Auditing and training remain key factors for IR35 compliance

Auditing provides a clear and demonstrable route to evidencing IR35 compliance should HMRC want to check your organisation is meeting the off-payroll working rules. For those audits to deliver the right results though, extensive staff training needs to have been in place so hiring managers fully understand IR35 and can effectively manage off-payroll workers. Without the right level of training and guidance across the recruitment supply chain, businesses run the risk of IR35 not being implemented consistently.

In late 2023, HMRC released Help to comply with the reformed off-payroll working rules, guidance for businesses to highlight focus areas that organisations should be checking for IR35 compliance. Within the guidance, it’s no surprise that auditing and training are key drivers for evidencing compliance.

The importance of auditing

The role of auditing in IR35 compliance is paramount. Whilst HMRC does not prescribe a fixed approach to these audits, it’s clear that they expect organisations to have a process that’s fit for purpose, reflecting the size and nature of your operations. For larger and more complex businesses, the off-payroll worker landscape often includes the engagement of a recruitment supply chain, requiring a more extensive auditing approach.

Internal audits should consider the wider supply chain and take a robust assessment into all areas of your business – in particular where you may have multiple business divisions or units. For larger organisations, engaging an external specialist to manage this process can demonstrate that a transparent and independent approach has been taken – adding a further layer of scrutiny to IR35 working practices.

Our compliance team at Linx do just that for our clients. Through rigorous external audits, we provide a robust evaluation of your processes, ensuring consistency when making status determinations and shaping a compliance framework that checks for compliance across the entire recruitment supply chain.

Our external audits serve not just as a check but also as a safeguard to reduce risk of non-compliance, by strengthening your practices and guiding you to a clear understanding of your contractual workforce engagements. All of which provides concrete evidence to HMRC that you are responsibly managing the off-payroll working rules.

The importance of training

Training is a critical investment, and an area we consider essential to ensure everyone responsible consistently understands and applies the rules of IR35.

“For Hiring Managers it’s crucial that they understand the principles of IR35 and can evaluate the authenticity of off-payroll working.”

– Richard Hanson, Linx Client Services Director

That’s why we work with organisations to fully understand their off-payroll operations and build a clear picture of who is involved in the implementation and adherence with IR35. Our tailored training sessions go beyond just outlining the off-payroll working rules, delving into employment status principles and what is required at each point in the contractual chain. Ensuring everyone involved in the decision-making process understands their role and the wider impact of decisions.

IR35 training isn’t just a topic that can be covered once though. Regular re-assessments and refreshers are vital in ensuring that your organisation not only stays compliant but also exhibits due diligence in its engagement of off-payroll workers. Training should also be updated whenever new guidance is shared, or when HMRC court cases for non-compliance highlight areas that need further scrutiny.

Our Linx team offer a range of support and services that keep pace with both legislative and operational changes, including developing and reviewing training programmes so businesses can continue to evidence their commitment to managing IR35 compliantly.

Sharing the latest guidance

To help organisations navigate IR35 compliance, we’ve created a whitepaper that takes a deeper delve into HMRC’s latest guidance, involving their expectations for auditing and training.