After the Fact
Everyone is focusing on getting ready for the off-payroll working legislation, but what about the ongoing management requirements?
PayStream, one of the leading providers of umbrella and accountancy services, has warned recruiters and clients not to forget about their ongoing responsibilities post April 2021. Legal director Julian Ball, has warned that failing to do so now will slow down the hiring process moving forwards.
In the run up to April 2021 it became clear to PayStream that many clients were unaware of whether their contractors were working through PSCs, umbrellas or agency PAYE. Project teams were set up to categorise contractors and carry out the assessments for those likely to be affected, either using CEST or eliciting the help of a third party IR35 expert. This was a steep learning curve for clients who had never had to consider IR35 before and many leaned heavily on the recruitment businesses for help and guidance.
“By April we expect that the existing population of contractors will have been categorised and status determination statements (SDSs) prepared and passed to the recruitment businesses and contractors,” noted Julian Ball. “But when the dust settles – what does ‘business as usual’ look like and how are clients and recruitment businesses going to cope? And bearing in mind that project teams will probably be disbanded, who is going to be responsible for ensuring that compliant processes are in place and followed?”
What are the client’s responsibilities?
- Assessing new roles – Will this fall within a hiring manager’s remit? If so how will the client ensure consistency between hiring managers? This is where an external IR35 expert can help as they will see all the reviews and build a knowledge bank of what should be consistent answers. Clients will need a quick turnaround but will also need to create an audit trail of how a decision was reached.
- Giving recruiters an SDS – For outside roles this will be a prerequisite with the role spec and clients may build this into their task management/CRM systems.
- Re-reviewing the existing population – over a period of time status can change as contractors become part and parcel of an organisation. A new SDS will be required on a regular (perhaps annual) basis – this could take the form of a review of the original SDS by the client or the client might require the contractor to go through a new specialist review at the contractor’s cost.
- Dealing with appeals – Clients don’t have to change their mind but do have to consider appeals. Clients should set expectations as to the level of detail expected from a contractor who appeals an SDS.
What are the recruiter’s responsibilities?
- Obtaining an SDS from the client – If the recruiter interfaces to the client IT system or vice versa they need to consider how the SDS will be posted. The answer may require some IT development work which can take time.
- Advertising roles as inside/outside IR35 – Before a role is even advertised recruiters need to be aware of the SDS so they can advertise the role accordingly.
- Ensuring compliance in the supply chain – There are likely to be more inside IR35 roles in the future and clients will be keen to ensure that tax is correctly deducted in the supply chain. A compliant umbrella PSL will be essential. Clients will also want reports confirming who is working inside and outside IR35.
- Check the AWR status of PAYE/umbrella workers – This probably won’t have been considered for PSC workers.
“Everyone is currently focused on ensuring all of their workers are compliantly set up by April”, noted Julian. “However recruiters and clients shouldn’t be ignoring what their ongoing responsibilities will look like. They need to be making the necessary changes now, in order to avoid compliance slowing down the hiring process in the future.”