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.


Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.

Expectation vs Reality: The Fallout Of The IR35 Roll-Out So Far

With the deadline behind us, we’re finally starting to see the ramifications of preparing – or failing to prepare – coming to fruition for engagers and fee payers. Join Workr Compliance and STR Group at 4pm on Wednesday, 5th May for a review of the last few weeks, and key advice for maintaining BAU in the months ahead….

Hosted by Andrew Webster, Founder and Director at Workr Compliance, who will be joined by David James, Engineering Programme Director at STR Group and former IR35 Project Lead at WORLEY, this session will provide actionable insights on:

  1. Continuation of assessing PSCs
  2. Audit of the IR35 programme
  3. Upskilling of new Managers
  4. IR35 legislation updates

The prediction and warnings have transpired; we have seen both Engagers and Fee Payers ill prepared for the changes despite months of advice and guidance from all angles. Whether you’re one of them – or simply keen to maintain best practice and BAU moving forward – we have plenty of observations to share from the past few weeks.

Join us for insights on 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…

NOTE: If you cannot attend live on the day, you can still register to receive a free recording after the session.

Missed it? View the webinar recording

  • The password protected webinar recording is available here. Complete this form to receive a password.

    Please see our privacy notice for more information but where your enquiry may include Personal Data please confirm your consent to the use and storage of that data by the Workr Group for the purposes of your specific enquiry as Opted-In below, over and above any legal obligations we may have to store and process your data. You may at any time withdraw your consent by notifying our Data Protection Officer at dpo@workrgroup.com or by using the specific online form.

Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.

Read More

IR35 – April 2021 and beyond

It’s now almost 12 months since the IR35 Off-Payroll Reforms were due to take effect.

Many businesses had invested time and money into preparations for the 6th April 2020 with collaborations, new systems and updated procedures only for the legislation to be deferred due to the pandemic.

With the reforms now in play, what should businesses be doing, and what should business as usual look like?

IR35 – Prepared and ready?

With the IR35 reforms now in effect, businesses still preparing can take some solace in HMRC’s announcement about a “light touch” introduction. Whilst it is imperative that businesses take action, genuine mistakes will go unpunished for the first 12 months following the introduction.

In a previous article, IR35 —  deferred, not defunct! Workr Group outlined the changes in responsibilities for engagers and recommendations on what HMRC expects from engagers concerning processes and responsibilities. Now that the reforms are in effect, engagers should be doing the following:

Status Determination Statement (SDS)

The IR35 changes state that the engager must make a 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 in accordance with the legislation.

According to HMRC’s Employment Status Manual (ESM10013), a valid Status Determination Statement must:-

  • state in the SDS whether or not the worker would be an employee or office holder, or is an office holder, for tax and NICs purposes if they were directly engaged by the client,
  • provide their reasons for coming to that conclusion, and
  • have taken reasonable care in coming to their conclusion (see ESM10014)

It is essential for engagers to note HMRC’s stance regarding reasonable care as follows:-

“If the client fails to 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.”

Reasonable Care

By reasonable care, HMRC means that the status determination must be thorough and detailed, giving an accurate and clear representation of the work to be carried out by the contractor (worker). 

HMRC recommends that you formalise and record a consistent process, seek professional advice and assistance, involve relevant parties or individuals, use a determination test tool and define and communicate a transparent process for challenges.

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.

However, suppliers in the industry have constructed several other tests using case law examples, representing credible CEST alternatives.

Insurance

Many engagers who want to continue to utilise contractors have stipulated a need for IR35 insurance within the supply chain.

A comprehensive insurance policy that supports a robust determination process should eliminate almost all liability from engagers and put them in a prime position to attract the best contractor talent for those assignments identified as outside of the legislation.

Challenge process

Contractors and agency suppliers must have the opportunity to challenge an assessment, whether inside or outside of IR35.

