Moving Forward from the Consultation on IR35 Reform

IR35

The government’s second consultation on private-sector IR35 reform closed on 28th May, and you can read Orange Genie’s response, here. Important as it is for all stakeholders to continue discussing IR35 and making their position known, it’s just as important to continue preparations for April 2020.

How to Help your Clients Prepare for IR35 Reform: Click here to download our free guide

For the reasons we give in our response to the consultation, we’d like to see a delay or a reversal of this policy, but as responsible experts we have to accept that this is unlikely to happen, and advise recruiters and end clients to make the necessary preparations.

What do you need to prepare for?

Recruiters and end clients will have new responsibilities after the reform.

  • The end client will be responsible for determining the IR35 status of any contractors they engage, and for communicating that determination to the supply chain.
     
  • Where the end client determines that the contractor is inside IR35, the “fee payer”, which will usually be the recruiter, will be responsible for deducting PAYE tax and NICs before payments are made to the contractor’s Limited company.

Determining IR35 status is a complex and time-consuming process, requiring specialist expertise, and while in theory it will be out of your hands, your clients are likely to look to you as their trusted recruitment expert for help and guidance in meeting their new responsibilities.

Likewise, for many recruiters the additional layer of administration required to make the “deemed employment” calculations of PAYE tax and NICs, process the deductions and pay to HMRC cannot be created overnight.

Recruiters and their clients can no longer afford to wait and see what happens. Careful assessment of the risks and requirements, followed by urgent implementation are the order of the day.

You may also find that your candidates come to you with questions. Many contractors are anxious about the reforms, and some may be tempted to look for permanent roles or alternative work as this anxiety builds. Only clear, trustworthy information about how clients will respond to the reform and how legitimately independent contractors can remain outside IR35 will allay their concerns and ensure key skills will continue to be available to your clients. 

IR35 reform is due in April 2020, so what’s the rush?

At the time of writing there are 217 working days before the reform is implemented, which doesn’t give recruiters and end clients a lot of time to assess their situation and implement the necessary processes.

Additionally, any current contracts that extend beyond the 5th April 2020 will be affected by the reform, so it’s likely that you’ll be recruiting contractors now who’s status will need to be assessed by the end client when the time comes. Those contractors may well have questions about how the reform will be managed, and concerns about how their income will be affected.

There are no viable shortcuts

Each contractor’s IR35 status will need to be individually assessed for each new contract. Blanket, or “role-based” assessments are not a viable solution, and will lead either to unacceptable risks, or an unnecessary increase in costs coupled with difficulty sourcing key skills.

Action you should take today

If you haven’t already, it’s very important that you contact a compliance expert like Orange Genie Compliance, who can assess your specific situation and help you implement the necessary systems and processes to protect you and your clients without interrupting the supply chain or causing delays. Orange Genie Compliance can also help you educate your contractors and your staff to ensure smooth implementation with a minimum of disruption and risk.  

If you have any questions or we can help in any way, please contact our expert team on 01296 468 483 or email andrew.webster@orangegenie.com.

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