How UK consulting firm B2E is facing Covid-19 and IR35

2020 has seen the consulting industry having to brace for a number of massive challenges – from tax reforms to a global pandemic. How are UK consulting firms dealing with Covid-19 and IR35? Consultancy.uk sat down with Maninder Murfin of B2E Consulting to see how the innovative consultancy is handling the situation.

With less than a month until the planned roll-out of the controversial IR35 tax legislation, March 2020 saw the Government announce it would delay the change for a whole calendar year. The reformed IR35 regulation was set to see medium and large businesses forced to set the tax status of certain contractors and freelancers – where previously this tax status was set by contractors and freelancers themselves – something which many expected to have major repercussions for Britain’s burgeoning gig economy.

However, due to the size and scale of the coronavirus pandemic this year, the changes were suspended for one year. It was a move which the Government might have hoped would stimulate the flagging economy, as it had come under acute pressure from the Covid-19 outbreak, and the nation’s containment efforts.

According to B2E Consulting partner Maninder Murfin, most clients were there or very nearly there with their approaches and preparation and believes the delay has actually allowed HMRC the space to focus on the government support schemes. “Whilst it is positive that clients have more time to prepare for the changes, perhaps its more pertinent to reflect on the stated reason for the delay. Coronavirus as well as its devastating impact to afflicted individuals and their families, is also clearly having a significant negative impact on both permanently employed and flexible workforces.”

“We welcome the recent government initiatives to provide unprecedented support at this difficult time,” she explained.

IR35 changes

Established in 2004, B2E is a consultancy which uses a gig economy model to provide a full spectrum of consulting services to its clients. As a result, some might have expected it to be heavily impacted by the IR35 changes, but according to Maninder, the consulting firm was already very well positioned for the new legislation.

Murfin expanded, “We developed in readiness for the original ‘launch’ a range of solutions that clients can use to engage with our independent consulting marketplace, to continue to deploy a flexible scalable expert workforce and remain compliant with the law. We have for a number of years worked on a services and statement of work basis.”

The solutions which will enable B2E to comply with the new law, but still harness the agility and depth of talent from the gig economy, include:

• a new ‘employed’ model (PAYE), where a consultant does not operate through a Personal Service Company but instead is engaged by B2E on a fixed term PAYE basis
• an MSP solution – consisting of service output-based arrangements, with project service provision based on task completion and key deliverables
• client-led determination, where the client wishes to retain control on assessing each engagement on a case by case basis.

“We strive to be as open and transparent as possible and have found that most consultants are pragmatic and flexible in considering each engagement whether ‘inside’ or ‘outside’ IR35,” she added.

Coronavirus challenges

With regards to the coronavirus beyond the matter of IR35, the pandemic has already had a notable impact on the consulting industry. The fact Covid-19 has hit at a time when the UK’s economy was already vulnerable has seen many clients scale back their spending, and consultants’ order books have suffered as a result.

One study by Source Global Research suggested the UK consulting market could subsequently see a revenue fall of an estimated 28% over the course of 2020, from £8.6 billion in 2019 to as little as £6.1 billion. Despite this, Maninder asserted that B2E is well positioned to pick up work helping clients weather the storm.

One of the key factors which separates B2E from other firms is that it is able to adapt to remote working relatively easily. According to Murfin who has predominately worked from home for the last five years, B2E is “fortunate to have a very distributed and flexible operating model with most of our partners well-versed in working from home, and a consulting community of over 20,000 independent consultants also distributed across the UK.” 

During these testing times B2E is increasing efforts to provide virtual social support; indeed, the consultancy has initiated a series of webinars to support the consultant community and already there has been a session to digest the Government support available for consultants and another on optimising LinkedIn when looking for a role.

Commenting on what the future holds, Maninder referred to a recent message to the community from B2E founder Tony McNeil: “B2E Consulting will do our best to continue to serve our clients and stakeholders, to support government advice completely. Indeed some of our consultants are working as key members of client’s Covid-19 Business Continuity response teams.”

“Demand has been impacted of course but we remain mindful of our future aspirations that will resurface once the virus is defeated,” Maninder added. “Reflecting the wider country, we are thankful to the NHS and other key workers and glad that many of our partners are able to volunteer in their community and care for vulnerable/at-risk family members.”