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

6th of April 2021 and beyond – Business As Usual (BAU)

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

Engagers prepared to invest in some simple processes and procedures, along with the support of compliant suppliers, can quickly and easily mitigate the risks posed by the new legislation and meet HMRC’s requirements.

As with any other supply chain for products or services, some good due diligence and common sense will allow businesses to carry on with business as usual, utilising contractors effectively and productively.

In contrast to businesses that have changed policies or made blanket statements, engagers will benefit most from the choice of exceptional contract talent available to them due to their fair and credible approach to IR35.

IR35 – Act now!

We encourage anyone with a responsibility for IR35 compliance to ensure that your determination process is fit for purpose and meets HMRC’s reasonable care requirements. To learn more about this you can join Workr Compliance and STR Group at 4pm on Wednesday, 5th May for a webinar reviewing the landscape post 6th April and to gain key advice for maintaining BAU in the months ahead. 

If you are unable to make the webinar our specialist team can provide impartial advice and support to help you meet your reasonable care responsibilities. For a free, no-obligation audit and assessment of your IR35 compliance process, you can speak directly with Andy Webster on 07827 810851 or at aw@workrgroup.com.


Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.

IR35 reforms to get a gentle introduction

With IR35 Off Payroll Private Sector Reforms coming into effect on the 6th April 2021, HMRC has confirmed what it describes as a soft landing for affected parties for the first 12 months following implementation.

As businesses prepare with procedures and assessments in readiness for the reforms, they can take some solace from HMRC’s recent publication pledging its support for parties affected.

For the twelve months following implementation, HMRC has confirmed that it will take a “light-touch approach” to penalties. The publication goes on to state, “customers will not have to pay penalties for inaccuracies in the first 12 months relating to the off-payroll working rules, regardless of when the inaccuracies are identified, unless there’s evidence of deliberate non-compliance.

HMRC support

With effect from the 6th April 2021, the responsibility for IR35 determination will shift from the contractor to the engager. To help support this transition, HMRC established a specialist team and created an educational programme for all parties affected by the change.

The light-touch approach to penalties and commitment not to investigate returns for years before 2021/2022 has reassured parties that there will, at least, be a reasonable period for adaptation. See our recent blog, IR35 – Soft landings and support for a more detailed overview.

It’s reasonable to assume, therefore, that HMRC is expecting teething problems.

Concerning mistakes, HMRC states that “a mistake for the purposes of the off-payroll working rules may mean that you have not met some or all of your responsibilities, or have paid more or less tax and NICs than is due.” 

“Mistakes can include payments being made to contractors without the correct deductions being made or making inaccurate employment status determinations.”

The focus here seems quite clear; make reasonable and accurate determinations and make the relevant and correct deductions appropriate to the determination.

HMRC has encouraged businesses to be vigilant and self-police their IR35 procedures, committing to supporting and assisting businesses who identify and admit mistakes once identified. In response, HMRC has said that they will work closely with engagers and agencies to understand and identify how the mistake has been made and support them to rectify any errors without imposing penalties.

While this approach may seem reasonable and supportive from HMRC, the added scrutiny and attention it may bring may not be quite as welcome. 

Reasonable care and compliance

It is unclear as yet as to how HMRC will approach governance and compliance as a whole.

RTI requirements already provide them with much of the information required to understand where the larger contractor populations reside. It would seem likely that HMRC will look first to those areas where they believe there is a higher risk of non-compliance or avoidance.

We believe this will be the root of HMRC’s approach. Tax avoidance and deliberate non-compliance will most likely be the key issues that HMRC will want to expose and eradicate.

There may be some “heat” for organisations where mistakes occur but, for those businesses trying to do the right thing, a sensible and documented approach should be more than enough to satisfy HMRC’s requirements.

Where engagers take reasonable care in their determination process and where mistakes occur, take reasonable steps to avoid repeat or new errors, it’s reasonable to assume that HMRC will focus their efforts elsewhere.

Get it right first time

Whilst HMRC has committed to a soft touch introduction, the risk and liability for getting things wrong remain.

