The IR35 countdown is on: top 5 IR35 myths debunked

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by Rebekah Valero-Lee on

IR35 continues to dominate the headlines as medium and large private sector companies work to get their contractor populations and working practices in order ahead of the 6th April deadline.

The upcoming reforms will create a seismic shift in the way we attract and retain talent in the UK, whilst delivering widespread changes to business operations and supply chain relationships.

Despite the constant chatter, confusion is rife over the looming IR35 reforms, with our recent blog revealing how more than half (54%) of the 1,000 contractors surveyed said that they were still unaware of the upcoming changes to off-payroll working.

To separate fact from fiction, here we debunk the five most commonly cited IR35 myths.

 

  1. We are responsible as the clients’ agency for determining the IR35 status of their contractor workforce

Currently, contractors engaged via a PSC (Personal Service Company) and operating in the private sector can determine their IR35 status, but from April 2020 this responsibility shifts to the end client. There’s a misconception amongst some businesses that the labour provider, such as Morson International, is accountable for determining the IR35 status of their clients’ workforce, yet it’s down to the end client to conduct these reviews and ultimately make these decisions as to whether individuals fall inside or outside.

IR35 legislation isn’t one-size-fits-all, meaning private sector businesses must demonstrate ‘reasonable care’ throughout this process. Following the lessons learnt from the public sector roll-out – which saw many organisations adopt a cautious approach and deem entire contractor populations as inside of IR35 – HMRC has insisted that every private sector company produces a status determination summary (SDS) that outlines the reasons to deem that individual as inside or outside.

Anyone found not to have adopted reasonable care risks the IR35 determination becoming worthless, meaning those found to be ‘blanketing’ could be increasing their chances of a penalty from HMRC.

These same organisations also risk losing talent to their competitors who may have deployed the necessary and accurate steps towards IR35 determination and deemed these same contractors to fall outside of the legislation.

 

  1. We are responsible for communicating IR35 decisions with individual contractors and managing the appeals process

As with determining IR35 status, it is also the responsibility of the end client to communicate these decisions to every party throughout the contractual chain, together with managing the appeals process.

Legally, every contractor has the right to appeal the decision of the end client, to which the client then has 45 days to respond. Excellent communication between all parties within the contractual chain is paramount, ensuring those involved can openly express their views without fear of prejudice.

Adopting the same reasonable care as described above, will able end clients to address any disagreements and evidence the reasons behind their employment status decisions.

Yet some sectors, such as construction, lack full transparency over their supply base, which poses the risk of being caught out when required to supply the SDS document to every party within this chain.

And whilst the end client has the ultimate decision, the power remains in contractors’ hands. From April 2020, contractors need only compare two clients and choose the working relationship that will do its best to ensure they operate outside of IR35. Meanwhile, those willing to move to PAYE or Umbrella may also demand increased pay rates and additional benefits to compensate against any financial losses.

 

  1. The changes won’t be implemented into the private sector come April 2020 and a delay will shortly be announced

The uncertainty caused by the Brexit narrative, the deadlock in Westminster, the decision to review IR35 legislation and the Budget delays has caused further confusion, with some clients and contractors perceiving this to be a delay to the reforms.

This is most certainly not the case, with the new tax regime needing to remain top of the private sector agenda. Our recent blog here details the IR35 review and the Treasury is still very much pressing ahead with its original April deadline.

The countdown to comply is therefore on, with private sector organisations having just weeks left to get their houses in order and deliver risk-averse talent strategies that ultimately protect their operations and finances.

 

  1. HMRC’s CEST tool is the best option to correctly determine IR35 status    

The risks posed by HMRC’s Check Employment Status for Tax tool (CEST) have been widely highlighted, with numerous public sector companies even receiving fines from the Treasury as a result of incorrect determinations that were delivered by CEST.

To ensure our private sector clients, and other private sector businesses, don’t fall foul of the same pitfalls, we have developed our independent review process. Created in conjunction with our IR35 expert partners, the process ensures each organisation takes the necessary steps to accurately test whether those individuals engaged through PSCs fall inside or outside.

The flaws surrounding CEST are often rooted in the tool’s simplicity. It fails to align with full case law, with ‘Mutuality of Obligation’ – a key determiner of IR35 status – not even being considered.

Despite HMRC promising to roll out an updated version, the criticism surrounding its use remains rife, with many stating how the questions fail to address or understand the nuances that are present in client and worker relationships.

 

  1. I can simply create ‘IR35 friendly contracts’ to give outside determinations

A common industry misconception is that having an ‘IR35 friendly contract’ that details a specific set of terms and conditions will ensure you fall outside of scope. Yet IR35 status is determined by your working conditions rather than the written contract. Those relationships that don’t reflect the contractual clauses risk their determinations being dismissed by HMRC.

A shift in the responsibility from contractor to end client will work to eradicate this myth, with end clients able to answer questions specific to their organisation’s ways of working; in what should then deliver a correct IR35 determination.  

Whatever your sector, it’s crucial that you seek support and guidance from a team of compliance experts to provide a holistic approach to IR35 and demonstrate reasonable care throughout the employment status review process.

