IR35 – Using compliance to win bids and tenders

Over the past 18 months, most if not all businesses have had to change to some extent.

The impact of the global pandemic has left its mark everywhere, and for those private-sector businesses associated with the utilisation and supply of temporary labour, there was the additional challenge of the IR35 reforms.

Introduced in April 2021, the IR35 reforms fundamentally changed the responsibility and process for assessing contractor assignments, forcing IR35 to the top of the agenda and further exposing the need for supply chain compliance.

For suppliers in the temporary labour market, the pandemic has all but removed the face to face sales route and challenged how they develop business and manage clients.

So how will the introduction of the IR35 reforms to the private sector and a rapidly changing, more remote sales process affect the future temporary labour market?

The changing sales process

Face-to-face interactions have always driven the traditional sales process. However, advancing technology and digital communications have slowly influenced these traditional views, and the pandemic of 2020 has challenged them further.

Buyers and decision-makers now spend less time meeting with suppliers and salespeople and more time conducting their own independent research. The enforced lockdowns caused by the pandemic have only served to exaggerate this behaviour.

An automated sales process structured around a formal bids and tenders process is now the preferred route for buying decisions for many businesses.

IR35 status determinations and umbrella company due diligence

In the lead up to the IR35 reforms in April 2021, many large scale engagers took an ultra-cautious, although potentially misguided approach. Policy changes or blanket statements determining all contractors as being caught by IR35 have been prominent.

As a result, the Umbrella company solution has been promoted as an alternative by those suppliers and engagers under pressure to retain their temporary labour workforce.

Whilst removing the responsibility of applying the IR35 legislation, these options come with their own responsibilities and risks. If income paid to contractors is taxed incorrectly in the eyes of HMRC, then someone will be held responsible, and this is where the main risk to businesses that engage contractors lies.

Without thorough due diligence of the supply chain or a robust compliance process for IR35 status determinations, engagers and agencies are leaving themselves extremely vulnerable to the risk of HMRC investigation and potential transfer of debt liability.

There are currently numerous stories in the marketplace concerning tax avoidance schemes, and most of these are associated with umbrella company models. For those engagers and agencies that have ushered contractors into umbrella solutions to avoid IR35, complicity is a real risk, and ignorance is no excuse.

Engagers that have made blanket statements or delegated status determinations to suppliers also risk falling foul of HMRC’s reasonable care requirements.

In both cases, the best form of protection is thorough due diligence and robust compliance. 

Effective bids and tenders

The recent introduction of the IR35 reforms will undoubtedly influence the focus of bids and tenders toward compliance and due diligence. The risks to engagers now associated with temporary labour usage should similarly shift the emphasis and weighting of assessment in the same direction.

Therefore, engagers and suppliers must understand the supply chain and implement processes that thoroughly check and vet suppliers and systems.

Engagers who have a thorough understanding of their supply chain should minimise the risk of engaging contractors and maintain a competitive advantage over less-prepared competitors.

Similarly, suppliers who can demonstrate robust compliance processes and thorough due diligence and compliance through their supply chain will undoubtedly see increased successes in bids and tender submissions.

Taking a robust, right-first-time approach to supply chain compliance will give peace of mind and confidence to all stakeholders in the process.

HMRC strongly recommends that engagers seek professional advice and assistance in effectively managing the temporary labour supply chain.

At Workr Group, our specialist team can offer impartial advice and assistance with all aspects of your supply chain, including our Umbrella solution – Workr Umbrella and our leading compliance service Workr Compliance.

For a free, no-obligation audit and assessment of your IR35 compliance process, you can speak directly with Andy Webster, Founder and Director, Workr Compliance, on 07827 810851 or at aw@workrgroup.com.

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IR35 reforms – Warnings becoming a reality

We’re almost three months in since the IR35 private sector reforms came into effect, and we’ve kept a close eye on what has happened in the marketplace.

