Long-term planning will be the key to ensuring IR35 compliance

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As organisations across the UK breathe a sigh of relief as the 6^th April Private Sector implementation date finally passes, it’s crucial to remember that the hard work to ensure IR35 compliance does not stop at this gatepost.

Adopting the right long-term strategy

Each time a Hiring Manager makes a material change to how they engage a contractor, a thorough review will need to be undertaken to re-evaluate their IR35 status for off-payroll working. As all projects continue to evolve and change, you can also expect that your Hiring Managers will need to bring in additional resources – requiring new status determinations to identify from the offset whether these extra resources will be in or outside IR35.

It’s for this reason that organisations need to ensure that IR35 continues to be a living, breathing element to how they operate their business – ensuring that they continue to be able to demonstrate reasonable care is being taken across their operations.

“The client must take reasonable care when determining whether the worker would have been an employee if they were engaged directly. Reasonable care means clients should act in a way that would be expected of a prudent and reasonable person in the client’s position.”

– HMRC, Employment Status Manual (ESM10014)

Ensuring Hiring Manager compliance and consistency

The subject of reasonable care, whilst open to interpretation, means that consideration will need to continue to be taken as individual contracts end and new commercial projects commence.

It’s a good idea to ensure you’re incorporating IR35 into your annual training calendar, so that new Hiring Managers joining your organisation have formal training to understand your approach and standard processes. Refresher training will also be required throughout the year, to ensure a consistent approach is taken to create accurate status determination statements.

Ensuring compliance across the supply chain 

For organisations operating without a central point of control for their agency supply chain, individual audits will need to be undertaken with each supplier. Review processes will need to be developed to ensure that their off-payroll workers are being passed down determinations and are operating within the contractual terms that played a part in determining their assignments out of scope.

Where organisations have partnered with a workforce solutions provider to manage their recruitment supply chain on their behalf, IR35 supply chain compliance should form an important topic in their working relationship.

Extensive analysis will also be required to review rehire rates and evaluate those regularly re-engaged contractors to ensure their working practices continue to remain compliant with the rules and expectations around off-payroll working.