IR35 compliance – IR35 in 2022

It’s fair to say that the lead-up to introducing the Off-payroll reforms to the private sector was anything but smooth.

When the Off-payroll reforms were introduced into the private sector in April 2021, two full years had passed since the government confirmed its intentions to introduce the reforms. The private sector had also benefited from witnessing the introduction of the reforms into the public sector back in 2017.

The pandemic forced many businesses into emergency or survival mode. Even though the government deferred the introduction of the reforms for twelve months, engagers could be forgiven for not being entirely focused on IR35.

Under normal circumstances, most people would argue that four years (2017 – 2021) is ample time to prepare for any form of change.

However, these were not normal circumstances, and IR35 has wallowed in ambiguity and controversy since its original introduction many years ago. Preparation, therefore, was unlikely to be straightforward.

Public sector investigations set the tone

In our previous article – 2021, A year of reform, we reviewed our experiences and findings following the introduction of the reforms to the private sector.

The findings were mixed, with some engagers exceptionally well prepared and others completely oblivious.

Irrespective of our findings, the one thing that has become clear since the introduction is HMRC’s commitment to the off-payroll reforms.

Even though the reforms were introduced to the public sector back in 2017, there were very few cases to base judgment or opinion on what HMRC would classify as good, bad, right or wrong.

Again, another reason for engagers to be confused or cautious about what actions to take. 

However, following the introduction of the reforms to the private sector, whether by strategy or coincidence, HMRC began to publish the results of investigations into some high profile public sector bodies.

The results were difficult to ignore.

The DWP, Home Office and the Ministry of Justice were all found wanting following IR35 investigations with eye-watering tax bills of £87.9M, £33.5M and £72M, respectively.

HMRC have subsequently followed that up with the results of an investigation into Defra, the government department responsible for environmental protection, food production and standards, agriculture, fisheries and rural communities. 

The result of Defra incorrectly determining contractors as outside IR35 in the eyes of HMRC was another hefty tax bill. This time a whopping £48M.

What does 2022 hold for IR35 in the private sector?

If these public sector examples are anything to go by, private sector businesses need to heed these ominous warnings.

Even though the government confirmed a soft introduction, promising no fines or penalties on genuine errors for the first twelve months of the legislation, this period is now almost over.

Having already gone through the IR35 investigation process with public sector organisations, HMRC is guaranteed to use the lessons learned when turning its attention to the private sector.

Initial requests for information and interviews with private sector businesses have demonstrated HMRC’s keen interest in the systems used to make status determinations, including the weighting of questions used to achieve a result. This is particularly interesting considering that the public sector organisations punished for making incorrect determinations all used the government’s own CEST status determination tool.

Additionally, HMRC questions have intimated that the scope of investigations may expand into the broader supply chain rather than focusing solely on status determinations.

Therefore, care and compliance must prevail in 2022 for private sector businesses to meet the demands of the off-payroll reforms.

If you have concerns about meeting the requirements of the off-payroll legislation or supply chain compliance, then Workr Compliance can help.

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.

IR35 compliance – 2021, a year of reform

In what has been a turbulent and unpredictable year, we can all be forgiven for moments of uncertainty.

However, when it came to the Off-payroll reforms, finally introduced into the private sector in April, there was an unerring certainty about HMRC’s actions.

Amid calls for a further deferral or even a complete u-turn and retraction of the reforms, HMRC remained steadfast in its determination to push through the legislation, albeit with a soft introduction.

The overall consensus was that engagers, contractors, agencies and all of those businesses within the temporary labour supply chain had received the benefit of an extra twelve months to prepare for the changes.

Although some would reasonably argue that the pandemic had distracted preparations and taken priority, the calls fell on deaf ears, and the legislation came into effect on the 6th of April.

So what have we learned?

What have we learned?

In the nine months since the introduction of the reforms, we’ve heard many stories, thoughts and ideas around how best to respond to the IR35 legislation changes. In many cases, engagers have taken an ultra-cautious approach with their new responsibilities and liability.

