IR35: the major legislation change your business needs to be prepared for in 2020

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by Rebekah Valero-Lee on

It's the start of the new year and the one thing that should be the priority for every private sector organisation who engages contractors, is IR35

In just 4 months (92 days), IR35 will come into effect in the private sector, directly impacting all companies who engage contract workers. These changes will affect a large part of the private sector as the new legislation requires companies, not contractors or agencies, to define the IR35 status of their contractors.

Businesses must assess each role individually or risk being in breach of ‘reasonable care’ imposed by the new rules. The potential financial penalties can be significant if incorrect steps are implemented.

Phil Beardwood, compliance & assurance director at Morson, said:

“Some businesses believe that it’s the responsibility of the labour provider to determine the status of their contractor workforce, yet it’s down to the end client to conduct these reviews and ultimately make this decision, which may provide the answer as to why some contractors aren’t yet aware of the forthcoming changes.

“Conservative promises in the General Election have led to some organisations believing that the forthcoming IR35 legislation reform will be delayed or even cancelled.

“This is certainly not the case and at the moment the new tax regime governing contractors remains top of the agenda in the private sector. The countdown to comply is on, with those companies who choose to bury their head in the sand posing major risk to their operations.”

“We strongly recommend that end clients do not simply adopt a blanket approach as a quick fix to reducing their tax risk. Lessons learned from the public sector rollout means that those who do try to cut corners risk losing contractors to a competitor who may correctly deem the same individuals to be outside of IR35. Pay rates could also increase considerably from those deemed as unnecessarily inside and transferred under PAYE, as end clients try to retain these in demand skillsets."

This is where we can help. Morson, alongside our IR35 expert partners, are on hand to support companies who use contract resource to introduce robust process to ensure compliance or risk financial, legal and reputational damage. Contact us at IR35@morson.com to find out how Morson can help your business navigate IR35.



What is IR35?

IR35 was introduced with the intention of ensuring that individuals operating via a personal service company (PSC), were paying the correct levels of income tax and national insurance, relative to their employment status.

The basis of the legislation is to assess the nature of the direct relationship between the end client and worker (effectively removing any intermediaries).

Where an assignment is deemed ‘inside’ IR35, PAYE deductions have to be made from the contractor’s pay. Any assignment ‘outside’ IR35 is classed as a genuine contractor and is not subject to the same taxation as employees.

Morson, alongside our specialist IR35 partners, Weightmans LLP and Champion Contractors, are experts in this legislation and are on hand to offer practical advice, tools and guidance to ensure you are prepared and compliant by April 2020.


You have only 4 months to become compliant

With only 4 months to go you should have started your preparations in 2019 and should now be well on the way to ensuring compliance. We’ve prepared a countdown calendar, so you can see what you should be considering and when to prepare for the upcoming changes to IR35 legislation.

  • 6th April 2020IR35 reforms go live
  • FEB - APR 2020
    • Assess new roles for IR35 and undertake training for internal staff on updated processes.
  • OCT 2019 – FEB 2020
    • Apply an employment status test to all PSC contractors that is relevant and fit for purpose.
    • Communicate and liaise with contractors to ensure they are aware of the new rules.
  • July – Sept 2019
    • Agree IR35 testing solution and conduct a high level assessment.
    • Establish how each contractor is being paid.
    • Review how the contractual workforce is supplied.
  • April – August 2019 
    • Organisations should start a full review of their contractual workforce and the work performed/required.

If you’ve missed a stage or are behind in your preparations, we can offer advice and solutions to help mitigate risk at all stages up until and beyond April 2020. Contact IR35@morson.com for more information.


Don’t prepare and face putting your business at risk

Failure to comply with the IR35 reforms could leave your business open to extra expense and exposed to risk. Contact IR35@morson.com to find out how we can help you mitigate financial risk and reputational damage.

  • Financial risk

If HMRC finds contractors to have incorrect determinations then the end client will face potential tax / National Insurance losses.

