What IR35 best practice looks like

This information may be out of date, view the latest IR35 information.

Although the April implementation for IR35 in the private sector may have passed, the topic isn’t going away anytime soon.

HMRC will be looking to ensure organisations are compliant with the legislation, which will extend across their supply chain. Where organisations engage multiple recruitment agencies to supply contingent labour, a process will be needed to evaluate compliance.

Tracking and monitoring determinations

Each time a worker assignment changes or is adapted – a new status determination statement (SDS) is needed. It’s also best practice to periodically review these statements, to check whether they still reflect the assignment the worker is undertaking. In particular where contingent workers are engaged on a lengthy project, it’s a good idea to set an end date on their SDS for 6-12 months – to ensure it’s regularly reviewed.

If an organisation is engaging multiple agencies, without a central point of control such as a managed service provider (MSP), these checks will need to be built into their supply chain management processes. Where an MSP is engaged however, this can provide a great mechanism to develop a formal supply chain auditing process.

“Regular auditing is going to be the key to ensuring an organisation’s contingent workforce remains IR35 compliant. It’s often difficult for organisations to see how IR35 is managed across every level of their supply chain though. We see our role as being their eyes and ears – identifying any concerns and implementing a formal process to ensure compliance”

– Richard Hanson, Linx Client Services Director

Ensuring determinations remain accurate

As the hype around IR35 quietens down, it’s more important than ever to ensure that Hiring Managers tasked with making each SDS stay up to date with the legislation. It’s a good idea to plan in regular refresher training and ensure that any new Hiring Managers understand IR35 processes. Even experienced professionals coming from roles with previous experience managing IR35 need to understand your organisations’ approach and protocols.

Where HMRC investigates IR35 determinations, they’ll be looking to ensure that reasonable care has been taken when organisation’s created each SDS. Well documented staff training forms just one part of the evidence to indicate that IR35 has been scrupulously managed within the organisation.