While 2020 has certainly thrown a lot of challenges at us all, the extension of the IR35 roll out was perhaps one of the few welcome announcements for many staffing companies. But the deadline is looming, and it is critical that recruitment businesses and their end clients are prepared. So how are recruiters getting ready this time?
Early preparation
APSCo has been involved in the IR35 debate from day one – in fact it is the reason the trade body was initially founded following the Government’s first off-payroll announcement back in 1999. Since then, we have acted in the best interests of the recruitment sector by both lobbying for clarification of and amendments to legislation and guiding businesses through the changes. Ahead of the original roll out date one of our key messages for hiring companies was to prepare as soon as you can, and this message remains the same. As Phil Beardwood, compliance and assurance director at the Morson Group explained:
“The clock is ticking towards IR35 reform in the private sector, and we are well underway in our commitment to support our clients and other businesses by providing strategic and agile IR35 consultancy, together with a suite of compliance solutions that enable organisations to get their houses in order, mitigate risk and deliver a smooth transition. We are also assisting our private sector contractors in ensuring they have access to the right information to understand how the changes affect them and more importantly, to separate fact from fiction.”
“The impact of Covid-19 on the supply and retention of talent, combined with Brexit, has made it essential for businesses to protect their greatest asset – their people. We may be in the midst of a global pandemic, but the original 2020 deadline was impacted by a General Election and other significant political and economic factors. This 12-month extension should be viewed as a time to reset the IR35 agenda, and private sector organisations who engage contractor populations must once again place IR35 amongst their top priorities and proactively plan ahead with a clear and confirmed deadline in mind – April 2021.”
ICS Accounting Managing Director, John Lyon, echoed this need to get ahead of the deadline, “As preparation is key for the upcoming changes, we would urge people to start using the assessment tool as soon as possible to avoid last-minute blanket rulings and rushed misguided rulings.” Kyra Cordrey, Commercial Director at PageGroup also highlighted that the firm’s involvement in the public sector roll out several years ago taught them that early planning is key, “Perhaps the biggest learning point for us based on our experience is that you can never be too prepared. In fact, this time around we started talking to our customers much sooner. While April might be several months away, the conversations are happening now.”
Provide training
Ensuring that your recruiters and end clients are fully educated on IR35, how accurate determinations should be made and where the liability lies is another common preparation trend. Seim Munif, CFO of Gravitas Recruitment Group explains why training has been a key part of their preparations:
“With a key focus on the public sector, we gained invaluable experience from successfully navigating the IR35 changes in 2017. We know what worked, what our learnings were and what we wanted to build on for the private sector reform. A key area for us was our internal and external training strategy. We delivered extensive training on all aspects of IR35 to all employees across all levels of the business. This is something we shall be repeating in preparation for 2021, including induction modules for our new starters. As part of our external strategy, we built a decision tree and held one-to-one meetings with our candidates and clients to discuss their specific needs and help them navigate the status determination process.”
PageGroup, also focused on knowledge sharing ahead of the original roll out date, as Cordrey, explains: “In October 2019 we began educating ourselves and then our customers on the details of the reform and how it would impact them. These educational pieces took place through webinars, podcasts and Q&A’s. It was key we understood our internal compliance process and we updated our Limited Company Contracts from a legal perspective as soon as we could to make sure they were reflective of the reforms.”
Educating end clients is clearly hugely important in ensuring fair and accurate determinations are made. In fact, as David Redmayne, CEO, NRL Group, touched on, it’s vital to engage with hirers to drive compliance and protect your firm; “We’ve always worked in partnership with our clients, and we’ve really seen these forged relationships come into their own when our clients began looking at IR35. For us, we feel our role is to help them to fully understand the legislation, and ensure they have compliant processes in place to protect their business. From experience, we’ve found that the key to this is getting the training right. Where large organisations have multiple business units, there’ll be a wide range of people expected to make accurate status determinations. To ensure compliance, these need to be approached in a consistent way, without different interpretations of the same question.”
Seeking expert help
The need to work closely with end clients is a common trend in many of our members’ preparations, but it in order to limit the potential risk for your firm it is also advisable to seek expert guidance. According to Malvina Gosik, Compliance Executive, Quanta Consultancy Services, using expert knowledge from outside of the business has helped the team prepare so far:
“Quanta have taken a proactive approach towards IR35 and partnered with specialist industry experts, offering status reviews, role assessments, training, legislative updates, round tables and documentation. We strive to be the de facto recruitment partner to our clients and candidates, therefore our IR35 project started early in September and focuses on educating sales consultants, clients and contractors to ensure a fair and informed status determination process. We run the IR35 project internally to support our contractors with utilising a bespoke IR35 status determination tool, assisting with general IR35 queries, retention calculations and IR35 status appeal process. It is pivotal that all contractual parties have a good understanding of retention changes when a contractor is deemed to be inside IR35. Sales and compliance work as one team, while speaking to the clients and candidates, which helps to ensure compliance with legislation and successful negotiation of rates for contractors deemed inside IR35.”
Gravitas Recruitment Group has also taken a similar approach: “Alongside working with APSCo and Osborne Clarke, we established a board level steering committee” Munif added. “This has enabled us to regularly discuss our approach in an ever-changing landscape and led to the creation of a bespoke on-line status determination tool, specifically designed for our niche markets and highly tailored, compliant contract terms to be used where outside SDS’s are received.”
APSCo’s IR35 action
While the above examples highlight how recruiters can prepare, as the trade body for professional staffing companies we have long been at the heart of the IR35 debate. Since the announcement that it will be rolled out into the private sector, we have lobbied government to review the plans to ensure they are fit for purpose and don’t put undue restraints and financial pressure on the staffing industry. In fact, APSCo is the joint chair of the HMRC IR35 Forum, and we regularly meet with HMRC to present the concerns of the industry. HMRC are listening to the industry, most recently in respect of feedback on the wording of a clause in the Finance Act. They are also rolling out their own education programme targeting contractors and clients.
We will continue to work with HMRC to support the best interests of the professional staffing industry as the 6th April edges closer and, as always, will provide our members with the latest information, guidance and supporting documentation to help them best prepare for IR35.
Getting IR35 preparations on track
While Covid-19 and the end of the Brexit transition period have certainly taken centre stage for UK businesses in recent weeks and months, the IR35 deadline is fast approaching. For those staffing companies that have yet to begin preparations, now really is the time to start.