As per one of our previous articles about HMRC’s “light touch” introduction, there has been little legislative or financial impact so far. We have yet to see or hear about how HMRC are policing the legislation post-reform.  

We will, no doubt, hear more on these issues over the coming months, and Workr Group will keep you fully updated as we hear more.

However, we are already seeing some impact from the introduction of the changes. Businesses that prepared a well-conducted, structured status determination process and followed reasonable care recommendations appear to have achieved business as usual without any major hold-ups.

For those that didn’t prepare (and in some cases, still haven’t) or made blanket or policy statement changes, the impact has been almost immediate.

IR35 – Predictions and warnings?

While most of the initial talk around the impact of the IR35 reforms was focused on the financial impact of making an incorrect determination, there were other predictions and warnings about the potential impact.

Administrative bottlenecks
The IR35 reforms stated that the engager needed to make a status determination for each contractor and take reasonable care in doing so. This change in responsibility created additional administration for the engager due to the initial assessment and the potential for challenges, and the added associated burden.

Due diligence
With the anticipated shift of volumes of contractors to umbrella solutions, warnings were made to engagers about ensuring that their supply chains were compliant and operating in line with UK tax and employment law.

Talent wars 
Probably the most significant risk of all to engagers was the loss of specialised and high-calibre talent due to “inside IR35” determinations. There were repeated warnings made about contractors migrating to companies offering “outside IR35” assignments and leaving gaping skills gaps behind them.

Three months in, and what are we seeing?

In the short time since the introduction of the reforms, we have already seen and heard of several cases where engagers that took a blanket statement approach and are now bogged down with a flood of challenges from contractors.

Failure to consider or respond to an SDS challenge will likely be regarded as a lack of reasonable care by HMRC and will significantly increase the risk of liability should HMRC find an assessment to be incorrect.

As anticipated, many contractors who received ‘inside IR35’ determinations have moved onto engagers payrolls as employees or transferred to umbrella company payroll models. This may seem a good solution for both engager and HMRC, however, market undertones suggest that there are still many illegal umbrella schemes around that could leave contractors, agencies and engagers in serious trouble if found to be complicit.

A lack of due diligence on the supply chain is highly likely to be frowned upon by HMRC, and once the reforms have bedded down, we suspect that the umbrella sector will come under renewed scrutiny from HMRC.

Most prominently, we have seen an immediate response in the migration of contractors.

For example, in the rail infrastructure sector, we have seen a large number of specialist contractors migrate from an engager that determined them to be inside IR35 directly to a competitor offering outside IR35 assignments.

The original engager took a blanket approach and ruled all of their PSC contractors inside IR35 and suffered an almost instant loss of a significant and skilled section of their workforce. They are now struggling to find the talent and expertise needed to replace those PSCs that moved on. This is having a significant impact on its ability to complete the work and projects on time and to standard.

We have also seen many examples of contractors who were given little choice but to transfer to employment contracts directly with engagers and are now resigning and moving to more lucrative permanent roles with competitors or alternatives.

In summary

Nobody wants to hear the phrase “I told you so”; however, there were plenty of warnings made before the IR35 reforms regarding the potential impact for engagers who chose to ignore the reforms or make blanket decisions.

The consequences of these actions are already being felt and are only likely to get worse as more contractors migrate to engagers offering a credible determination process and outside IR35 assignments.

Additionally, risks also remain for those engagers who chose to take a blanket approach. HMRC will undoubtedly conduct investigations into those sectors or businesses that promoted a shift to umbrella models.

It’s not too late to implement or change your process regarding IR35, and we encourage anyone responsible for IR35 compliance to ensure that your determination process is fit for purpose and meets HMRC’s reasonable care requirements.

To help you retain a competitive advantage and meet your reasonable care responsibilities concerning IR35 compliance, Workr Groups’ specialist team can provide impartial advice and support.

For a free, no-obligation audit and assessment of your IR35 compliance process, you can speak directly with Andy Webster, Founder and Director, Workr Compliance, on 07827 810851 or at aw@workrgroup.com.

