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Staffology and Crunch cement IR35 alliance

The impending rules requiring medium and large businesses to determine the status of their contract workers has encouraged two south coast cloud accounting pioneers to join forces.

29th Jan 2020
Editor in Chief (interim) AccountingWEB
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Crunch, the fast-growing Brighton-based small business accountancy firm has signed up with Staffology Cloud Payroll to support its new package of services for workers affected by the IR35 off-payroll rules.

When they were introduced to the public sector in 2017, thousands of people providing services to the NHS and civil service were put onto PAYE. Many contractors who wanted to stay independent switched to umbrella company employers and closed down their personal services companies.

The loss of one-person company work affected many practitioners. Crunch echoed many of the criticisms about the inconsistencies of the government’s employment status tool (CEST) and the additional risks and burdens the new regime will place on employers and contractors, but in a challenge to what other accountants are thinking, Crunch founder Darren Fell also saw it as an opportunity for more growth.

IR35: Platform for growth

As part of the firms evolving service model, Crunch added an end-to-end IR35 solution for recruiters and employers to its Crunch Two small company option last month. This month it added a free IR35 calculator to help contractors asses their situation ahead of the reforms that will take effect from 6 April 2020.

“We wouldn’t describe Crunch as a contractor accounting firm, but we have a lot of freelance contractors as clients and we’ll be playing harder in that area,” said Darren Fell. “We set up an umbrella operation before public sector workers had to shift and were determined to have everything in our kitbag, particularly for recruiters.”

The Crunch platform add-on strategy is designed to extend its flexibility to cope with different clients and situations, so the AI-driven calculator can “pump out” assessments for workers and agencies, Fell said: “We can run them through all 22 legal test cases and will give a 100% accurate response on where they sit on the in-out traffic light.”

As part of that service package, Crunch also offers IR35 payroll to all parties. “We can see exactly the people at risk and we are talking to them. If they’re inside, they need to do something about it,” he continued.

“We assessed many payroll products, but only Staffology ticked all the boxes, offering PAYE, CIS and umbrella functionality all accessible via a modern API.”

Staffology API strategy

The cloud-based application programming interface (API) strategy is a key differentiator for Staffology, which was launched into the UK market six months ago by KashFlow founder Duane Jackson. “There’s nothing that can be done in the app that can’t also be done programmatically via the API,” he said.

Jackson also sees a silver lining in the off-payroll rule changes and likens the payroll software environment to how accounting software was nearly 15 years ago when he conceived his cloud accounting product.

“We’re expecting the umbrella stuff to grow because we’re the only ones who can provide tools to technically savvy providers like Crunch. It’s a single solution that can scale up because you don’t have to put more people in front of a desktop payroll system to do the work,” he said.

Jackson added that Staffology included specific functionality to help umbrella companies work out their “horrendously complicated” payroll calculations. “They can plug in an agency amount for what their cut is and work out a perfect payslip,” he said.

When KashFlow was sold to Iris back in 2013, Jackson invested in Crunch as soon as his previous deal allowed him to. The latest alliance takes that relationship a step further.

"I've been a long supporter of Crunch's software + accounting service model and given their growth and plans, I was keen to invest in Crunch as soon as I could,” he said. “Although we were competitors, it was always friendly. This deal just goes to show you never know when you might cross paths with someone again.”

 

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By GR
29th Jan 2020 20:57

Another great article regarding the evolution of the business strategy of contractor accountants. It is going to be really interesting to see which contractor accountancy firms ends up like Thomas Cook (if anyone). I have no concerns about Crunch's ability to thrive in this new off payroll world. This is because they appear to be led by a very passionate founder/CEO. I worry about all the other mega contractor firms. They all appear to be owned by private equity or venture capitalists who probably don't really care and are just focusing on cost cutting. It is really interesting seeing Crunch spend money/invest to grow, while others are trying to cut costs in order to survive. I think I know which strategy will win long term.

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Mohit Baheti
By camohitbaheti
31st Jan 2020 11:24

Its a good strategic partnership, transforming a threat into an opportunity. It proves yet again that technology is affecting the accounting profession like never before. Also reminds me of an article named, go digital or go home.

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