Organisations in the supply chain have already seen an increase in the administrative burden due to the changes. They are unlikely to welcome any additional scrutiny as a result of an HMRC investigation.

The easiest way to avoid this scenario is to get the process right first time!

It’s not too late, but with time quickly running out before the 6th April introduction, organisations need to act decisively to ensure that they have taken reasonable care in their approach to compliance. To avoid any risk of complicity in tax avoidance schemes, they must also have absolute confidence in their supply chain.

To help meet your reasonable care responsibilities concerning IR35 compliance and tax avoidance schemes, Workr Groups specialist team can provide impartial advice and support in preparation for the reforms.

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


Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.

HMRC rectifies conditions of liability oversight in readiness for IR35 changes

Last year, HMRC made some minor last-minute changes to the Finance Act 2020 in preparation for the implementation of the IR35 reforms.

Without seeking consultation from sector stakeholders, HMRC amended the conditions of liability (COL) for a company intermediary in an attempt to prevent avoidance of the off-payroll working rules.

By reducing their shareholding to less than 5%, workers providing their services via an intermediary would remove the conditions of liability required for the off-payroll working rules to apply.

Therefore, the government felt it necessary to close this loophole by clarifying the conditions of a company intermediary.

Changes went beyond the intended scope

Whilst wholly unintended, the subsequent changes made to the Finance Act 2020 extended the scope of the conditions for an intermediary. In the words of the government, the changes “went beyond the intended scope of the policy”.

Different intermediaries such as partnerships or incorporated limited companies have different conditions of liability. In the original IR35 legislation, the intermediary conditions of liability stipulated that the worker must hold a material interest (5% or more) in the intermediary.

The legislation also required the worker to disclose to the engager that it held a material interest in the intermediary. Where the worker failed to provide the information, the engager was to assume that the worker held a material interest.

However, whilst the material interest condition remained the same, HMRC added two further conditions as follows;

Where the worker receives a chain payment.

Or

Where the worker is entitled to receive a chain payment.

When strictly applied, these added conditions meant that any worker providing services via an intermediary where a chain payment is received would fall within the scope of the legislation. The unintended consequences being that some self-employed or even employed workers would fall within the scope of the legislation.

HMRC announced a commitment to addressing this oversight on the 12th of November 2020. On 3rd March 2021, HMRC published a policy paper stating that the scope of this condition was wider than the policy intent. It confirmed that it would have caught any arrangement where the worker operates through a company, even if the full payment had already been taxed as employment income (such as where the worker is operating as an employee of an umbrella company).

Operating as intended

Having published its policy paper, HMRC confirmed its intention to amend the conditions of liability again to limit the scope of the condition to cases as follows;

Where the worker holds a material interest.

Or

Where the worker holds less than a material interest in the intermediary and the payment received by the worker for the services provided is not already taxed wholly as employment income.

Additionally, HMRC has extended the requirement to confirm whether the conditions of an intermediary are met to the intermediary as well as the worker. The change is intended to make it easier for parties in the supply chain to confirm whether the worker is potentially subject to the IR35 off-payroll working rules.

The provision of fraudulent information was also extended to any UK-based party in the labour supply chain, rather than just the worker or someone connected to them. This is aimed at preventing deemed employers from facing a liability where they have been provided with fraudulent information by another party in the chain.

 

Subscribe to the Workr newsletter to hear updates as they happen

 

We are currently awaiting the confirmed wording of the technical changes and will provide an update once published.

For queries regarding the above technical changes or any other IR35 related issues, Workr Group has a specialist IR35 team that can support and advise you.

You can speak directly with Andy Webster, Founder and Director, Workr Compliance, on 07827 810851 or at aw@workrgroup.com.


Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.

IR35 – Soft landings and support

With no mention in the budget, and following its latest update on the IR35 Off Payroll Private Sector Reforms, HMRC has all but confirmed that the reforms would come into effect on the 6th April 2021.

