People, processes, protection – How to turn IR35 into an opportunity

This article features in the Jan/Feb 2021 issue of Recruiter, and has been reproduced by Workr Group with permission.

With the upcoming changes to the IR35 reforms for the private sector just round the corner, Andrew Webster explains how savvy recruitment agencies can steal a march on their competitors and win new business

Enough has been said about the IR35 Off Payroll Private Sector Reform. Countless predictions and forecasts have been written but none of them change the fact that in a short number of weeks, it will impact all stakeholders in the contracting chain. Whether end client, agency or contractor, this change is likely to hamstring growth and income if nothing is done to navigate the new rules.

However, the changes also bring a huge opportunity. Savvy agencies will not just retain talent that operates through a PSC (and end clients) on their books – they could also win new business. Those with the right knowledge and resources will have a competitive edge over the less-equipped recruiter.

Workr Compliance have developed a three-pronged approach designed to keep agencies profitable and compliant. By prioritising these Ps – People, Processes and Protection – you’ll protect your bottom line, and potentially grow it as well.

People

If you want to navigate the reform successfully, you need to know more about IR35 than what’s changing. You need to understand case law and what IR35 compliance best practice looks like. Not to mention make sure everyone involved in managing your contractor books is clued up on an ongoing basis, as HMRC will likely start enforcing across the supply chain.

Consultants that understand the Off Payroll IR35 Private Sector Reform will be in a much better position to educate clients – and ensure they make the right decision on how best to manage contractors post-April. If you don’t, you risk losing contractor books altogether.

Without knowing why a client is more inclined to bring all contractors under PAYE, you’re unlikely to be able to convince them otherwise.

Nor will you be able to explain to a contractor how you can hope to establish and maintain a compliant IR35 status throughout their chosen career as a contractor or freelancer.

What’s more, it’s imperative that all parties within the contractor supply chain understand and are capable of establishing the status of roles. Without this knowledge, end clients are unable to pass with confidence out of scope roles to their chosen agency – restricting them from quality talent.

As a first priority, Workr Compliance helps agencies and end clients get up to speed. We have a team of IR35 experts to demystify the legislation and genuinely collaborate to meet the responsibilities. Their advice covers everything from the complications of blanket decisions to custom guidance on the nuances of preparing for the changes and enforcement whilst not affecting operational delivery.

Process

You can’t afford a significant upheaval at this stage. Wherever possible you should be attempting to maintain business as usual. In order to do this, your methodology and process of issuing a ‘Status Determination Statement’ needs to be seamless. If not, you risk losing more talent than you bargained for – denting your income.

Unfortunately, time isn’t on your side. Even if it was, manually assessing each and every contractor on your books is taxing and risks a heavy number of inaccuracies. One proposed solution is the HMRC CEST tool. However, the free-to-use software has been heavily criticised for its unreasonably high standards and lack of consideration for mutuality of obligation.

Specifically, most PSCs have had an issue with the fact that HMRC has reversed decisions when disagreeing with CEST assessments.

Thankfully, CEST isn’t the only option on the market. There are a handful of established and proven tools that have been developed by those on the frontline of contracting.

That being said, at Workr Compliance, we believe it’s otherwise impossible to be compliant unless using a blend of intuitive online assessment tools and a consultative approach.

After all, a blended approach ensures you can quickly process status assessments without cutting corners…

Protection

Perhaps the biggest reason why some recruiters haven’t jumped at the opportunity that comes with the IR35 reform is the risk factor. The new rules put the onus of liability on the agency – as the fee payer, the buck rests with you if HMRC did call your status determination assessment into question or, from investigation, prove that ‘reasonable care’ has not been met.

It’s for this reason that agencies should seek a robust solution that comes equipped with the correct insurance for their employment status tax investigations and, possible tax loss. Only then will you have peace of mind when moving forward with contractor recruitment.

Andrew Webster
Founder & Director Workr Compliance


With only weeks to go before IR35 takes effect, can you afford not to utilise the most robust and proven IR35 solution on the market? At Workr Compliance, we apply a genuine understanding of the intermediaries legislation and off-payroll working rules in a commercial context. We’ll collaborate throughout project delivery, assessing the potential impact to each stakeholder in the supply chain of status outcomes. We’ll ensure that compliant and transparent processes are created, implemented and adhered to in order to meet HMRC expectations of reasonable care and, anticipated HMRC enforcement.

We’re committed to giving agencies the upper hand, so apply our expertise to your negotiations today and contact Workr Compliance email, aw@workrgroup.com or mobile 07827 810 851

For more detaills and insights, visit our Workr IR35 Hub.


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