Umbrella companies have stepped up their pitch to promote their offering as an IR35-free solution, and contractors have had to make career and lifestyle choices that were often unwelcome or unwanted.

These reactions were not entirely unexpected, but perhaps the biggest surprise has been the number of stories and examples of businesses that remain unprepared or uncertain about the legislation.

The government confirmed a soft introduction, promising no fines or penalties on genuine errors for the first twelve months of the legislation, perhaps giving engagers a sense of security and a safety net from which to preach ignorance.

However, the critical point of the soft landing is the reference to genuine errors. Given HMRC’s guidance notes on responsibility and reasonable care, genuine errors appear quite a narrow channel that leaves a lot of other areas open to challenge.

Engagers who have made blanket statements or outsourced determination processes to avoid IR35 liability should seriously reconsider their actions to ensure they have genuinely mitigated any risk.

The soft landing is unlikely to stretch as far as protecting against complacency or ignorance.

Furthermore, we have learned more recently of HMRC’s post-reform requests for information. While the requests initially focused on determination processes, compliance and contractor numbers, subsequent interviews have led us to believe that examining the broader supply chain is highly likely.

This would likely include agencies and umbrella companies, meaning that engagers could be held responsible or deemed complicit if tax avoidance schemes are unearthed within the supply chain.

With a plethora of other tax legislation at its disposal, the Off-payroll legislation could just be a Trojan horse that HMRC will use to assess the broader temporary labour supply chain. This is particularly relevant to engagers that have forced contractors down the umbrella route.

What next? IR35 in 2022 and beyond

Compliance and care must be the keywords for engagers as we approach 2022 and beyond.

Based on the direction of HMRC’s post-reform investigations, we strongly recommend that supply chain management and due diligence become an integrated part of engagers BAU for 2022 thereon.

Given the economic impact of the pandemic over the last two years, tax avoidance is undoubtedly going to be high on the government’s agenda.

Moving contractors to umbrella models purely to avoid the Off-payroll legislation may, in hindsight, appear to be a jump from the frying pan straight into the fire.

If you have concerns about meeting the requirements of the off-payroll legislation or supply chain compliance, then Workr Compliance can help.


For another angle on our sector in 2021, we asked Group CEO Matt Tyson to walk us through the year and highlight some of his stand-out moments, you can read that here.

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.

IR35 compliance – Is supply chain compliance next on HMRC’s hit-list?

Following Workr’s recent articles about HMRC’s post-reform activities, it’s been interesting to observe that much of the information requested in HMRC letters and interviews has centred around those involved in the supply chain.

In particular, HMRC appears to be focusing much of its attention on the recruitment suppliers used to source contractors and the umbrella companies used to engage them. 

Having kept a close eye on recent proceedings and spoken with businesses that have already conducted post-reform meetings and interviews with HMRC, it’s fair to say that HMRC’s questioning has been more extensive than expected.

The consensus following these meetings (some businesses have already had more than one) is that HMRC is looking well beyond the scope of the Off-payroll reforms in its investigations.

HMRC appears to be looking at the whole supply chain if its questioning and investigations are anything to go by. Requests for records of recruitment suppliers and umbrella companies have not been uncommon.

These requests lead me to believe that HMRC is looking to assess the bigger picture rather than focussing purely on the status determination process.

Are engagers responsible for their supply chain?

In the context of the Off-payroll reforms, there are two main changes in responsibility for engagers:

  1. Conducting and communicating the status determination for each contract assignment.
  2. Meeting Reasonable Care tests, as defined by HMRC. 

Upon completion and confirmation of the status determination, the responsibility for the payment of taxes etc., falls to the payee, which in most cases is the recruitment agency or umbrella company, depending on the status result.

The legislation contains little reference to the supply chain or responsibility for its management.

Why, then, is HMRC following this route of questioning?

If the early market indicators are correct and many PSC contractors have transferred to umbrella models or employment contracts, it would make sense to me that HMRC prioritises following that money trail over anything else. This is, after all, where HMRC is likely to generate its quickest wins and the majority of its revenue.

