Managing your supply chain when IR35 applies
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Now that IR35 is active in both the public and private sectors, it’s not a bold assumption to make that your organisation will come into contact with the legislation at some point. If you haven’t already.
Many organisations manage a large supply chain of recruitment agencies across multiple business divisions and offices. This makes ensuring IR35 compliance across the chain difficult to manage.
Knowing where your in scope determinations are
As the end client, you hold the responsibility to determine each assignment’s IR35 status. For those deemed in scope however, it will be the fee payer who is tasked with making the necessary deductions.
Whilst it may be the fee payer who’s more involved in the day-to-day management of each in scope assignment, it’s best practice to ensure that your organisation has a good level of control and management to monitor compliance. Where there are material changes to worker assignments, a new Status Determination Statement (SDS) must be issued. Making it even more important to have clear visibility across the supply chain.
As each SDS expires or needs periodically reviewing to ensure it still accurately reflects the worker’s assignment, further checks will be needed.
“It’s not uncommon for adjustments to be made to project plans, as they start to take shape. Changes however can sometimes impact the contingent workforce brought onto the project. Where worker roles and responsibilities are changed, the formal SDS process must be completed again. This can create a mindfield for ensuring IR35 compliance.”
– Richard Hanson, Linx Client Services Director
Keeping an even closer eye on the out of scope determinations
You might assume as an organisation that those contingent workers deemed out of scope need less monitoring.
It’s crucial to remember however, that IR35 applies to each assignment – not the worker themselves. Where their role is extended or materially changes, a new SDS must be completed. Adding a risk that the role may subtly change to an in scope role, unless fully evaluated at regular intervals.
Gaining the visibility needed across your supply chain
At Linx, we advise our clients to periodically review all SDS outcomes on a regularly basis to ensure they are still accurate. Where organisations are managing multiple agencies within their supply chain – this can be both time consuming and complex.
By engaging a workforce consultancy to manage this process on your behalf, formal auditing processes can be established. Drilling down into the detail of each assignment, to identify workers who require a formal SDS review. Whilst highlighting the overall compliance of each agency.