For example: For a contractor on £100k the tax / National Insurance would be circa £20k. Therefore, for a contractor on a salary of £100k who is found to have been incorrectly determined, the end client would face a bill of £80k plus interest and penalties/fines over 4 years.

Potential end client bill per contractor = 20% (of total salary) + interest + fines x 4

End clients could be left open to financial risk if their contractors are found to be incorrectly determined. 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.

Find out how Morson can help with the assessment process contact IR35@morson.com

  • Legal, reputational and operational risk

Outside of financial risk, operational, legal and reputational damage can arise if businesses do not prepare for change appropriately or early enough. Delay to projects due to loss of resource, litigation with HMRC and a restriction to the flow of contract talent are all risks that may arise if you do not prepare early or well enough.


Work with Morson

Collectively and individually our team has a wealth of experience in dealing with IR35 matters across the public and private sector. 

  • Our specialist team

To support you in the lead up to (and following) the April 2020 off-payroll changes, Morson has exclusive partnerships with specialist contractor services company, Champion Contractors, and Top 40 UK law firm, Weightmans LLP, both of whom have significant experience in helping businesses navigate the changes to how IR35 is applied in the public and private sector. 

  • 50 years of experience

Morson have been in the contract recruitment market for over 50 years. During that time we have seen and dealt with many challenges faced by the industry. Therefore we have a unique insight into the workforce challenges faced by our clients and can shape the most effective IR35 strategies.

  • Robust processes

Our 5 step process, including initial audit and individual assessment, is designed specifically to help end client organisations make IR35 determinations. Implemented with our partners, the process drills down on key IR35 factors.  If correctly implemented, this process will provide accurate determinations and allow you to compliantly support and retain your contractor workforce before and after April 2020.

  • Workforce insights

WIth a network of over 1 million contractors we are able to gain unique insights about contractor behaviour and industry trends. Our surveys provide deep market insight, invaluable to clients needing to understand the market when making determinations. Download our latest IR35 contractor report at https://ir35.morson.com/IR35-contractor-report.

  • Public sector experience

Both Morson and our partners have extensive experience in supporting organisations in the public sector through IR35 changes brought in, in 2017.  This has given us an excellent understanding of how to manage the changes effectively which we can now apply to assist private sector organisations


Together we can help you undertake a full review of your contractual workforce, to ensure your business is prepared well in advance of the changes.

Get in touch IR35@morson.com for support and more information.

IR35 guide


Cx Jobs

Physical Logistics & Transport Supervisor

The PHS&T Supervisor will be responsible in the operational short to medium term for the coordination and supervision of safe receipt, storage, pick, pack, dispatch and transportation activities in order to deliver customer requirements within timescales set. Also supervises and coordinates the planning of logistics activity and the resolution of queries/issues through interface with other teams/organisations. Ensure motivation and effective utilisation of workforce, adherence to SHE, Quality and other internal and external regulations. This will include managing, stock (including lifting and stocktaking), handling, distribution of materiel on base (including Classified, Secret, or National Sensitive Data (NSD) equipment to meet the operational requirements of both Forward and Depth environments. In Addition the PHS&T Supervisor will be responsible for all the on base transportation of goods to the end user using delivery vehicles and forklift trucks in the execution of these duties to meet agreed KPIs and availability output on a daily basis. Requires in depth knowledge of the workings of a warehouse / logistics operation and the importance of compliance with the MRP Part 145 regulations. Requires excellent planning and expediting knowledge and skills and can demonstrate good experience of using asset tracking / warehouse and planning systems. Knowledge of BAES / customer and supplier logistics and Release to Service (RTS) documentation. Requires excellent relationship building and problem solving skills. Requires team leader knowledge, team leadership, budget control, planning, performance management and reporting. Requires good IT literacy skills and in depth knowledge of asset tracking / ERP systems. Understands Export Control regulation and be able to apply knowledge and skills in the correct completion of documentation. Close attention to details are essential. Driving licence Forklift licence desirable but not essential Institute of Supply Chain Management Level 5 or its equivalent is desirable but not essential.

