How do organisations prepare for IR35?
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Despite the brief reprieve when the Government announced it would postpone the IR35 Private Sector reform until April 2021, there is no avoiding that organisations still need to prepare to compliantly implement IR35.
Whilst some organisations may have already extensively developed their IR35 strategy before the date was pushed back, and some may still have been considering their options – this delay provides a good opportunity for everyone to take another look at how they should approach IR35.
“As the Private Sector legislation began to take shape, there were lots of changes and adjustments meaning organisations were often lost in the finer details – and felt unable to continually consider the wider viewpoint”
– Richard Hanson, Linx Client Services Director
For the Linx team, this additional time has allowed wider conversations with our clients to be put back on the table. How well placed are their supply chain to support them with IR35? How have previous plans impacted their contractor workforce? How prepared were their Hiring Managers to make accurate IR35 determinations?
Although robust IR35 processes will be needed by every business engaging off-payroll Limited Company contractors, their IR35 strategy needs to go much further than solely focusing on compliance.
As with every evaluation tool, the information output is only as good as the information input. That’s why it’s vital that Hiring Managers fully understand the questions asked in HMRC’s Check Employment Status for Tax (CEST) tool to achieve meaningful IR35 determinations.
Organisations will need to issue detailed guidance around the CEST questions – because if Hiring Managers were to simply answer the questions as presented, this could lead to incorrect or inconsistent answers where it has been interpreted differently by each person.
Businesses need to consider how In Scope determinations will be delivered to contractors through their supply chain – understanding these contractors will gain a perception of their brand through how they are communicated to – especially when they may see this information an unwelcomed news. A well-managed communication programme in the lead up to determinations can help contractors understand an organisation’s approach to IR35 and give reassurance that an extensive evaluation is behind each individual determination.
Ensuring effective training
IR35 training resources will also need to be reviewed – gaining feedback from Hiring Managers to identify what additional support is required from centralised functions (such as HR, Procurement, Tax and Talent Acquisition teams) to ensure the people tasked with completing an IR35 assessment have the knowledge and capability to demonstrate reasonable care.
Changes to the legislation will also need communicating, and a process must be put in place to ensure all new Hiring Managers are trained in line with company processes.
Once revised processes have been agreed upon, it’s crucial that these are effectively rolled out across the recruitment supply chain – and all stakeholders understand what is required of them to ensure its success.