Confident in your IR35 preparations? Follow our 5 step process to ensure IR35 compliance
IR35 | 3 MIN READ
We strongly recommend businesses act now and perform a full review of your contractual workforce.
Follow our 5 step process to check on your progress.
We can help. Contact our expert IR35 team now at IR35@morson.com to find out how we can support your organisation.
Like it or not, it is likely that IR35 reforms in the private sector will come into effect on the 6th April 2020. With only months to go, business need to act now, as failure to comply with the IR35 reforms could leave your organisation open to extra expense, and exposed to risk. Read our latest article which explores the risks to your business if you do not prepare effectively enough and what you should be doing now to avoid this.
Ideally, as a private sector business who engages a contingent workforce, you should be in the midst of your preparations, reviewing your contractor landscape and performing initial assessments. As one of the changes is that the responsibility of defining IR35 status will switch from the individual to the end client, we strongly recommend that a full review of your contractual workforce is started now, to ensure your business is prepared well in advance of the changes. As you, the end client, will be responsible for determining whether a contractor is ‘inside’ or ‘outside’ scope you must ensure you are making correct assessments. End clients could be left open to financial risk if their contractors are found by HMRC to be incorrectly determined.
Complied with our specialist partners, Weightmans LLP and Champion Contractors, follow our 5 step process to ensure your business is compliant by the 6th April 2020 deadline. Read through our 5 steps to compliance if you have not started preparing or just want to check on your progress:
What do I need to help my company prepare for IR35?
Appoint a project lead and/or a steering group. Having appointed person(s) will help get the programme of tasks involved progressing more swiftly. Whether you have a project lead or steering group will depend on the size and complexity of your organisation as well as your volume of contractor use.
How can Morson help?
Our in-house experts can provide advice on the best team for you based on our own experience if required. We’ve also developed a handy IR35 process checklist which will help you design a project and risk mitigation plan independently or with the expert support of our compliance team. Contact IR35@morson.com to get a copy of the IR35 process checklist.
What’s the first step you need to undertake?
You need to conduct an internal review of your contractor population. This will mean asking your payroll and HR teams for details of contractor workers, your supply chain and/or your recruitment managed service partner for this information. Once collated you’ll have an understanding of the potential
number of affected contractors.
If you have a complex supply chain and/or a large number of contractors you directly payroll this is an excellent opportunity to explore how partnering with a recruitment managed service provider could help to mitigate your risk.
How can Morson help?
At Morson, we’ll be able to consolidate your contractor worker engagement process – simplifying and controlling the supply chain spend and
compliance adherence whilst removing the financial and legislative burden associated with directly payrolling contractors. This will give you full visibility of contractor use and through accurate data speed up the IR35 assessment process.
Now I understand my contractor population what else do I need to do?
Using your contractor information and, our sample IR35 considerations list, conduct an initial review of each contractor. From this you’ll have a draft
‘traffic light’ system of contractor statuses.
We can support you with the assessment process for roles via our approved partners Champion Contractors and Weightmans LLP.
How do I develop my initial assessment?
From April 2020, you as the end client are responsible for confirming the IR35 status of an individual. In our experience, the best way to develop the initial assessment is to complete a sample of mock employment status indicator (ESI) forms. To maximise the validity of this sample we recommend speaking to your colleagues who utilise contractors to fully understand the roles/disciplines. After completing these sample ESIs these can then be submitted to
Weightmans LLP for review.
After I’ve submitted my sample ESIs to Weightmans LLP what happens?
Once the assessments have been submitted, Weightmans LLP will provide status reports that will identify whether the roles/disciplines fall inside or outside of scope. It then sits with you as the end client to review this information and determine which contractors are required to complete the full IR35 assessment.
How to demonstrate ‘reasonable care’
Whilst the HMRC have suggested that role-based assessments are legitimate, it will be difficult for you as the end client to ascertain if any contractor specific factors which may be considered at an official enquiry and potentially taken in to account when confirming the overall status. Therefore, to demonstrate ‘reasonable care’ we recommend that all contractors are provided with the opportunity to take an individual assessment. However as this process illustrates, this decision is for you, as the end client, to make.
What’s the best way for me to engage our contractors in this process?
We’ve developed a helpful suite of communication tools to engage your contractor audience. This includes an online assessment tool for contractors.
Designed to be fully auditable, independent and easy to use this tool goes beyond the Check Employment Status for Tax (CEST) tool suggested by the HMRC. Instead of anyone in the supply chain being able to complete this information as per the CEST tool, our independent review controls the
assessment process allowing full disclosure and considerate assessment of each individual contractor.
Importantly Weightmans’ independent review provides a final determination agreed by you the end client, with a detailed report which is accessible to the supply chain.
Contact IR35@morson.com to find out more about this assessment tool.