 

For more information and to find out how the Morson Group can support you, contact our IR35 compliance experts today at IR35@morson.com or visit our IR35 portal.

 


Cx Jobs

Engagement Manager

A leading client in the Transportation Industry is recruiting for an Engagement Manager to work on a contract basis, based at their offices in Birmingham. Role is inside scope of IR35. JOB PURPOSE The Engagement Manager develops and delivers the plan for engaging with the affected communities and their representatives and creates strong stakeholder relationships in order to achieve organisational objectives. ACCOUNTABILITIES Develop and implement regional and local plans for community engagement to ensure there is public awareness of: the project; its benefits and local impacts; the support the Engagement Manager provides to affected communities; and how they can get involved in the development of the railway. Engage with local representative groups to identify appropriate channels for engagement, particularly with those who are vulnerable or require additional support. Maintain internal and external stakeholder relationships, apprising Ministers and senior client employees and civil servants of progress. Work with community stakeholders and local representatives to minimise objections. Through engagement, gather relevant information to ensure the organisation understands how the proposals impact on local communities. Represent the client organisation in the region, including with local elected representatives and business groups, and act as the spokesperson in local and regional media. Ensure all engagement is recorded in line with organisational policies. Ensure appropriate processes are followed to promote knowledge and understanding of community views and concerns within the organisation. KNOWLEDGE, SKILLS, EXPERIENCE Intermediate experience engaging and working with communities, including in a hostile and complex environment. Demonstrable track record of using strong communication and interpersonal skills to establish and maintain good working relationships with a wide variety of stakeholders, including local communities, business representatives, and elected representatives. Proven ability to develop and deliver a local engagement strategy Strong planning and organisational skills. Experience of presenting a large amount of complex information to a wide range of stakeholders in an appropriate style. Able to operate effectively within a community engagement or consultation forum environment. Demonstrable track record of delivering sensitive - and at times distressing ‐ messages to the individuals and community groups Experience of line managing staff. Experience of working in a large infrastructure project environment is desirable. A local authority background would be useful although but not essential.

Manager of Project Engineering - Nuclear Industry

Role: Manager of Project Engineering - Nuclear Industry Location: Chester Salary: Negotiable (client more interested in finding the right person for this key role, with salary of secondary importance) Start: ASAP (Security clearance will be required prior to starting) My client is an international supplier of enrichment services and fuel cycle products for the civil nuclear industry, serving utility customers worldwide who provide low carbon electricity through nuclear generation. As a result of investment activity, my client is seeking to enhance their in-house project delivery capability based in the Group Projects team based on sites in Gronau (Germany), Almelo (Netherlands), Capenhurst (UK), and Eunice (NM, USA). Group Projects is responsible for driving excellence in portfolio management, project management, project engineering management, estimating, project controls, procurement and contract management, and construction management. As a part of Group Projects you will join a pool of experts providing subject matter consulting, advice and direct delivery of strategically significant Client projects. The client Group Projects is entering into a period of significant and exciting change. The role will own and shape the project system for the clients Group's global portfolio of small and medium projects accumulating up to €100 million annual CAPEX and select projects ranging from €50 million to in excess of €500 million. The purpose of this role is to develop delivery excellence in Project Engineering Management and direct the management of integrated design solutions. Reporting to the Director of Group Projects you will be accountable for Project Engineering Management and direction of the management of integrated design solutions. The remit of the role stretches through initial project evaluation and conception, to project handover and closeout. The main areas of responsibility will include: Giving strategic direction to enhance engineering management capabilities Providing expert opinion to aid selection of the right projects to be added to the portfolio Building high performance multicultural teams and aligning team members to common goals Development and evolution of engineering/design process and procedures, to deliver against the Client Group selected projects Protecting the clients commercial position through good practice contracting strategies, procurement, negotiation and contract management and meeting Group Projects Objectives We are now looking for an individual who can make a difference and add value to our client's Team. The following skills and experience will provide an indication of the types of Team Players they are looking for: Proficient command of English and the business language in the role location Educated to a degree level in a relevant subject Qualified in project management (for example PMI) Significant experience in the full project lifecycle An effective communicator Demonstrable success in engineering management Demonstrable track record in successful project delivery involving technology internationally in a responsible leadership role You will drive for results to exceed challenging targets. You will also have a thirst for knowledge and a desire to continuously improve. Salary will be negotiable dependant on previous experience. For this key position, though they will be a consideration, candidate salary expectations will be of secondary importance to finding the right person. In addition to this, the client offers an excellent benefits package including bonus, 27 days holiday and a very generous pension, along with excellent career development and advancement prospects, as well as the opportunity to work for a prestigious and respected company serving a key role within the nuclear industry MORSON INTERNATIONAL, part of the Morson Group, are the leading TECHNICAL & ENGINEERING RECRUITMENT COMPANY in the UK specialising in Technical Support to the following industries: Nuclear, Power Generation, Aerospace, Rail, Marine, Petrochemical & Construction

