How to prepare prepare your business
What do you need to do now?
If you haven't already, firstly you need to review and audit your workforce. To complete your audit you should capture and record the data to identify information such as:
- Who exactly are your current contingent workers?
- What is their pay rate?
- How long have they been on assignment for?
- What is the end date of their assignment?
- What is their current employment status?
- Are there other intermediaries in the supply chain?
To make life easier we have created a template that will help you quickly and easily complete your audit, to download a copy please contact our IR35 Team.
Contact team
What next?
Once the full audit is completed, you must correctly define the IR35 status of their entire contractor population to mitigate risk. Defining the IR35 status of your contingent workforce requires a full review and effective individual assessments of each role to prevent being in breach of deploying ‘reasonable care’ when making such decisions.
Our flow chart below should help in preparing for the upcoming changes to IR35 legislation reform, including what to action and when. To ensure that you are compliant and operations don’t become effected we urge you to act now.
01/ Assess
Assess whether your business will be exempt from the off-payroll rules or not. Tell your agencies as early as possible if you are exempt or not. If you are close to the thresholds, keep your status under review. Assess which contractors might be affected by the changes and why.
02/ Identify
Identify who within your business can make IR35 status decisions and ensure that those individuals understand how to assess status and have the appropriate tools to do so. Consider if you need to engage a well-established external reviewer to help with your IR35 status decisions. Periodically review your status decisions and tell agencies immediately if you decide to change an earlier status decision.
03/ Process
Put processes in place to pass the status decision and the reasons for that decision to the contractor and the agency. Work with agencies who will have their own processes in place to implement.
04/ Agree
Agree with agencies how the increased employer costs will be met - agencies will not be able to simply absorb these costs and pay contractors the same rates.
The risks of not preparing.
There can be financial, legal, operational and reputational impacts to consider.
As the responsibility for defining IR35 status switches from the individual contractor to you, the end client, businesses not only face significant financial penalties should the incorrect steps be implemented but also must be mindful of Legal, operational and reputational risk. Being mindful for example that your non-pay rolled workforce may also be concerned by this change, and ensuring you engage with this important group will be key to ensuring you retain your supply of talent.
The good news is there is still time, we are able to support you. And, in our view, this change is not as ‘cataclysmic’ as some might suggest.
Removing the risk from IR35
If you are looking for further information on IR35 reform (Off – Payroll working legislation), what your options are and how to navigate your way to building a compliant, solution to engage a temporary workforce then please download our guide here. If you would like to talk to one of our experts, please get in touch using the form. If you'd prefer to talk to us right away, call us on 01785 339 000.
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