How will IR35 impact the construction industry?

Architecture Building City Clouds 410730
author profile picture

by Rebekah Valero-Lee on

Phil Beardwood, compliance and assurance director at Morson discusses how IR35 will affect the construction sector, particularly with regards to attracting and retaining talent, business operations and the supply chain.

IR35 is coming into play for medium and large sized private companies from April 2020, following its roll out in the public sector over two years ago, April 2017. Within construction, this will create a seismic shift in attracting and retaining talent, as well as changes to supply chain relationships and business operations.

What is IR35?

IR35 is tax legislation applying to contractors who don’t work in a way that meets a ‘self-employed’ criterion set by HMRC. These varying criteria includes the amount of control a client has over where, when and how a worker completes their role; whether, if the worker suddenly became unable to work, they could supply a substitute, and whether the worker is obliged to accept work offered to them by the client.

Currently, contractors in the private sector determine their own IR35 status, but from April 2020, medium and large businesses will become responsible for such status determinations. For the construction industry – from specifiers through to on-the-ground labourers – IR35 will pose serious disruption.

Operational change

IR35 doesn’t just pose a risk to your business operationally, but also financially. HR and finance teams are debating the best ways to deliver risk averse strategies that wouldn’t result in a huge shake up of existing operations and processes, or risk hefty fines from HMRC.

IR35 isn’t a one-size-fits-all approach. Any business found not to have taken ‘reasonable care’ to determine IR35 status for every individual engaged via a PSC (Personal Service Company) , are only increasing their chances of a penalty.

The 2014 Agency Workers Intermediaries Legislation also changed the construction industry, seeing many sole traders move to Personal Service Company models so that a CIS deduction would mitigate against any tax risk. But IR35 will still apply, even when CIS has been deducted.

Availability of talent

Any contractor deemed in scope and moved to PAYE will see a huge impact on their income. As such, many will migrate to projects that see them fall outside of IR35, so they can maintain similar ways of working and living. This will leave organisations already struggling to source a high-quality workforce, at even greater risk.

And the power is still in contractors’ hands. Once IR35 comes into play, contractors need only compare two potential clients and what they will do to ensure they can work outside of IR35, and choose the best option as their next role. Meanwhile, those willing to move to PAYE will demand greater benefits and increased rates to compensate against any losses.

Impact on your supply chain

A lot of businesses within construction engage directly with contractors meaning they’re doubling their risk as both the end client and the fee payer. In those instances, it’s better to engage with an agency supply chain, like those operating within the Morson Group, so that some of the risk is mitigated.

Following lessons learnt from the public sector roll out, HMRC has also insisted that every private sector organisation produce a status determination summary (SDS) that outlines the reasons to deem an individual inside or outside of IR35. However, this will also have to be supplied for every party within the contractual chain. Few organisations in construction have full transparency of their supply chain posing a substantial risk of being caught out.

Act now

There are just weeks left to get your house in order. Aside from the threat of fines from HMRC, those who don’t take the necessary steps to deliver IR35 properly, and deem those inside or outside correctly, will ultimately lose talent to their competitors who do.

The future success of any construction company will come down to its ability to attract and retain this talent, so while IR35 may seem like challenging Everest, prioritising it now to ensure your business is futureproofed and able to meet the demands of candidates, will reap the long-term benefits. 

Contact for help and support from our expert IR35 team.

Cx Jobs

Accounts Payables Supervisor

Our client is looking for an Accounts Payables Supervisor to join their Finance team in Longstanton, Cambridge. Key Accountabilities and Tasks: - Manage, motivate and develop a team of 2 AP Clerks. Success will include the following: - effective team output - team respected within the business for quality and service - team highly motivated - team have personal development opportunities available to them - team champion John Henry Group company values - Run weekly payment runs for all suppliers and subcontractors - Maintain a fully reconciled retention schedule for purchases, this will form back up to the month end Balance Sheet position - Prepare accurate and timely AP & Subcontractor accruals and deliver within agreed Finance timetable - Daily posting of all transactions from bank statement - Make sure Daily Banking is completed and published by 9:30 on days of responsibility - Reconcile bank statements to Sage ledger daily - Cover on AP and subcontract ledgers as required - Submit monthly CIS return to HMRC for all group companies within HMRC deadlines - Weekly Payment runs - Maintain Purchase retention reconciliations - Prepare month end subcontractor and AP accruals - Daily postings of bank payment transactions - Daily bank reconciliation - Transaction processing and compliance: - Construction Industry Scheme - Team performance and development Key Skills: - Experienced in the use of Sage 200 in a Construction Industry business. - Experienced in the use of MS Office including Excel skills, Pivot table and LOOKUP level The successful candidate must have previous experience in a similar position. If you are interested and would like to find out more, apply now and we will be in touch shortly. Alternatively, contact Paul from Morson for more information.