However, HMRC has a plethora of tax evasion legislation that it can use for enforcement purposes. I, therefore, believe that there is a real risk of engagers being held responsible or deemed complicit for the actions of those within its supply chain should future HMRC investigations unearth problems.

What are the risks of not managing your supply chain?

Based on the direction of HMRC’s initial post-reform investigations, it appears that supply chain management and due diligence could well be defined as being a part of the engagers reasonable care and compliance responsibilities.

In its reasonable care guidance notes, HMRC advised engagers to seek the advice and support of qualified and professional advisors, but this was as far as the advice went. Therefore, the  Off-payroll legislation contained little for engagers to fear in relation to its supply chain management.

However, given the focus that HMRC has put on the supply chain during its recent investigations, my advice to engagers is to beware.

The Criminal Finances Act is an alternative piece of legislation that HMRC has used previously and could use again in its fight against tax avoidance. There have been several cases of umbrella providers being found guilty of peddling illegal tax avoidance schemes in recent times.

Engagers found to have such umbrella companies in their supply chain could well find themselves under investigation for being complicit in promoting such schemes.

Therefore, the need for supply chain management and due diligence is essential to prove reasonable care and will go a long way to reducing any risk of complicity.

If you have concerns about meeting the requirements of the off-payroll legislation or supply chain compliance, then Workr Compliance can help.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.

IR35 Reforms – PSC to employee details requested

Our recent article about HMRC’s IR35 activities highlighted that Request For Information (RFI) letters had been sent by HMRC to numerous businesses across several different industry sectors.

The main focus of the RFI was for documented evidence of records, processes and systems used for the off-payroll legislation.

However, the RFI also requested details of those contractors transitioned to PAYE models (either agency payroll or Umbrella) along with details of those contractors that transitioned to permanent employees.

Whilst both of these requests pose little risk to the engager for pre-reform arrangements; they could give an insight into how HMRC will look at the responsibilities and reasonable care requirements of engagers in the future.

Why would HMRC ask for these details?

The process upon which HMRC has embarked following the introduction of the Off-payroll reforms in the private sector is definitely information focused.

The letters distributed by HMRC to private sector business clearly state that they are requests for information (RFI’s).

This is understandable as HMRC is likely to be looking to reconcile its records with information that it has previously gathered through RTI reporting etc. Understanding which contractors have converted to employment contracts should allow HMRC to then focus their attention on the remaining outside IR35 population.

In the first instance, the salaries of contractors that have converted to employees will be subject to tax and National Insurance through the PAYE scheme and would likely make these contractors a low priority.

We would assume that HMRC will be looking for trends where businesses have had significant reductions in contractor numbers or alternatively have retained significant numbers of contractors on an outside IR35 basis. Whichever is the case, the information gathered should allow HMRC to focus their attention on the areas they feel are priority.

What’s the risk to the engager of providing this information?

Prior to the Off-payroll reforms, introduced into the private sector in April 2021, the responsibility for IR35 assessment sat with the contractor and had little impact on the engager.

Upon the introduction of the reforms, HMRC made a clear statement that it would not use the opportunity to retrospectively investigate previous IR35 arrangements.

Adding these two elements together would imply that engagers have nothing to fear in terms of their arrangements with contractors prior to the reforms. Therefore, engagers should have little or no concerns over HMRC requesting information about contractors that have converted to PAYE arrangements or direct employment contracts.

What do enagers need to consider?

Perhaps the main thing that needs serious consideration in response to HMRC’s approach is the engagers compliance process, including supply chain management.

HMRC have made it clear in the lead up to the introduction of the reforms that engagers will be held responsible for taking a reasonable amount of care in the manner in which they manage the IR35 assessment process.

This is likely to mean that HMRC have an expectation of engagers to take some responsibility in the management and control of the supply chain involved in the provision of contractors.

This would probably be in the form of a level of due diligence that demonstrates that the engager has a reasonable level of information and understanding of the suppliers in the chain.