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Navigating Payroll & Funding Solutions for Your Recruitment Business

Alex Niarchos, Investment Director at Recruitment Entrepreneur, has invited Yves Bizimana, Managing Director of Workr Solutions and Easypay, to join Recruitment Entrepreneur’s latest webinar to discuss payroll and funding solutions for recruitment business. 

The webinar is free to attend and will take place on Wednesday June 16, 2021 at 3pm UK time. 

Host Alex Niarchos has worked in recruitment for over 10 years and now supports recruitment business founders to set up on their own. 

Yves Bizimana also has a wealth of recruitment experience prior to heading up Workr Solutions, a market-leading back office outsourcing service who also provide specialist funding for recruitment businesses through sister company EasyPay. 

If you run your own recruitment business or are thinking about setting one up it is the ideal webinar for you to learn more about the different payroll and funding providers in the market and how to choose the right one for your needs.

Alex and Yves will provide their experience-led advice and best-in-class guidance as they explore key considerations to help you make the right choices to help fuel your growth.

The duo will end the session with a Q&A as an opportunity to have any burning questions you may have answered. 

Follow us for updates on LinkedIn at:

Workr Group on LinkedIn
Workr Solutions on LinkedIn
Easypay on LinkedIn

Sign up for the free webinar on LinkedIn

If you would like to attend sign up via Recruitment Entrepreneur’s LinkedIn event page. 

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A Guide to Statements of Works

Following the introduction of the IR35 reforms to the private sector in April 2021 private sector businesses (engagers) that utilise personal service company (PSC) contractors have been presented with some complex challenges.

The changes in responsibilities brought about by the reforms have increased financial risk, added administrative burden, and reduced available and flexible skills and expertise hindering their ability to provide services or complete projects efficiently and profitably.

In response, many agencies and engagers have looked at alternative methods of engagement that would help retain access to a flexible and skilled resource whilst complying with or circum-navigating the IR35 legislation. One such common idea has been the Statement of Works or SoW.

Touted by some as the answer and a guaranteed solution to IR35, the Statement of Works presents an alternative solution to providing services but must not be mistaken for an IR35 get-out.

Workr Compliance has compiled a useful guide to Statement of Works that explains everything you need to know:

  • What exactly is is a Statement of Works and who uses them?
  • What details should be included in a Statement of Works and how do you manage them?
  • How can a Statement of Works impact IR35 and does it offer a realistic solution?

To get the answers and determine if a Statement of Works approach could benefit your business download the guide or contact us for a free no obligation discussion.

Email Andrew Webster, Founder and Director Workr Compliance at aw@workrgroup.com

Complete the Form to Receive our Statements of Works Guide

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Euro 2021 Workr Fantasy Football League

The Premier League season is finally over, and whether you came out laughing or crying, this summer brings something all football fans can smile about… THE EUROS!

Even if you’re not a footy fanatic, national competitions are great fun. Everyone can get behind the team as the country unites in the summer sunshine – and if the last week is anything to go by, it’s going to be a scorcher! 

To add an extra competitive edge, we’re running a Workr Fantasy Football League, just for recruiters. Read on to find out how to get involved, and more importantly, what you could win…

The tournament itself

Euro 2020 kicks off at 8pm on 11th June and will last for four weeks. And for anyone who spotted it, we didn’t get the year wrong! It’s actually last year’s postponed tournament, so the hype has really been building for this one.

For the first time in its history, the tournament will be hosted collectively across 11 European cities. 24 nations will compete in six groups, where 16 teams will progress into a knockout format. It all leads up to the final, which will be held at Wembley Stadium on 11th July. 

A fantasy football snapshot 

If you’re making your debut appearance on the fantasy field of play, the concept is pretty straightforward. Build a 15-player squad within a set budget of €100m, then select 11 starting players. The better they perform, the more points they get, and the higher you climb up the Workr league. Simple! 