Confirming what it describes as a soft landing for affected parties for the first 12 months following implementation, HMRC emphasised compliance and support in its update.

In essence, this means that HMRC will take a lenient approach with parties where they believe genuine mistakes are made during the process. For the twelve months to the 5th April 2022, HMRC states that it will not issue penalties where it deems the error genuine. It will, however, still pursue any perceived outstanding tax liabilities.

Soft landings and support

IR35, also known as the Intermediaries Legislation, is tax legislation aimed at tackling tax avoidance. 

The earnings of workers providing their services and expertise to a client via an intermediary, such as a limited company or personal service company, are subject to income tax and National Insurance Contributions (NIC’s) if caught by IR35.

With the responsibility for IR35 determination shifting from the contractor to the engager once the reforms take effect, HMRC has established a specialist team and created an educational programme in preparation for the changes.

Emphasising its desire to ensure that people pay the correct taxes through education and support, HMRC has confirmed that it will take a “light touch” approach to penalties in the first twelve months following the implementation of the IR35 changes.

In its policy paper, issued on the 15th February 2021, HMRC stated: “You will not have to pay penalties for inaccuracies relating to the off-payroll working rules in the first 12 months of the operation of the new rules unless there’s evidence of deliberate non-compliance.”

HMRC also went on to confirm that “We have also committed that we will not use information acquired as a result of the changes to the off-payroll working rules to open a new compliance enquiry into returns for tax years before 2021 to 2022, unless there is reason to suspect fraud or criminal behaviour.”

Compliance and anti-avoidance

Whilst these commitments will re-assure those parties concerned with prior years investigations and ambiguity around determination processes, we still urge parties to proceed with caution.

Implementing a specialist team is a clear indicator of HMRC’s determination to tackle tax avoidance and compliance.

In publishing its compliance principles, HMRC clearly states its support for those customers trying to do the right thing and complying with the rules, which we interpreted as taking reasonable care, following guidance and enlisting professional help where required.

It was also clear in its approach to tax avoidance and non-compliance. HMRC committed to challenging deliberate non-compliance and schemes that claim to avoid the off-payroll working rules or otherwise reduce the tax payable.

For those engagers or other organisations in the supply chain who fail to take reasonable care or comply with the legislation, the landing may not be quite as soft as it sounds.

Does a soft landing mean no financial risk?

Absolutely not.

By soft landing, HMRC means that it won’t financially penalise organisations for genuine mistakes. However, it will still pursue any unpaid taxes through the supply chain if a mistake is made.

With time quickly running out before the 6th April introduction, organisations need to act decisively to ensure that they have taken reasonable care in their approach to compliance. To avoid any risk of complicity in tax avoidance schemes, they must also have absolute confidence in their supply chain.

To help meet your reasonable care responsibilities concerning IR35 compliance and tax avoidance schemes, Workr Groups specialist team can provide impartial advice and support in preparation for the reforms.

Engagers or end users can find out more by registering for our free webinar on the 11th March 2021 via the following link:

Use the link to access a free recording if you can’t make the date.

Alternatively, you can speak directly with Andy Webster, Founder and Director, Workr Compliance, on 07827 810851 or at aw@workrgroup.com.


Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.

HMRC soft landing + IR35 Insurance + preparing for BAU = Confused?

Everything you need to nail the final sprint to April 6th 

Join Workr Compliance and STR Group at 10am on Thursday 11th March to get essential clarity on compliance, insurance and what BAU looks like post April…

Hosted by Andrew Webster, Founder and Director at Workr Compliance, who will be joined by David James, Engineering Programme Director at STR Group and former IR35 Project Lead at WORLEY, this session will provide actionable insights on:

With confusion still evident in the marketplace, Andrew and David will provide clarity to engagers (end clients) on three key areas of IR35: HMRC’s soft landing, insurance and preparing for BAU. They will provide their experience-led advice and best-in-class guidance to engagers going through the latter stages of preparing for 6th April – and indeed beyond. The session will explore the key considerations including what should be done, by when and with whom and provide you with an opportunity to have any burning questions you may have answered. 

