The UK’s contracting workforce has successfully been delivering projects within the rules of IR35, for nearly 20 years.
However, with changes that are likely to come into effect in April 2020, customers and clients will need to understand the new law – and put some checks in place to ensure compliance. It is not necessary to stop the projects and release your highly qualified and valuable resources!
If you are using contractors to run operational teams, asking them to deliver staff appraisals, make decisions about grades, pay, hiring, firing or to make key business decisions on your behalf, then you may well have a disguised employee on your team.
However, if you are running projects, which are temporary by nature, and have teams made up of various individual specialists and supplier disciplines, then you are likely to have genuine “off-payroll” resources who should operate outside of IR35. For the past 20 years, these suppliers have been “self-assessing” their status, and most genuine contractors will have taken that responsibility very seriously. Good contractors should be able to explain the law and demonstrate to you how they clearly sit outside the regulations.
What’s Changing?
The new rules will simply shift the responsibility for the assessment to the hiring organisation. This should have the effect of ensuring both parties are interested in the determination, making it a joint responsibility and delivering a more robust system, which in turn reduces the burden on Her Majesty’s Revenue and Customs to check each contractor themselves.
Sounds like a good thing? Maybe, there are numerous sources that will tell you that it is not, but that’s a post for another day…
What do you need to do?
To comply with the law and keep your projects running, all you need to do is develop a simple Policy and Procedure that ensures your hiring managers understand their responsibility and step through a process to validate the status of each worker.
Don’t follow the trend of “throwing the baby out with the bathwater”. Businesses create new Policy and Procedure all the time. This is just another new policy that your organisation needs.
To get started, assign somebody on your permanent payroll to follow the three simple steps below…
- Review your workforce to identify those supplying services through a personal service company
- Use a tool, such as HRMC’s own Check Employment Status for Tax (CEST) Tool to help assess their status (other tools are available)
- Put a process in place, that everybody understands, which is clear, auditable and continually used to provide a written determination for each and every assignment or extension
At AI Digital we deliver projects that are outside of IR35
We can work with you to understand your project and help remove the uncertainty and risk around IR35. To find out how AI Digital delivers projects, please fill in the form below…
