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Private Sector IR35 Reform: Don’t Leave It Too Late!

IR35

Given that private-sector IR35 reform has been delayed and is now due to take place in April 2021, you could be forgiven for thinking you and your clients have plenty of time left to prepare. Many recruiters and are thinking that way, and it’s understandable.

How to Help Your Clients Prepare for IR35 Reform: A Recruiter's Guide. Click here to download>>

However, IR35 status has a huge impact on how much of the contract rate ends up in the contractor’s pocket, and contractors can’t reasonably be expected to accept contracts without knowing how much they’ll be earning. This means that your clients need to know how the reform affects them and have suitable processes in place before the start of contracts that will be affected. For 12-month contracts, for example, this means being ready by April 2021. How much time you actually have depends on the length of your longest contracts, and how long you need to set them up. Whatever your situation, we’d strongly advise you to act now.

Why you need to be prepared in time

Without suitable processes in place, you and your clients will be left with a stark choice between two unacceptable risks:

  • The risk of allowing contractors to work outside IR35 without knowing if this is correct or being able to defend your decision, leaving you and/or your clients liable under the legislation.
  • The risk of insisting everyone works inside IR35, thus increasing the cost of hiring contractors while at the same time reducing contractors’ take-home pay. This will encourage many contractors to take their valuable skills elsewhere. 

Your clients will be looking to you, as their trusted recruitment expert, to advise and guide them and this could be seen as an opportunity to strengthen your client relationships. IR35 reform is an important issue for thousands of end clients, whether they know it yet or not, so being the recruitment expert who has the answer can only help your cause. However, this only works if you’re ready in time. Leave it too late and your clients will be alarmed and disappointed that you weren’t able to advise them in time to protect them from these risks.  

Why preparing for IR35 reform will take time

Ideally, you need to be able to assess IR35 status on an individual basis, so you can ensure that each contractor is using the correct IR35 status. This mitigates your liability, while allowing contractors to work outside IR35 where appropriate. When you factor in the additional costs of engaging contractors inside IR35, this is by far the most cost-effective approach.

The difficulty is that assessing IR35 status is time-consuming and complex. It requires specialist expertise and one size definitely does not fit all. You’ll need help from compliance experts to assess your specific situation and risks, and to put appropriate processes in place. All of this will take time.

Where to go for help

As compliance experts, Orange Genie Compliance will assess your clients’ specific risks and help them and you to implement robust processes to mitigate them without creating delays or disrupting your supply chain. If necessary, our experts can work with you and your clients to help train your staff and educate your contractors.  

Contact us as soon as possible to make sure the required processes can be implemented in time. You can reach our expert team on 01296 468 483 or email compliance@orangegenie.com 

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