Categories: Hiring

The quantity surveyor is crucial to a project's success, however, misconceptions about the value of a contract or freelance quantity surveyor's services persist.

So, to combat some common myths and to make reassurances over concerns voiced by several clients I have spoken to recently, I have decided to dedicate this article to bridging the understanding gap between clients and quantity surveying professionals.

IR-35 uncertainty

There's a common misconception floating around LinkedIn that the length of a contract automatically determines IR35 status for Quantity Surveyors.

Here's the truth: The contract length itself has no bearing on IR35. It's all about the nature of the working relationship.

Here's what HMRC considers when assessing IR35:

• Control: Who calls the shots? Does the client dictate your hours, or even how you tackle the project? Do you have regular performance reviews and additional training? A true contractor has more control over their working methods and can typically get started quickly, more akin to a plumber coming to your house, you wouldn’t be hanging over their shoulder telling them which tools to use and how to plumb

• Mutuality of Obligation: Is there an ongoing expectation of work beyond the current contract, or is this a fixed-term project with a clear end date? A one-off project leans towards being outside IR35. You would continue to pay an employed member of staff if there were no work but that shouldn’t happen with a contractor.

• Financial Risk: Does the contractor bear the financial risk for equipment and overheads, such as insurance, accountancy fees, and even equipment & stationary use?

• Substitution: Could you have an equally qualified colleague take over the project if needed, with the client's consent? This flexibility is a hallmark of genuine self-employment. This may be if the current contactor is away for several weeks etc. Similar to an electrical contractor sending a different electrician to continue on a job.

In essence, even a long-term contract can be Outside IR35 if it allows you to work independently and manage your own workload. And the pre-agreed working arrangements between the client and ltd company. We work with a specialised insurance company who are experts in IR35 policy. They have crafted a detailed IR35 status determination tool, as the current HMRC tool is quite ambiguous which is what brings in the risk element...(I wonder why they did that!). This insurance company has had 600+ IR35 enquiries successfully defended.

Most of the freelancers have IR35 insurance so, with an appropriate assessment and insurance HMRC won’t waste their time with a fight they will lose, they essentially just want to see that a duty of care has been taken to assess each engagement with a limited company/sub-contractor. Many businesses are unknowingly putting themselves at risk by neglecting this crucial step.

A blanket IR35 assessment might seem harmless until the unexpected happens. HMRC scrutiny, financial penalties, and reputational damage are just some of the potential consequences.

Protecting your business requires a thorough understanding of IR35. By investing in a proper assessment, you can mitigate risks, make informed decisions, and ensure compliance.

A recent LinkedIn poll I held shows the primary reason for hesitation around conducting an IR35 assessment:

Cost Implementation: 9%

Administrative Burden: 9%

Risk of getting it wrong: 74%

Loss of flexibility: 9%

Clear communication and expert guidance are essential for navigating compliance challenges and ensuring that roles are correctly classified. By proactively addressing IR-35 concerns, companies can mitigate risks and maintain compliance with employment regulations as well as access quantity surveyors other competitors aren’t!

Hiring contractors is more expensive than hiring permanent employees.

While contractors typically have higher hourly rates than permanent employees, it's essential to consider the full cost picture. In addition to their hourly rate, permanent employees come with significant overhead costs for employers, including payroll taxes, benefits such as healthcare, retirement contributions, paid time off, and training expenses. These costs can add up to 20-30% or more of an employee's salary.

On the other hand, contractors are responsible for their own taxes, insurance, and benefits, significantly reducing the burden on employers. For example, employers do not need to contribute to contractors' healthcare plans, saving thousands of pounds per year per contractor. Additionally, contractors do not accrue paid time off, reducing costs associated with covering absences. When considering these factors, hiring contractors can often result in cost savings for employers, particularly for short-term or project-based work where the full-time employment benefits may not be fully utilised or where work has been picked up in a location where a business doesn’t usually operate.

Contractors lack loyalty to the company

Contrary to this belief, contractors often demonstrate a high level of loyalty to the projects they are engaged in. They represent their own limited company, therefore, reputation is everything. Contractors are motivated by the opportunity to deliver quality work and achieve project success to build strong portfolios. Many contractors forge long-term relationships with clients and become trusted partners in their business operations. By providing contractors with clear expectations, support, and recognition for their contributions, companies can nurture a strong sense of loyalty and commitment among their contractor workforce.

Contractors are less reliable than permanent employees

Contractors bring valuable expertise and experience to projects, making them reliable contributors to project success. Clear communication of project goals, deadlines, and expectations ensures that contractors understand their roles and responsibilities. Contractors are often highly motivated to deliver results and meet project milestones, as their reputation and future opportunities depend on their performance.

It's challenging to integrate contractors into existing teams and company culture.

While the rise of hybrid/remote working has transformed work dynamics, it also presents unique opportunities for enhanced flexibility, diversity of thought, and work-life balance. Freelancers are accustomed to working with different teams and clients, making them adept at integrating into new project environments.

Companies can aid team integration by providing contractors with access to necessary resources, introducing them to key team members, and clearly defining their roles and responsibilities.

Hiring contractors is a temporary solution and doesn't contribute to long-term company growth.

Contractors offer flexibility, and scalability that contribute to long-term company growth and success. Contractors bring specialised skills and experience to projects, enabling companies to access talent that may not be available internally. Additionally, contractors provide flexibility in staffing levels, allowing companies to adapt quickly to changing business needs and market conditions. By leveraging contractors strategically, companies can achieve their short-term project goals while also positioning themselves for long-term growth and competitiveness.

Embracing the freelance model can lead to increased project efficiency, access to specialised knowledge, and improved cost management. Ultimately, the successful integration of freelance quantity surveyors into project teams can drive business growth and enhance overall project performance.