With only 16 working days left before the Reform can you afford to miss out? 

NOTE: If you are cannot make it on the day, you can still register to receive a free recording after the session. 

Missed it? View the webinar recording

  • The password protected webinar recording is available here. Complete this form to receive a password.

    Please see our privacy notice for more information but where your enquiry may include Personal Data please confirm your consent to the use and storage of that data by the Workr Group for the purposes of your specific enquiry as Opted-In below, over and above any legal obligations we may have to store and process your data. You may at any time withdraw your consent by notifying our Data Protection Officer at dpo@workrgroup.com or by using the specific online form.

Read More

IR35 insurance – Who needs it?

HMRC has issued its latest update on the IR35 Off Payroll Private Sector Reforms, all but confirming that the reforms will come into effect on the 6th April 2021.

HMRC has confirmed what it describes as a soft landing for affected parties for the first 12 months following implementation, emphasising compliance and support. In essence, this means that HMRC will take a lenient approach with parties where they believe mistakes made during the process are genuine.

Whilst this represents an olive branch from HMRC to assist with the impact of the IR35 private sector reforms, many large scale engagers, in the financial sector, for example, have still adopted an ultra-cautious approach and made policy statements ruling out the use of personal service companies.

So how can insurance play a part in changing this thought process?

Risk-averse to new responsibilities

With the reforms shifting responsibility for IR35 determinations from contractor to engager, many engagers have taken an ultra-cautious approach in response.

Even though the immediate financial liability will sit with the fee payer (possibly the engager but more likely the agency), the reforms clearly state that the engager retains responsibility for taking reasonable care in how they handle the process. Failure to do so could still land liability square at the engagers door.

This stipulation and responsibility seem to have been a step too far for some engagers. Ironically, this is even the case for some of the financial service organisations that provide insurance policies for off-payroll workers against IR35-related investigations.

Compliance and insurance

The challenge for engagers is how this approach will affect their capability to attract and retain the flexible talent they have utilised and relied upon previously.

The consensus suggests that contractors will seek assignments deemed outside of IR35, either with small businesses where the reforms do not apply or medium to large businesses with a fair and reasonable determination process.

The alternative, if a PAYE solution is the only choice, is a significant hike in rates and cost to the engager. Neither of which would seem very appealing propositions due to the potential cost of business lost or reduction in profits.

However, a robust compliance process underpinned with a comprehensive insurance policy could eradicate almost all of the engager’s risk. Indeed, engagers with a robust due diligence process and some qualified, professional support should have little trouble identifying a supply chain and process that includes an insurance provision.

Engaging with fee payers with insurance protection should leave engagers with very little to fear from HMRC’s transfer of debt provisions and everything to gain from a talented contractor workforce keen to provide their services.

IR35 insurance policies can be hard to come by, such is the ambiguity surrounding the legislation. In fact, some insurers are even reluctant to provide cover where the government’s own CEST tool is used to conduct determinations.

Policies will therefore fall into one of two categories. One will be policies that contain weak prospect of success clauses that effectively provide underwriters with an opt-out if they deem the case weak. Engagers should avoid these policies wherever possible.

The others will be policies provided on the strength of the compliance process and will usually include First and Upper-tier tax tribunal representation, cover for previous tax years for up to six years, and cover all defence costs, including liabilities and penalties.

All of which should give engagers confidence and peace of mind that the risk of engaging contractors outside of IR35 is mitigated.

What now?

Our Founder and Director of Workr Compliance, Andrew Webster, recently hosted a webinar with Markel Tax on IR35 insurance. For a complimentary recording of the webinar, please follow the link – https://workrgroup.com/demystifying-off-payroll-working-for-the-entire-contractual-chain-whilst-protecting-your-interests/


Our staff regularly write about subjects that interest them in ways that will interest our clients. Sign up to our newsletter and receive notifications when new content is added.