A failure to take responsibility for the supply chain and process involved in the supply of contractors and, more specifically, the taxation of the fees generated could jeopardise an engagers reasonable care argument.

Need help with your compliance process and supply chain?

If you and your business need to utilise or continue using contractors but have concerns about meeting the requirements of the off-payroll legislation, then Workr Compliance can help.

Workr Compliance can provide you with impartial advice on engaging high-calibre specialist contractors whilst effectively managing your supply chain in an efficient and compliant manner.

We can help you implement and maintain a consistent and compliant process to meet the requirements of the off-payroll legislation and minimise the risk of an HMRC investigation or incorrect assessment.

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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The 2021 Autumn Budget In Review

Now the dust has settled from 2021’s Autumn Budget speech, it’s time to filter through the noise and extract exactly what it means for you.

Rishi Sunak started as he meant to go on – in overwhelmingly high spirits. The Chancellor opened by announcing the revised annual growth rate from 4% to 6.5%, relishing in confirming the UK’s return to pre-pandemic levels before the year’s out. Promises to tackle the skills shortage by investing in a high-skilled economy were positive too, as Sunak proclaimed he is ‘backing business’. 

So, what does this all look like for specific sectors? How do the self-employed fare, and has the outlook for employers and contractors actually improved? We put the Budget under the microscope…        

Happy hospitality and invested infrastructure 

After being battered and bruised throughout the pandemic, hospitality businesses finally received some respite. For the next 12 months, they can benefit from a 50% business rates discount up to the value of £110,000. It’s the biggest single-year tax cut in 30 years. 

The Chancellor also stated he will be using Brexit as a stepping stone to radically simplify our ‘outdated’ alcohol duty system. The number of rates will be reduced from 15 to 6. This includes a draught relief on beer and cider, and a scrapped surcharge on sparkling wine. All other initially planned alcohol duty increases were cancelled at midnight on the day of the speech too. This is a welcome relief for pubs who were already struggling pre-pandemic. 

Moving to infrastructure, and by 2026/27, Sunak targets a £22bn growth in research and development investment. Additionally, Innovate UK’s core budget is up to £1bn, while £30bn will be invested into new green industries. Reaffirming his views on future success and lifelong learning, the Chancellor also increased skills spending by a huge 42% to £3.8bn – a vision of opportunity for the construction industry.

The devil’s in the detail

Heavy infrastructure investment and further duty freezes is good news on the whole for contractors and employers in this sector. Namely, the cancellation of the planned rise on fuel duty means an average tank will cost £15 less per car, equating to £1,900 less per year. In addition, the lack of news around Capital Gains Tax triggered a collective sigh of relief.

But while the 50% increase in R&D bodes well, the strong focus on domestic investment heavily limits firms who use contractors outside of the UK. And although the Chancellor cancelled and froze planned increases around alcohol and fuel duty, there was no mention of other raw and recent changes such as Corporation Tax rises, National Insurance and dividend changes, and the IR35 reform.

A rose-tinted view

At surface level, the tone of the 2021 Autumn Budget was overwhelmingly positive. But it doesn’t undo the aforementioned recent changes that have wreaked havoc for employers and contractors over the last 18 months. Overall, the Budget offered very little in the form of reassurance or support for the millions of self-employed businesses who have already faced severe financial hardship.

So, whether you’re a freelancer, a contractor, a recruitment agency or opening an office overseas, you need someone on your side. Workr Group offer a range of services and solutions to help you tackle the obstacles ahead. For more information, call us on 0208 10 60 000, email info@workrgroup.com, or book a call today.

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IR35 investigations – HMRC setting the wheels in motion

Six months after introducing the Off-payroll working rules into the private sector, it appears that the HMRC is progressing to the next stage of its IR35 policing plan.

As we have pointed out many times before, IR35 is not something you can just avoid or ignore.

Why do we say this?