Warehouse Operative

The Warehouse Operator will be responsible for the safe discharge receipt, storage, pick, pack, dispatch and transportation activities in line with regulations and standards in order to deliver customer requirements within timescales. Maintain and update appropriate IT systems, and resolve queries/issues through interface with other teams. Understand the workings of a Physical Logistics operation and the importance of documentation in a safety critical environment. Good planning and expediting knowledge and skills and can demonstrate experience of using asset tracking / warehouse and planning systems. Knowledge of BAES / customer and supplier logistics processes. Relationship building skills in order to build working rapport with the line and suppliers and problem solving skills to ensure quick resolution of items shortages to the line. Requires good IT literacy skills and knowledge of asset tracking / ERP systems. Maintain a strong working relationship with the Receipt and Despatch/Import and /Export staff to ensure accurate transfer of items inbound and outbound to prevent processing delays This person would be seen, as a competent individual in operational supply chain activities, be able to support the processes, propose improvements and manage those improvements into the day-to-day running of the operation. Must have a working knowledge of Export Control requirements including ITAR/EAR regulations and the movement of Classified equipment Forklift Driving Licence desirable Institute of Supply Chain Management Level 3, NVQ3 Award or its equivalent is desirable but not essential.

Receipt & Dispatch Operator Hawk

The Receipts and Dispatch (R&D) Operator will under supervision receipt, storage, pick, pack, dispatch and transportation activities in line with regulations and standards in order to deliver customer requirements within timescales. Maintain and update under supervision appropriate IT systems and resolve queries/issues through interface with other teams. All inbound and outbound equipment will be managed within the Main Store and will be goods received, inspected and accounted for on the IMS System. Outbound equipment will be packaged to the relevant standard including IATA, IMDG regulations and dependent upon the equipment classification will be subject to further rules and regulations. Inventory Management will utilise the IMS system for stock location and accounting. Experienced stores person, fully conversant with logistics and warehouse systems, locations and safe handling methods. Use of special to type containers. Awareness of potential hazards caused by incorrect storage such as moisture ingress and cadmium corrosion. Basic IT literacy skills and some knowledge of asset tracking / ERP systems. Requires a working knowledge of an operational supply chain, tools and techniques, protocols and procedures. Understands where and how to gather asset information, and how to interpret this information in a range of situations. Is able to build and maintain strong relationships within the Operational organisations. Maintains a strong working relationship with the Warehouse Operator, Import and Export staff to ensure accurate transfer of items inbound and outbound to prevent processing delays. This person would be seen, as a competent individual in operational supply chain activities, be able to support the processes, propose improvements and manage those improvements into the day-to-day running of the operation. A working knowledge of Export Control requirements including ITAR/EAR regulations is desirable. Forklift Truck Licence Institute of Supply Chain Management Level 2/3, NVQ 2 / National Diploma Level 2 or its equivalent is desirable but not essential

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The Squadron Support Operator will be responsible for Squadron Support, receipt, storage, pick, pack, dispatch and transportation activities in line with regulations and standards in order to deliver squadron requirements within timescales. Maintain and update appropriate IT systems, and resolve queries/issues through interface with other teams. Coordinate and respond to all Squadron related Supply Chain matters operating a two-shift pattern. * Receive all items, ensuring that all required documentation is present and correct and that the packaging is intact. Quarantine any non-conforming items for appropriate investigation action. Record receipts using Stock accounting systems and procedures in place. * Check that part numbers on documentation matches that marked on the part or parts packaging. Quarantine any non-confirming items for appropriate investigation action. Record receipts using Stock accounting systems and procedures in place. * Ensure the preservation of materials and equipment is conducted as defined within logistics storage systems. * Ensure the storage, handling and movement of hazardous materials is carried out as defined within hazard data sheets and mandated procedures. * Protect any materials for dispatch against transit damage. Adhere to material packaging standards publications. * Mentoring the QAF staff as they join the MOB Organisation from the Qatar Technical Institute

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