Network Specialist

Network Engineer - Stevenage We are recruiting for a Global Defence & National Security organisation that provided a Managed Service to the Ministry of Defence and they are on the lookout for a Network Specialist that would like to work on challenging and meaningful work that has a huge effect on the UK's National infrastructure.This role will be working predominantly on project work. For the next 12 months, you will be involved in a major Network refresh from a Cisco Network to a modern Juniper Network. There are other exciting projects that you will be able to get your teeth into as well.This company prides itself on career progression. The business is always looking to recruit internal candidates before going out externally and because of the size of the organisation, there are always exciting opportunities for you to progress into. They are very open-minded, they will never stop you from moving to another department in the businessThey have some senior members in this team of 7 Network Engineers that will provide on the job training as well as excellent internal training platforms that you can utilise and they are not afraid to send you out on external training courses too.Role responsibilities:This lynchpin role will require you to support the rollout of a sophisticated Technical Refresh project involving take on and management of the MOD network infrastructure. With a proven record of acceptance of new equipment into service, and the retiring of older equipment, you will also have knowledge of before and after reporting and analysis and issue investigation when required.Your colleagues will look to you to own and advice on all decisions relevant to implementing the Tech Refresh from scheduling to technical approach. Your passion for technology will involve a 'hands-on approach' enabling you to take responsibility for delivery aspects of the solution and play your part in ensuring an excellent customer experience.Experience requiredMinimum of two years commercial networking experienceStrong, in depth knowledge of networking technologies, i.e. LAN, WAN, TCP/IP, routing, switching and subnet addressing, of networking hardware, ideally from the Juniper family.

Civil Site Agent (Supervisor)

Civil Site Agent (NRSWA Street Works Supervisor) Salary up to £37,000 plus yearly 10% bonus Our Client are an innovative telecommunication company who are at the forefront of technology. As part of their growth, they're looking for a Civil Site Agent to support with reinstatement background to support with on going demand.Main responsibilities * Ensure compliance to agreed safety and quality standards including internal policy, method statements and external guidelines and legislation. * Carry out daily risk assessments relating to site set-up and ensure respective gang(s) have also completed daily risk assessment. * Ensure build remains on target as per the completion date, reporting any delays/concerns to the Build Manager. * Ensure compliance to agreed Street Works processes as specified locally. * Ensure site set up and end of day closure adheres to the chapter 8 guidelines, adhering to all safety standards and record with photographs. * Collaborating with internal teams, sub-contractors and local authorities. * Liaising with street works team to make sure permit conditions are adhered to. Person Specification * Ability to work alone as well as in a strong team environment * NRSWA Street Works Supervisor Ticket * PIA accreditation * Safety conscious and compliant * Experience in managing crews * A full driving licence (Travel mostly around Cheshire expected) If you are an experienced Civil Site Agent looking for your next challenge, then please apply directly or get in touch for more information -

Payroll Project Manager (HR Transformation)

Key Accountabilities: Project managed delivery: * Accountable for leading the delivery of projects that are large, complex and represent significant benefit and risks within a complex stakeholder environment. * Managing the delivery of the project so that the deliverables and releases are completed on-time. * Matrix management of a multi-disciplined team, including contractors and 3rd parties and resources from other Customer Facing Units (CFUs). * Ensuring that there is a formal audit trail for the sign-off of all deliverables. * Chair regular project meetings to review risks, issues and progress against plan. * Monitor progress against the plan and intervene when necessary to take corrective action to stay on plan. * Report progress accurately to the PMO and stakeholders through regular progress reports and project briefings to the Management Delivery Group. * Resolve conflicts within the team to agree common goals and a sense of purpose, recognising that each specialism will have their own processes and standards to follow. * Ensure that the project team follow the programme's governance arrangements for reviewing key decisions and managing risks and issues. Project initiation: * Project manage the commercial activities working with specialists in Procurement, for the selection of the vendor and systems integrator. Project mobilisation: * Arranging a project kick-off and creating the Project Charter (PID) for assigned projects, detailing the business objectives, scope, benefits, team roles and responsibilities, high-level plan including constraints and dependencies, initial evaluation of risks and issues, resource plan and definition of deliverables. Planning: * Create and maintain the workstream project plan, adhering to the programmes planning standards and taking advice from the SMEs assigned to the workstream project to ensure that the plan is achievable and follows good practice. Obtain buy-in from the project team to their responsibilities and timescales. Change control: * Manage the team and stakeholders, so that a formal project change control process is followed for any changes in scope, benefits, costs or timescales. Risks and issues management: * Formally manage risks and issues to ensure that they are identified and managed within the project where possible. * Escalate high priority risks and issues that cannot be addressed within your project tolerances. Stakeholder management * Manage stakeholders, including project sponsors at Director Level providing regular updates to them and managing expectations and agreeing priorities. * Understand the interests and attitudes and consider what the implemented changes will mean for all stakeholders and how their concerns can be addressed. Skills/Experience required: * Advanced experience of managing projects to deliver new systems, services and transformational change. * Matrix management of multi-disciplined teams and managing suppliers and contractors. * Project management qualifications, such as PRINCE2. * Stakeholder Management experience * Use of Project Management tools, such as MS Project, JIRA and standard project management controls and documents. * Track record of managing large payroll implementations, preferably SAP Employee Central Payroll. Desired: * Experience of managing projects as part of a transformational programme.

Skills and qualifications needed for a career in cyber security