Well, over the last couple of weeks, we have seen and heard confirmation that HMRC has sent Requests For Information (RFI) letters to a large number of companies. In particular, businesses in the Oil and Gas, Energy and Renewables, Aerospace, Rail, IT, Infrastructure and Construction industries.

The main focus of the request is for documented evidence of records, processes and systems used for the off-payroll legislation, with compliance the apparent target. 

We do have a word of warning, however. The RFI also requires details of those contractors transitioned to PAYE models (either agency payroll or Umbrella) upon the introduction of the reforms. It also asks for records of contractors that transitioned to permanent employees.

Both requests would infer that HMRC is keen to understand whether businesses have made blanket statement decisions following the introduction of the reforms. This would likely be considered a lack of reasonable care by HMRC if found to be the case.

What will a Request For Information include?

It’s important to note that an RFI does not mean that there will definitely be an investigation. As we understand it, it is just a starting point from which the HMRC will assess the information received and then determine whether they feel an investigation is necessary.

HMRC will likely look for trends, whether positive or negative and then proceed from there.

As we have already pointed out, the first section of the RFI refers to guides, processes and systems. A robust system with clear and documented processes should give engagers a solid foundation to argue a reasonable care case, even where errors occur. The RFI also requests evidence of how the process is applied consistently throughout the organisation. In an investigation, HMRC will look beyond any documentation and processes to assess the working practices in a “substance over form “approach.

 In other words, does what happens on the shopfloor reflect what is documented or included in contracts. If not, there could be consequences.

Interestingly, the RFI also asks about the test systems used to make status determinations. Specifically, the RFI asks whether the engager has used the government’s own CEST (Check Employment Status for Tax) test or any other test, with details of such required.

The remaining details required centre around the number of contractors and the methods through which they are engaged.  

What comes next?

As we’ve previously stated, receiving an RFI is not a definite indication HMRC wants to investigate. However, it’s an excellent indicator of what they might look for if they decide to.

Based on the RFIs sent out, we are confident that those organisations with a robust process for making status determinations will fare well under scrutiny. Following the guidelines for reasonable care and applying consistency and common sense to the determination process should go a long way towards satisfying HMRC’s initial enquiries.

If you and your business need to utilise or continue using contractors but have concerns about meeting the requirements of the off-payroll legislation, then Workr Compliance can help.

Workr Compliance can provide you with impartial advice on engaging high-calibre specialist contractors whilst effectively managing your supply chain in an efficient and compliant manner.

We can help you remain competitive in the demand for specialist skills and talent whilst meeting the requirements of the off-payroll legislation and minimising the risk of an HMRC investigation or incorrect assessment.

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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Connecting Our Excellence: How Workr Prioritise Team Wellbeing

Workr Group’s approach has always been engaging with clients at all levels. Whether that’s a director or junior member of staff, we make sure everybody understands changes in employment and how to minimise administrative burdens.

Without this uniform understanding, the support we offer can fail to make a lasting difference. But to offer such a comprehensive service, we need a workforce that operates in complete harmony while simultaneously being fully invested in the future of Workr. Here, Group Sales Director of Workr Group Mike Lee, explains how we make that possible.

Rallying the remote workforce

The wellbeing of our team has always been important to us. But when the coronavirus pandemic hit in 2020, it brought mental and physical health into much greater focus. It also presented a challenge.

First, we had to overcome the stumbling block of synchronising a workforce that was largely working from home. To do this, we organised group activities and exercises so that everyone felt a part of the wider community at all times.

When it was decided by the group to re-enter the workforce, we brought all our internal experts together. Remote working technology taught us how to streamline certain tasks, but in order for us to help each other, agencies, contractors and clients, we still believe in the power of physical connections. It’s just the nature of our industry and something we take as seriously internally as we do externally. Connecting our excellence helps guide our attitudes, actions, decisions and relationships and is something that’s made easier when we’re all together.

A cause for celebration

Thanks to our eventual reintroduction, we were delighted to hold our inaugural Summer(ish) Social at the end of last month – the ‘ish’ being a point of contention as others in the office were convinced September didn’t still count as the summer!