Project Cost Estimator - Nuclear Industry

Role: Project Cost Estimator - Nuclear Industry Location: Chester Salary: £43,746 - £50,294/year + excellent benefits including bonus, 27 days holiday and a very generous pension Start: ASAP (Security clearance will be required prior to starting) My client is an international supplier of enrichment services and fuel cycle products for the civil nuclear industry, serving utility customers worldwide who provide low carbon electricity through nuclear generation. As a result of investment activity, my client is seeking to enhance their in-house project delivery capability based in the Group Projects team based on sites in Gronau (Germany), Almelo (Netherlands), Capenhurst (UK), and Eunice (NM, USA). Group Projects is responsible for driving excellence in portfolio management, project management, project engineering management, estimating, project controls, procurement and contract management, and construction management. As a part of Group Projects you will join a pool of experts providing subject matter consulting, advice and direct delivery of strategically significant Client projects. The client Group Projects is entering into a period of significant and exciting change. The role will own and shape the project system for the clients Group's global portfolio of small and medium projects accumulating up to €100 million annual CAPEX and select projects ranging from €50 million to in excess of €500 million. Reporting to the Manager of Project Support, the Project Cost Estimator will develop and, when necessary, change project baseline estimates, ensuring they fully reflect the project concerned and that those risks and are fully integrated with the project baseline schedule. The successful candidate will be assigned to either one major or a number of smaller projects. They will ensure that the cost estimates fully reflect the scope of the project and in accordance with our client's policies and procedures. The Project Cost Estimator will normally work remotely from line management and is expected to be able to operate with autonomy whilst providing services to several customers. . The main areas of responsibility of the role will include: Accountability for the development of probabilistically modelled project cost estimates Production of counter estimates to enable validation of vendor offers and claims Supporting the development of Capital Expenditure Proposals Estimating the impact of any project change requests Carrying out peer reviews of cost estimates produced by others This role will also ensure knowledge is retained and transferred and undertake lessons learnt reviews to promote continuous improvement Our client is now looking for an individual who can make a difference and add value to their existing Team. The following skills and experience will provide an indication of the types of Team Players they are looking for: Significant project estimating experience including projects over €100 million, brownfield and turnaround/outage projects Professional cost estimating qualification e.g. AACE or equivalent Ability to interpret technical specifications and engineering drawings of varying complexity Ability to co-ordinate disparate information into a coherent estimate Sound understanding of good practice estimating processes and principles including probabilistic modelling Experienced user of relevant software packages Conversant in business English and in the business language specific to role location Our client is looking for someone who will drive for results to exceed challenging targets, and will also have a thirst for knowledge and a desire to continuously improve. The role include a competitive salary, as well as an excellent benefits package including bonus, 27 days holiday and a very generous pension, along with excellent career development and advancement prospects, as well as the opportunity to work for a prestigious and respected company serving a key role within the nuclear industry MORSON INTERNATIONAL, part of the Morson Group, are the leading TECHNICAL & ENGINEERING RECRUITMENT COMPANY in the UK specialising in Technical Support to the following industries: Nuclear, Power Generation, Aerospace, Rail, Marine, Petrochemical & Construction

Contract Support Officer

Job Title: Contract Support Officer Job Type: Permanent Salary: £24,045.00 Per Annum - £29,400.00 Per Annum Benefits: 27 days holiday per annum plus benefits Location: Leeds Recruiting for a Contracts Support Officer to provide support to the rail franchise contract work stream and coordinate the management of documentation to assist in the successful delivery of contractual obligations, ensuring timely and collaborative compliance of all related activity leading to the overall economic development of train services across the North of England. The primary aim of the role will be to support the delivery of distinct elements of straightforward projects or contribute to the control/delivery of projects/programmes of work as required. You will be required to support the processes needed to answer questions from government, stakeholders and members of the public on the performance of train services across the North of England. You will support rail franchise contract delivery, support the Contract Management Delivery teams and are expected to be a team player, with the ability to communicate highly and effectively whilst providing exceptional customer centric services. You will be adept problem solving, have experience of rail industry's commercial environment and ability to develop credible relationships with industry leaders. You will have a flexible and adaptable approach and ability to think through complex issues to co-ordinate multi-faceted aspects of projects. Qualifications, knowledge, skills and experience required at selection stage: Degree in a relevant subject or equivalent experience. Working towards professional qualification or chartered status. Skills and expertise: Experience of rail industry commercial environment and ability to develop credible relationships with industry leaders at executive level. Experience of managing both internal and external resources appropriately, ensuring that the quality of service is upheld and that appropriate programme and project management, risk management and financial resource management skills are delivered effectively. Proficiency in operating relevant project management software. Experience of working on projects and programmes. Good communication skills, including the ability to liaise with peers and senior colleagues and build and maintain relationships. A logical approach and ability to think through complex issues to co-ordinate multi-faceted aspects of projects. Commercial awareness. Requires experience of providing support to projects. Problem-solving will is guided by application of a diverse range of procedures. Primary focus is the delivery of own work and individual performance indicators.

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