who is leaving, this notice period window can be crucial). As everyone in business likes to say; time equals money! Long hiring processes can mean losing candidates to other offers, or losing their interest if you make them wait too long - it doesn't reflect well on the business. At that point you may find yourself starting the whole search process again, not ideal or cost effective. If you would like to discuss a part qualified role, or if you're looking to expand your team please get in touch with me here.

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The part qualified market is huge and forms a big part of our business, however some of our clients have never recruited a PQ candidate before or are unsure of what this candidate pool looks like.

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Rebekah Froom

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Rebekah Froom

Rebekah Froom

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Rebekah Froom

Will IR35 affect your business?
Will IR35 affect your business?

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General

Content Type

General

20/09/20

Summary

Employees in the United Kingdom can be categorised as full-time, part-time, casual, freelance and contract workers, with the self-employed bracket now making up 15% of the entire working population. The number of self-employed workers jumped from 3.3 million in 2001 to 4.8 million in 2017, with a corresponding fall in the unemployment rate showing the overall boost in jobs growth from the rise in self-employment. However, the attractive market for freelancers and contractors has been hit with some uncertainty in recent times, thanks largely to the 2018 Autumn Budget’s announcement of IR35 tax reforms. Here’s what the new IR35 rules could mean for you and your business: What is IR35? IR35 is a piece of legislation originally introduced to the UK in 1999. Its purpose is to differentiate between those workers who operate as genuine contractors and those who work as ‘disguised’ employees to avoid paying tax. It came about to challenge contractors who were taking advantage of the tax efficiencies of working through a limited company, with the aim of defending both the Exchequer from lost taxes and protecting workers’ rights from unscrupulous employees. However, the IR35 has proven to be ambiguous for many, with some contractors taking advantage of loopholes and a lack of clarity. Hence, the new IR35 rules aim to tighten up the contractor market and ensure tax avoidance loopholes are closed. How does IR35 work? There are three principles that can help to determine employment status and whether a contractor falls inside or outside IR35: Control (the degree of control the client has over the work a contractor does and how and when they do it) Substitution (whether the worker needs to do the work themselves or if they could send a substitute in their place) Mutuality of obligation (whether the employer is obliged to offer work and the contractor is obliged to accept it). Additionally, the contract type, provision of equipment and whether a worker is “part and parcel” of a business can all help to determine whether someone falls inside or outside IR35. The change in IR35 rules shifts the responsibility to determine tax status away from the contractor and onto the business that takes them on. Until now, contractors have been able to self-determine their status, however as of April 2020, when the new rules come into effect for the private sector, companies will risk being fined if they don’t make the correct assessment.  How will IR35 impact contract workers? It’s anticipated that many contract workers who have been enjoying the tax benefits of working outside IR35 will fall under the legislation when employers are tasked with determining their status. This will see more contractors having tax and National Insurance contributions deducted from their pay. However, if you operate as a legitimate small business and are determined to work outside of IR35, you will not be affected by the rule changes. How will IR35 impact employers? The major change for businesses is that they will now be responsible for determining the IR35 status of any contractor working for the company. The new rules will only apply to medium and large sized businesses, so contractors who work for small businesses can continue to set their own IR35 statuses. Those businesses that the IR35 rule changes do apply to will face paying back taxes and fines should they be found to be noncompliant. What should I do to prepare for IR35? Contractors may wish to speak to an accountant or personal finance expert to determine whether IR35 will impact them and if a move to permanent work may prove to be more beneficial after the rules come into effect. For many, contracting will remain appealing regardless of increased tax responsibilities, however it’s important to factor in any change in income that IR35 may bring about. Businesses are being warned not to make blanket assessments that cover all their contractors, as this can leave workers without a fair assessment and risk them paying unnecessary taxes without equivalent employment rights. Instead, businesses should consider IR35 status on a case-by-case basis or they may risk losing out on top talent. The HMRC has released a consultation document for businesses to prepare for the IR35 changes, recommending identifying and reviewing current contract workforce status and putting processes in place for taking on new workers. At Marks Sattin, we pride ourselves on keeping abreast of all industry legislation, updates and changes that affect our candidates and clients. Speak with us about how we can help you. References: https://www.bbc.co.uk/news/business-44887623 https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2018-02-07 https://www.contractorcalculator.co.uk/what_is_ir35.aspx https://www.axa.co.uk/business-insurance/business-guardian-angel/how-ir35-changes-will-affect-freelancers-and-self-employed-contractors/ https://www.telegraph.co.uk/business/ir35-rules/new-contractor-tax/ https://www.telegraph.co.uk/business/ir35-rules/how-will-new-rules-impact-business/ HMRC consultation document

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Employees in the United Kingdom can be categorised as full-time, part-time, casual, freelance and contract workers

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Pres Pillai

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Pres Pillai

Pres Pillai

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Pres Pillai