It’s free to sign up, and in case you’re wondering, the budget isn’t real so there’s no need to call the bank. But just like actual football, you can make transfers each gameweek to try new angles, and swap out injured or non-competing players as the tournament progresses. Everything else you need to know is right here.

Workr Group’s league

So, you’ve already proved that you can discover the best candidates, but can you recruit a winning fantasy team? Unlike the game itself where there can only be one winner, the Workr league has three:

1st place: 2x tickets to a Premier League game in 2021/2022 
2nd place: £100 vouchers of your choice 
3rd place: A bottle of champagne

To get started, build your team and use the code: 6251FHMC02 to enter our league. And for those who didn’t know, there’s a bit of a trend among fantasy footballers to get creative with your team names. We’re talking about a pun, a play on words or clever humour. Our example sets the bar pretty low (‘No Kane, no gain’) – but you get the idea.   

On that note, it’s about time you got your Gareth Southgate on. Good luck!




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Workr Group joins JSA Group

JSA Group, provider of accountancy, payment and support services to the UK’s growing flexible workforce has acquired The Workr Group

The acquisition of The Workr Group strengthens JSA’s offering by enabling the provision of new technology, funding and consultancy services to the contingent workforce supply chain community, including back-office management solutions for recruitment agency partners. 

In addition, JSA will now be able to provide comprehensive compliance and payment solutions to international workers following Workr Group’s success in this arena, today managing over £100m of pay across 85 countries.

John Hoskin, CEO of JSA Group, said: “We were attracted to Workr primarily by the sheer quality of its people and breadth of services. It adds not only meaningful scale in our core outsourced employment, payment and accounting services but also significantly to the capabilities we can offer our customers and to the contingent workforce supply chain community,  from international payment solutions in a substantial range of territories to recruitment back-office outsourcing, compliance, funding, and technology.”

Matt Tyson, Managing Director of The Workr Group, said: “Over the last seven years, Workr has become synonymous with great customer service and innovation in the solutions we offer recruitment agents and the flexible workforce. Having spent a considerable amount of time speaking with JSA about their approach and the way they work, we are confident we have very strongly aligned values and that this transaction will be positive for our staff, clients, and contractors. The Board, all of whom are staying with the business, and the team at Workr, are tremendously excited about the prospect and potential of a collective offering with JSA.”

JSA, who have a 30-year track record, now support more than 1,000 recruitment businesses and 25,000+ freelancers and contractors. The transaction marks JSA’s eleventh acquisition since 2013 and its sixth since 2018 when the company was backed by Universal Partners. They are headquartered in Watford, UK, now with offices in London, Manchester, Leeds, Chester and Edinburgh as well as regional offices in the USA, UAE and India following the acquisition of The Workr Group.

 


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Workr Compliance shortlisted for Tiara Awards

We are delighted to announce that Workr Compliance, part of the Workr Group, has been shortlisted as a finalist for the 2021 TIARA Talent Tech Star Awards in the Compliance Solution of the Year category. 

The Tiara Awards (part of Talint Partners) recognise and celebrate excellence in the recruitment and talent acquisition industry shining a spotlight on the best solutions for employers and recruiters.

Workr Compliance are a trusted strategic partner to recruitment agencies and end-clients. They provide regulatory consultancy that blends people, process, and technology to provide complaint certainty.  

Andy Webster, Founder and Director of Workr Compliance, commented: ‘Myself and the team are genuinely passionate about compliance, supporting flexible workers and helping the businesses that champion them navigate legislation and regulatory change. With the IR35 Off-Payroll Reform it has been an incredibly busy time for us so this achievement is a great way to recognise the teams efforts. Being shortlisted is fantastic in itself and it would be great to go one step further in July.’

Andy added: ‘Whilst this award is focussed on Workr Compliance I wanted to recognise the contributions of every Workr Group employee. The close collaboration and support across our different businesses is our unique differentiator. By connecting our excellence in this way we can develop solutions from several different perspectives that make a real impact and add new types of value to our clients.’ 

