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Fully contracted-out services and IR35: Your questions answered

James Kenealey morson news

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As the clock continues to tick down towards HMRC’s IR35 tax reforms, we’re exploring the variety of options open to organisations which use contingent labour to ensure they remain compliant beyond April 6th.

In recent weeks, we’ve delivered a series of webinars – which are readily available online to those who couldn’t attend them live – and are following up each with a Q&A to answer the queries raised during the event.

Our most recent webinar explored fully contracted-out services – often referred to as a Statement of Work (SOW) or a bought-out service.

Private sector organisations who engage contractor populations are keen to remain compliant with the legislation, but few hiring managers, procurement heads and HR professionals consider a SOW as a potential option.

A SOW is a flexible, effective and highly successful commercial route that has multiple benefits, most notably being its ability to remove off-payroll working concerns.

Already commonplace in engineering, IT and tech sectors, there is no strictly prescribed format to a SOW; it is simply a ‘contract for services’, which governs the relationship and outputs agreed between the client and service provider.

Morson Projects has been delivering SOWs to clients for more than 40 years – long before IR35 legislation was established – and since 2000, have successfully implemented more than 12,000 SOW solutions, with a value in excess of £750m. It’s an effective route because it puts us in the position of the ‘End Client’ to any relevant PSC engaged and, therefore, means we are responsible for ensuring reasonable care is exercised correctly by producing and issuing an IR35 Status Determination Statement (SDS).

During our latest 60-minute session, our expert panel explored SOWs, explaining how Morson Projects can help businesses offload responsibility for IR35 to us, and clearly define their requirements. We explored the necessary processes, procedures and tools require to ensure IR35 compliance and delved into a case study with an aerospace client who’s achieved invaluable benefits from implementing a SOW.

During the session, the below questions were submitted. Our panel have since provided answers which might help you with your own IR35 preparations.

1. Where will you get people from if you can’t employ contractors?

We’re seeing a significant level of interest in workers wanting to join Morson as staff and we have an appetite to grow our staff team. We will be assessing every engagement in isolation, so for those engagements we deem to be outside of IR35, we will continue to engage PSC workers. Those which fall inside will be accessed via our Umbrella PSL.

2. What are the timeframes of engagement if I’m to remain IR35 compliant?

If the challenge you currently face is suitable for a contracted-out solution, then Morson Projects would typically require 3-4 weeks to establish this. Ultimately, the legislation comes in to force on 6th April 2021.

3. If I don’t have a fully contracted-out service, what are my options?

Having a trusted supply chain is of paramount importance, now even more so. Therefore, for contingent worker engagement, we would strongly advise speaking to our sister company, Morson Talent.

4. We have hundreds of sub-contractors working for us. Some are large companies, some are sole traders and some are partnerships. Do we have to review every sub-contractor, or do we look at those that could be working under a PSC?

The short answer is that you only need to assess those workers providing their service via a PSC to you directly. To discuss this in greater depth, please don’t hesitate to contact us via

5. How certain are Morson that the IR35 legislation will come into effect in considering the current situation with the pandemic? Last year the decision was pushed back - the straw on the camel’s back was the pandemic.

The Government has reiterated its commitment to implementing IR35 reforms and provisions now enacted in the Finance Act 2020, which received Royal assent on 22nd July 2020. It is widely believed that it is unlikely the Government will abandon, fundamentally rethink, or delay the legislation. Organisations have been advised to make all necessary measures to prepare for the forthcoming reforms to IR35 and Morson Projects has undertaken this.

6. How closely do you work with Morson International? Do you offer contingent resource on your books to them?

We work daily with Morson Talent (International) to provide the best solution for our customers. Morson Talent are Morson Projects’ main supplier of contingent labour.

7. Can an example scenario be described where Morson Projects utilises a contractor (PSC) to fulfil a client SOW?

We provide our customers with project solutions. To deliver these, we currently engage staff, Umbrella, and/or PSC workers. Post April 6th, we will continue to do the same, whilst ensuring full compliance to the new legislation. A live example is detailed within the slides, which can be requested by emailing

To find out more, visit our dedicated IR35 Hub or email