Instead of our typical company conference, the social was designed to be a ‘thank you’ to the Workr Group family. We wanted to reward the mammoth efforts each and every person has put in over the last 18 months, especially when our way of life was turned on its head. We wanted it to be a celebration of reconnecting.

As well as a whole host of other activities, the main event was held at the notoriously challenging Crystal Maze where our teams took on the Crystal Dome competing for bragging rights.

Leading from the front

My fellow directors and I didn’t get away lightly either as we were all the subject of an interactive quiz. I think everyone got a little more than they bargained for by the end! Yet that was the point of the day: to acclimatise to that social interaction many of us missed.

The day was particularly significant for our colleagues at Easypay, a business that joined the Workr Group during the pandemic. It was the first time the majority of their Leeds-based business had met their Workr counterparts from the Manchester and London offices, and we were delighted to officially welcome them. 

We saw off the evening in Albert’s Schloss. Here we celebrated the fact that, despite the past 18 months, we had just delivered our most successful year.

A director’s takeaway

One thing I’ve picked up from the pandemic is the importance of not only being able to identify change but also being agile enough to adapt to it. This has been key to our continued success – a success that I believe we owe to having such a connected community – and why we continue to invest in physical events to bring them together. 

If the last 18 months have taught us anything it is that five-year plans are long gone. Having a better-connected team allows us to spread the responsibility for detecting, interpreting and translating patterns, then exploring the implications for our business so we are better prepared for whatever may be around the corner.

Mike Lee, Group Sales Director

If you’d like to see more news from us, please check out the blog section of our website for all updates and announcements.

Changing the culture of how engagers utilise contractors

It’s fair to say that, in my time supporting the temporary labour sector, I have, on many occasions, witnessed engagers treating contractors in much the same way as employees.

The off-payroll legislation was introduced to combat this very practice. Not because the treatment was unfair in any way, but because such behaviour contradicted the spirit in which specific tax laws had been intended.

In essence, the off-payroll legislation was introduced to ensure that if a worker was acting like and being treated like an employee, often defined as a disguised employee, then the income generated should be taxed in the same way as an employee’s income.

However, with responsibilities for IR35 previously sitting solely with the contractor, engagers had little need to invest time and money understanding the fundamentals of a piece of legislation that did not relate to them or have any impact on their business performance or profits.

Contractors are not employees, so don’t treat them like employees

Following the off-payroll reforms in April 2021, engagers in the private sector have now had the responsibility for the off-payroll legislation placed squarely at their door.

Failure to correctly assess the employment status of a contractor engaged by their business could result in fines and penalties for engagers.

All of a sudden, the tables have been turned and engagers have found themselves having to read up on the legislation and gain a true understanding of its implications.

In my opinion, the situation following the reforms in the private sector is clear and simple.

Engagers should hold no fear of utilising contractors who provide their services through an intermediary. However, contractors are not employees, so don’t treat them like employees.

Setting clear parameters and deliverables

If we treat contractors like the service providers they are, and not like employees then we should meet most of the constraints of the off-payroll legislation.

Having a clear and defined plan of what the contractor is being engaged for and for how long will help to clarify the distinction between service provider and employee.

Setting clear parameters and deliverables in the form of a statements of works (SOW) prior to the engagement will give all parties, including any external observer, a transparent and defined picture of the nature of the arrangement.

The SOW should include timescales, milestones and gateways necessary to review the progress and performance of the project.

Deliverables should be defined, achievable and agreed to by all parties along with the financial implications of failure to deliver.

The whole arrangement should contrast to that of an infinite employment arrangement where the employee gets paid irrespective of performance and delivery. 

Consistency is the key

Importantly, this methodology must be practiced consistently throughout the organisation.

Simply having a set of written documents that prescribe the above will not be enough to meet the demands of an HMRC investigation.

If contractors are providing their services on site, as is often necessary, inviting them to team meetings or providing them with corporate workwear will undermine the whole arrangement in the eyes of HMRC.