Watch this space for more news and updates. Winners will be revealed at a ceremony in London on the 2nd of July. 

You can read more information about awards and finalists here.

 


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The fallout from the IR35 roll-out so far

The fallout from the IR35 roll-out so far.

After much conjecture and a twelve-month deferral, the IR35 Off-Payroll Reforms have finally been introduced into the private sector.

For those businesses that utilise personal service company (PSC) contractors, the responsibility for assessing whether contractors’ assignments fall inside or outside of the IR35 legislation now falls on them.

Not only is this a change in responsibility for businesses that engage PSCs, but it also comes with an increased possibility of financial liability, should they get it wrong.

So what are the initial reactions following the implementation of the IR35 Reforms?

IR35 – Prepared and ready?

The IR35 Reforms have been much publicised following their introduction to the public sector in 2017. Add in the COVID induced deferral, and businesses have had plenty of time to assess and prepare for the private sector reforms.

However, despite months of advice and guidance from hundreds of sources and angles, predictions and warnings have transpired, and we have seen both engagers and fee payers ill-prepared for the changes.

So far, we have witnessed and heard of cases where engagers of tens, hundreds, and even thousands of contractors have done nothing to prepare for the introduction of the IR35 reforms and not even issued a status determination statement (SDS). 

Alternatively, we have observed many engagers take a broad-brush approach and introduce “no PSC” policies or, more worryingly, make blanket “inside IR35” assessments.

In other cases, we have observed engagers taking the minimal actions possible to assess the contractors. Notably, we have heard of some engagers advising their contractors to conduct their own self-assessment by completing the HMRC’s Check Employment Status for Tax (CEST) test and feeding back results to obtain a status determination.

Whilst we have also witnessed some excellent IR35 work and preparation with some engagers, the volume of stories we have heard or witnessed regarding a lack of preparation is hugely concerning.

What are the implications of poor preparation and bad practice?

Reassuringly, before the implementation of the IR35 Reforms, HMRC announced that the reforms would get a “light touch” introduction, advising that genuine mistakes will go unpunished for the first 12 months following the introduction.

However, engagers should not interpret this approach as an excuse not to take action.

HMRC have issued regular updates over the last two years outlining their expectations of engagers following the reforms, and a lack of preparation is unlikely to be considered sympathetically.

So what are the possible consequences of poor preparation or a lack of action?

Consequences

Valid Status Determination Statements

The IR35 changes state that the engager must make a valid status determination and take reasonable care in doing so. The status determination is required to ensure that the correct taxes and deductions can be calculated and made per the legislation.

If the client fails to issue an SDS or take reasonable care, the responsibility for the deduction of tax and NICs, and the payment of the apprenticeship levy and paying these to HMRC will rest with it. That liability will always remain with the client unless it takes reasonable care in reaching its conclusion set out in the SDS.

Failure to take reasonable care is unlikely to be deemed a genuine error by HMRC and will therefore induce fines and penalties from day one.

Blanket Statements

Making blanket statements is also classified by HMRC as not taking reasonable care, meaning that this approach would also render the engager liable for deductions and penalties where errors occur.

The blanket statement approach is also likely to make the engager less attractive to those contractors seeking assignments outside of IR35, reducing their chances of attracting top talent, meeting work schedules or achieving project milestones.

The potential for reputational damage to the engager as a supplier or employer of choice is significant.

Determination test tools

HMRC released its Check Employment Status for Tax (CEST) tool some time ago, but this has proved inconclusive for many assessments, even in some of HMRC’s own test cases.

Simply directing contractors to conduct their own assessments using the CEST tool is unlikely to meet reasonable care requirements and offers no guarantee against incorrect assessments. 

Again, the responsibilities and liabilities for engagers taking this approach could be severe.

