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Statement of Work (SOW) and IR35: A Private Sector Solution

  • Publish Date: Posted 9 months ago
  • Author: James Kenealey

​While the clock continues ticking towards the looming HMRC IR35 tax reforms, many private sector organisations who engage contractor populations are now turning their attention to the potential solutions, and any alternative models, which can form part of their compliance strategy.

When discussing the upcoming legislative changes, few hiring managers, procurement heads and HR professionals consider an outcome-led statement of work (SOW) as an IR35 solution, when in fact, such a flexible and effective route can altogether remove the off-payroll headache from an organisation.

Here at Morson Projects, we have been delivering SOWs in accordance with our clients long beforeIR35 legislation was even introduced. Morson Projects is not a new entity by any stretch, and for more than 40 years, we have constructed and delivered fixed price work packages. In doing so, we will soon become responsible for determining the IR35 status of any Personal Service Contractors (PSCs) we engage, as well as managing these teams to deliver against strict KPIs and outcomes – something which makes a statement of work a highly effective solution for removing the burden of employment status.

Whilst SOWs are incredibly commonplace in the engineering, IT and tech sectors, many industries can, in fact, benefit from making the leap to this new way of working.

What is a true SOW?

Over recent years, we have seen several operators enter the market, claiming to deliver ‘true’ SOW solutions. Whilst there is no prescribed format, a robust statement of work would comprise a ‘contract for services’ – something which governs the relationship and outputs agreed between the business and Morson Projects. Alongside pre-agreed T&Cs, each party would define the scope of work and commercial arrangements, including fees, timescales and outputs.

A true statement of work must be genuinely outsourced and is not a way to mask the provision of labour as a consultancy agreement. Within Morson Projects, we manage the contract for services and assume complete responsibility for a project’s successful delivery by utilising a pool of talented workers. Such a model means we are responsible for deploying reasonable care and correctly assessing the tax status of any PSCs we engage, which is an appealing proposition for our clients.

What are the advantages of a SOW?

To create a robust SOW solution, we seek to immerse ourselves in an organisation and project to collaboratively understand which bodies of work lend themselves to a fixed price statement of work.

An outcome-based SOW provides solutions to several issues, including project misalignment, variable costs, lack of control, poor efficiency and inconsistent quality.

Our clients can rest assured knowing we have expert oversight of the whole package of work. It is delivered to pre-agreed, fixed timeframes and a defined set of milestones, with the team at Morson Projects ensuring optimal delivery at every stage.

By recognising these factors, it’s easy to understand why performance-based work packages make good business sense.

Morson Projects also becomes the end client and is accountable for IR35 compliance and the associated risks. We take on the responsibility of a project by establishing guaranteed deliverables – on time and to strict budgets – which helps to provide significant project cost savings by removing any inefficient working or the costs for rework.

SOWs provide a powerful solution for businesses to benefit from optimal deliverables and access to the best talent, without unnecessary overheads and the added headache of IR35 compliance.

It’s in our DNA

Since the introduction ofIR35 legislation in 2000, we have successfully delivered more than 12,000 projects under SOWs, with a value in excess of £750m.

Delivery of engineered solutions to defined SOWs remain an attractive alternative to conventional recruitment models, and the value we can provide through a true statement of work goes beyond IR35 compliance to ensure we can solve our clients’ pain points to add revenue-boosting solutions.

To find out more, contact Visit our IR35 Hub to see how we're supporting clients and contractors through the changes.