With just over twelves months to go before IR35 reforms are introduced into the private sector, industries across the UK that work with contractors are busily preparing to amend processes in line with these changes.
For businesses within the recruitment industry, many of whom have rarely come across IR35 regulation themselves, the responsibility for determining a contractor’s status has moved from the contractor to their business, meaning they are liable if an incorrect status is assigned. As a result of this, it is vital that recruiters ensure they are fully prepared come April 2020. So, can your agency prepare?
Preparing for IR35 reforms
In hindsight, the introduction of these same reforms into the public sector, back in 2017, caused significant issues for all parties involved. In fact, the extension of these reforms into the private sector was delayed to ensure that businesses had a substantial amount of time to prepare, and thus avoid these same issues. With twelves months to go, now is the perfect time to get started on your preparation, assessing the impact it will have on your current processes and amending them accordingly.
Before you are in a position to implement any changes, you must first ensure that you and your fellow recruiters fully understand IR35 legislation, why it was introduced, what it means for a business and strategies for ensuring compliance.
Once these changes are introduced, and should HMRC come knocking to ensure your business has been complying with legislation, their first port of call will be to look at the paperwork for all involved. This means that the contract between yourself and a contractor, as well as between the end client, must reflect the contractor’s IR35 status, whether they fall inside or outside. It is essential therefore that when determining status, it is a true reflection on the contractor’s working situation.
As mentioned earlier, for the majority of recruiters, it has not previously been necessary to understand IR35 due to the fact that the decision and liability was in the hands of the contractor. As this is about to change, and agencies are liable to pay back any tax owed if an incorrect status is assigned to a contractor, it is vital that all necessary steps are taken to ensure compliance. To do this, we would highly recommend that you seek out advice and guidance from experts on this subject, who will ultimately support you in navigating these changes.
Find out more about IR35 legislation by reading our ‘Guide to IR35’.
Still confused? Contact our team today and we would be more than happy to provide effective guidance and support.