On the 17th March 2020, the UK Government announced that the off-payroll (IR35) private sector reforms would be deferred from the 6th April 2020 to the 6th April 2021.
Whilst there is much information online about the private sector reforms, it can be difficult to know where to start or where you should be in your preparations. In this brief guide, we’ll explain exactly what you need to do to prepare your agency and your end hirers for the reforms and what your priorities should be.
You can also download our comprehensive IR35 checklist for recruiters.
Identify your off-payroll workforce in scope of the reforms. This is the total number of contractors you have working through Personal Service Companies (PSCs). Contractors that are working via an umbrella company will be out of scope of the reforms.
Work with your clients to identify how many they engage via Personal Service Companies currently.
Identify your position in each supply chain. For how many clients will you occupy the position of first agency in the supply chain? For how many will you occupy the position of fee-payer?
End hirers are unlikely to have dealt with IR35 before. This offers an opportunity to add real value to the service you offer. As one of our recruitment partners, we can offer bespoke training on IR35 and specifically the private sector reforms to you and your end hirers. Speak to your account manager to find out how you can get this booked.
Speak to your end hirers about how they plan to assess current arrangements for each contractor and how they are planning to do this. For example are they planning on utilising IR35 contract review services which can offer accurate determinations or HMRC’s CEST tool?
Speak to your end hirers about their key projects and decide how you will deal with inside IR35 determinations. Are they willing to renegotiate the rates for key contractors rather than risk losing them? Who will be responsible for assessing future arrangements? How will the status of the roles be determined before advertising? If you will be using role-based assessments, will there be a process for reviewing this?
Develop a communications plan to ensure your contractors understand changes to IR35 and how it may affect them depending on if they’re ‘inside’ or ‘outside’ the legislation.
End hirers now have a responsibility to provide a Status Determination Statement to the contractor and the first agency in the supply chain. If this is your agency, you will then have a responsibility to pass this to the next agency in the supply chain. As part of your preparations, you will need to establish a process for how this will be communicated. Considering the significant risk that will arise from not passing this on, you will also need to identify how this process will be managed and documented?
If you occupy the position of Fee Payer, it will be your responsibility to correctly apply the SDS to the contractor’s payment. The SDS carries the tax liability so you will need to ensure that this is administered correctly. You will need to review your payroll systems and ensure they are able to make the appropriate deductions.
Are your systems able to issue the payslips and make the relevant RTI submissions to HMRC? Or will you outsource this to an umbrella solution. Parasol can help with this.
Audit your supply chain, this is particularly important if you occupy the position of the first agency in the supply chain. With the inclusion of debt transfer provisions in the April 2021 reforms it is more important than ever that you are completing due diligence on all parties in the supply chain.
With you all the way
You and your contractors are in safe hands with Parasol. As a market leader in compliance and a founding member of the FCSA, we have been supporting agencies, end hirers and contractors for 20 years. Compliance is at the heart of everything we do and our goal is to always do what’s right, not just what’s easy.
So, if you’re looking for an IR35 specialist to help guide you through the April 2021 reforms, request a callback and we will be in touch.