Treating contractors like employees in the workplace must be avoided. From the receptionist to the MD, all members within the organisation need to understand the difference between a contractor and an employee, and treat the individual accordingly.

Guidelines and processes regarding the engagement and treatment of contractors should be clearly communicated throughout the organisation to ensure that there is a consistent approach to contractors throughout the organisation.

Providing training for those that may come into regular contact with contractors or utilise the services of contractors from time to time is also a good way of ensuring consistency in the treatment of contractors.

Whatever you decide to do, consistency is key.

Workr Compliance – helping you to utilise contractors consistently and compliantly

If you and your business have a need to utilise or continue using contractors but have concerns about meeting the requirements of the off-payroll legislation, then Workr Compliance can help.

Workr Compliance can provide you with impartial advice on how to engage high-calibre specialist contractors whilst effectively managing your supply chain in an efficient and compliant manner.

We can help you remain competitive in the demand for specialist skills and talent whilst meeting the requirements of the off-payroll legislation and minimising the risk of an incorrect assessment.

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 – What has Workr Compliance been doing?

In a nutshell, we’ve supported our clients with impartial and compliant advice on continuing with business as usual (BAU) post IR35 Reform.

Since the introduction of the IR35 reforms to the private sector in April this year, we’ve been working closely with engagers and agencies to meet the new legislative requirements. We’ve consulted with them through the preparation phase and assisted them in formulating working practices that allow them to continue with BAU.

In our previous article, IR35 Reforms – Key Lessons Learned, we highlighted how introducing the Off-payroll legislation reforms was not the end of the process. We went as far as to say that it was only the beginning of the IR35 compliance lifecycle.

Our approach with clients has looked at how to make the most of the legislation’s opportunity and gain a competitive advantage through a structured, compliant and reflective process.

IR35 Reforms for Engagers

The most significant change brought about by the legislative reforms was the shift in assessment responsibility from the contractor to the engager.

The changes represented a significant increase in responsibilities for compliance and reporting and, in many cases, prompted a recoil response.

In other words, the risk seemed too high and the administration too onerous.

Hence, we observed many engagers making blanket statements or ruling out the use of Personal Service Company (PSC) contractors altogether. Whilst this approach removed the immediate responsibility of IR35, the longer-term effects weren’t given much consideration, and the impact is now beginning to bite.

Skilled contractors are migrating to those engagers offering legitimate and compliant ‘outside IR35’ assignments, leaving those engagers who took the short-term, ‘avoid IR35’ approach with significant skills gaps and problems meeting deadlines, schedules or targets.

In contrast, Workr Compliance has been supporting engagers to implement compliant processes that efficiently and effectively manage the status determination phase, meet the reasonable care requirements of HMRC and compliantly utilise a skilled, flexible workforce to enable BAU.

As importantly in our opinion, we’ve also been supporting engagers with a review of the working practices they follow when engaging contractors.

In many cases before the reforms, engagers treated PSCs in much the same way they treated their employees.

Issuing of corporate clothing, invitations to company socials and the use of company canteens are just a small number of examples of practices that would lead HMRC to a ‘disguised employee’ verdict.

Workr Compliance has been working with engagers to evaluate their working practices when utilising PSCs. We have assisted them in formulating transparent and compliant methods and processes for engaging with PSCs that have been communicated throughout their businesses to ensure a consistent approach throughout all business functions.

In doing so, we have helped our clients gain a competitive advantage in attracting and retaining highly skilled talent whilst maintaining BAU.

IR35 Reforms for Agencies

One of the key benefits of working with Workr Compliance is that we offer an impartial service that supports agencies and the supply chain as well as engagers.

Following the reforms, agencies have come under immense pressure from engagers to maintain the status quo between the flexible workforce and the hiring community. A thankless task, given that those engagers that took a blanket approach removed PSC’s option to contract through their own limited company. Even worse, they forced them into PAYE models resulting in an immediate reduction in rate. Neither action is sitting well with the PSC community.