IR35 – avoid the risks

Engagers should not underestimate the benefits of having a defined, robust and compliant process for IR35 assessment.

Those prepared to invest in some simple processes and procedures can quickly and easily mitigate the risks posed by the new legislation.

If you’re looking for help to develop a compliant process or simply keen to maintain best-practice and BAU moving forward – we have plenty more observations to share from the past few weeks.

To learn more about the good, the bad, and the ugly, as well as advice on what Engagers and Recruitment Agencies can do pretty quickly to attract and retain talent whilst adhering to the legislation. You can access a recording of our most recent webinar here – Expectation vs Reality: The Fallout Of The IR35 Roll-Out So Far

Alternatively, for a free, no-obligation audit and assessment of your IR35 compliance process, you can speak directly with Andy Webster, Founder and Director, Workr Compliance, on 07827 810851 or at aw@workrgroup.com.




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Workr Group Boost Contractor Numbers with Latest Acquisition

Workr Group, a leading international provider of employment, payroll and accountancy services to engagers of temporary workers, has acquired the contractor book of PayCo Services.

PayCo Services is also an established and respected provider of employment, payroll and accounting services. It was founded in 2005 and maintains an excellent reputation with its contractors and agency clients.

Matt Tyson, Group CEO at Workr Group, said the move was a significant boost to three of the group’s areas of expertise; umbrella, self-employed and international. Two of the existing PayCo services staff transferred across to support the existing Workr Group team managing the increased volume in contractor and agency relationships.

Matt said; “We have known and admired the team at PayCo Services for some time. The move is aligned to our strategy to grow our existing service lines both organically and through acquisition.”

Matt added; “Our initial focus has been on providing a smooth transition and personalised service to the contractors and demonstrating the added value and enhanced benefits they now receive.”

“At the same time we have been talking to our new agency partners. Our additional breadth of service offerings has really resonated as has our FCSA and APSCo accreditations and the increased security and compliance this affords them”

Workr Group was represented by Fieldfisher LLP and supported by Beever and Struthers for financial and tax due diligence.

Terms of the deal have not been disclosed.


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Workr Group Makes a Hat-trick of Promotions

L to R: A Hat-trick of Promotions – Ashley McClure, Beth Robinson, and Chris Timms

Workr Group is delighted to announce a trio of key promotions to strengthen their client offerings taking effect immediately. 

In the sales team Ashley McClure has been promoted to an Account Director whilst Beth Robinson has become a Senior Relationship Manager. Their roles are focussed on finding new ways to drive client success by combining the Group’s services in unique ways to meet client specific requirements. 

Chris Timms has been promoted to Associate Director, IT. Chris was already a member of the Senior Leadership Team and his promotion gives him formal oversight and responsibility for Group-wide IT operations. 

All newly formed roles sit at a Workr Group level and have been created through a demand from existing clients looking to consolidate their supply chain and connect the breadth of our service offering under one roof. 

Mike Lee, Group Sales Director at Work Group commented on the moves: “We are really excited to have Ashley, Beth and Chris in their new roles, their successes with the business to date have led to their promotions. Both Ashley and Beth deserve to be recognised for their hard work in building, maintaining and growing our existing client base. Chris has an ability to understand and translate not only our internal IT requirements but that of our clients needs. Working together, and drawing from their collective experience, we are confident we will continue to find new technologies and solutions to support our clients growth.”

McClure, Account Director at Workr Group commented: ‘Workr Group has been such a fantastic environment for me to progress in my career and I have been lucky to work across such a robust network of clients, delivering a wide array of services with a uniquely talented group of colleagues. Since I joined the business over two years ago, my client and exposure has grown significantly which has really solidified my understanding of the requirements of each sector we work with.”

Lee added: “Ash, Beth and Chris have already been integral in creating the right mix of people, process and technology that allows us to connect our excellence across our service offerings. Their promotions will be seen as a natural progression by our team and our clients and will help fuel our continued business growth.”

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