Staying ahead of HMRC with IR35 compliance

IR35 compliance may have been something that your business focused on extensively when the off-payroll working rules were initially extended to the private sector, with working groups and teams of people involved in ensuring processes were robust and compliant.

Years later, it’s quite common that processes such as IR35 status determinations have become business as usual activity. For HMRC though, they’re looking to see that businesses continue to keep a focus on their compliance and consistent management of the off-payroll working rules.

Understanding IR35 from HMRC’s viewpoint

It’s imperative that your business not only recognises the need to align with IR35 legislation but is able to evidence this should HRMC want to investigate.

HMRC’s latest guidance shared important information from their viewpoint, including how they will be looking to ensure organisations are compliant if they were to investigate.

IR35 compliance can be a significant concern for organisations engaging off-payroll workers – in particular where businesses engage a recruitment supply chain to manage their external contractors, where there may be multiple links between the worker and end client. This makes it even more crucial to ensure that IR35 processes are being applied consistently and accurately across the supply chain.

Some of the areas of focus HMRC shared in their latest guidance, Help to comply with the reformed off-payroll working rules, include:

• Training your staff
• Record keeping
• Internal auditing
• Contracted out services
• Status determinations

Understanding the need for IR35 compliance

IR35 is HMRC’s way of checking that workers are paying the appropriate level of tax for the payments they are receiving to deliver their services. Working off-payroll means HMRC needed clearly defined guidance for businesses to follow to ensure they are all applying tax and National Insurance on external contractors where required in a consistent way.

This is why when it comes to checking compliance, HMRC will be looking for clear evidence that processes have been devised in line with the off-payroll working rules, and that these processes are being implemented consistently across your organisation.

HMRC has already started working with organisations to check IR35 compliance, so it provides a timely reminder that those processes that were first implemented when IR35 was extended into the private sector need to remain an active area of focus when it comes to business compliance. The key to ensuring effective management of IR35 within your organisation will be to demonstrate you have consistently monitored and reviewed your processes, maintained clear visibility within your supply chain and have kept staff up-to-date with training.

Understanding IR35 compliance for your business

To help, our experts here at Linx have created a whitepaper, with helpful support and advice to navigate IR35 compliance and ensure you’re ready should HMRC choose to run checks on your business.

We’re able to do this because we work with clients to review their IR35 strategies and processes, develop dedicated IR35 training programmes that educate and inform hiring managers, as well as managing supply chain auditing that checks legislation such as IR35 is being effectively managed across a business’s operations.