At Workr Compliance, we have been working closely with agencies in the supply chain to help them understand their role in the IR35 process. We’ve partnered with them to help present solutions or guides to their end clients, and we’ve assisted them in formulating strategies for retaining and attracting the skilled and white-collar talent pool.

IR35 compliance is an ongoing process

In all cases, we have been proactive in encouraging organisations and individuals that IR35 compliance is an ongoing process that requires regular review.

Maintaining a compliant process that is reviewed regularly is the key to avoiding errors, investigations and subsequent fines or penalties.

If your response to the reforms is subsequently causing you problems with administration or the retention or attraction of talent, it’s not too late to change.

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 – Key lessons learned

Since the introduction of the IR35 reforms to the private sector in April this year, Workr Compliance has been working closely with contractors, engagers and agencies to meet the new legislative requirements.

The fundamental changes in responsibilities brought about by the reforms have presented some significant challenges to the temporary labour supply chain. In recent articles, we have highlighted the risks associated with the blanket statement approach that many engagers appear to have taken.

We’ve also analysed how IR35 insurance policies, in support of a robust compliance and assessment process, might help reduce or even remove the risk of engaging contractors on an “outside IR35” basis.

And, we’ve assessed how the IR35 reforms have created a divide between project and hiring managers, desperate to retain or attract highly skilled specialist contractors and risk-averse legal and HR departments, keen to avoid the repercussions of HMRC investigations and IR35 assessment challenges.

So what have we learned in the first four months following the introduction of the IR35 reforms?

IR35 or not, the world keeps turning

First and foremost, the world hasn’t stopped turning. Businesses are continuing to trade and hire, and the need for a skilled and flexible workforce has not gone away.

On the contrary, in fact.

As the global economy emerges from the difficulties of the last 18 months, the outlook appears bright.

Investment levels are on the rise, and the economy is showing signs of a quick recovery. These signs are breeding confidence in the marketplace, and recruitment activity, including temporary labour, is expanding at record rates. According to the REC’s report on Jobs for June, “temp billings growth hit its highest for nearly 23 years”.

So what can engagers do to make the most of this resurgence whilst remaining compliant to the Off-payroll legislation?

IR35 Reforms – Lessons learned

It’s not too late.

Case studies in the public sector are now demonstrating HMRC’s approach to poor IR35 reform preparation and care.

The Home Office and DWP have both recently been issued with significant bills from HMRC as a result of carelessness and errors in their handling of the reforms.

It’s now almost five months since the IR35 reforms took effect but with HMRCs soft landing approach, it’s not too late to implement or improve processes to meet the off-payroll legislation.

Effective planning and collaboration in the supply chain

Our experiences over the last few months have shown us that those engagers that have “gone it alone” without engaging with their supply chain partners have experienced severe difficulties in getting the assessment program up and running effectively.

In many cases, suppliers have had to repeatedly return to engagers for clarification and guidance on how assessments have been conducted and concluded. Subsequently, we have observed far higher rates of challenges where engagers have not planned and collaborated with suppliers on how to achieve a valid status determination.

For further information on valid Status Determination Statements, see HMRC’s Employment Status Manual (ESM10013).

Compliance is an ongoing process.

One of the biggest issues that we have observed since the introduction of the reforms is the failure of engagers to plan for their IR35 responsibilities as part of their ongoing business processes.

Planning for, and responding to the introduction of the reforms only met the requirements of the legislation for engagers and contractors on assignment at that point in time.

We are now seeing engagers struggling with talent retention and attraction because they haven’t integrated their IR35 responsibilities into their recruitment and attraction frameworks.

For engagers to remain competitive and compliant in the contractor marketplace, IR35 compliance must form part of the ongoing “business as usual” process. 

IR35 – Business As Usual

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.

At Workr Compliance we encourage anyone responsible for IR35 compliance to ensure that your determination process is fit for purpose and meets HMRC’s reasonable care requirements.

Although the IR35 changes are now in effect, it’s not too late to take action.

To help meet your reasonable care responsibilities concerning IR35 compliance, our specialist team at Workr Compliance 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.

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