IR35: Your Project Plan
IR35 (off-payroll) reforms are rapidly approaching and it’s time for your agency to begin preparations. FCSA Chairman and Director of Accounting Services at JSA, Chris James, gives his advice on the steps you should be taking between now and April 2021 to be successfully prepared for IR35.
Depending on your agency’s sector and specialisms, your feelings of preparedness and concern surrounding the IR35 reforms may vary. But no matter where you fall on the scale of prepared to unprepared, or concerned to confident, ensuring you’ve implemented a thorough plan to guarantee compliance and maintain relationships with your end hirers and contractors is a top priority.
If you’re not feeling 100% ready for the reforms, it’s important to gather all the information you can so you know how to mitigate your agency’s risk while helping your end hirers and contractors work compliantly. As a first step, it can be useful to outline a plan like the one below and appoint a project leader to head the operations.
Even if your agency is prepared for the reforms, checking your actions against the plan below could help you identify any steps you may have missed, and give you the time to solve problems now before the reforms are implemented.
Phase 1: Planning
1) Get informed – Determine the best way to equip your agency by starting with the facts. Locate a range of reliable sources of information and decide on the best way to mitigate risk for your agency. Understanding how you may be impacted will help you prepare accordingly. JSA has developed an IR35 Guide for Agencies to get you started.
2) Speak to JSA – Contact an accountancy and payroll provider who specialises in compliance and IR35, such as JSA, and they’ll be able to help you set up your project plan, walking you through your next steps.
3) Conduct a Sample Assessment – Assessing a sample of your workforce can help you gain clarity on how your agency is likely to be positioned and impacted come April next year, allowing you to make the appropriate arrangements. JSA offers an in-house IR35 assessment tool which can be used to audit a sample of your contractors for free to give you clarity on where they currently stand. This will help you decide your next steps.
4) Assign a Project Lead – Appoint a project manager within your agency to spearhead your IR35 preparations and ensure continuous momentum, clarity, and efficient communication.
5) Engage your End Hirers – Once you know how you’ll be impacted and the next steps you’re going to take, it’s advisable to proactively approach your end hirers to have informed conversations, deciding how you will work together to manage contractor assessments and SDSs. You’ll need to maintain regular contact with end hirers because you’re dependent on each other throughout this process. Click here to view a two-minute video explainer on how each member of the supply chain will be affected.
6) Collaborate to Develop a Strategy – Work with your hirers to develop an action plan that’s transparent, straight forward, and appropriate for your circumstances and explain this to your contractors so everyone is informed and knows where they stand.
Phase 2: Implementation
7) Individual Assessments – Conduct individual assessments on every contractor and their existing assignments using a reliable assessment tool. JSA’s in-house assessments provide instant and insurable results meaning you can assess cohorts of contractors within minutes and have peace of mind that they’re 100% compliant. Plus, recommending a reliable and efficient assessment tool to end hirers demonstrates you understand the risks they’re facing and are willing to help overcome them, helping to strengthen your relationships.
8) Status Determination Statements – Using an assessment tool like JSA’s will also allow you to assist in generating compliant Status Determination Statements, detailing the assessment outcome, and helping your agency (and other parties in the supply chain) to pass on the results correctly. Status Determination Statements are the responsibility of the end hirer to issue to contractors and recruitment agencies. But you’ll need to work with your end hirer to ensure these are completed and passed along the supply chain compliantly.
9) ‘Inside’ IR35 Contractors – Discuss working options such as JSA Umbrella, changes in working practices, and changes in pay with newly ‘inside’ IR35 contractors. JSA can assist you with tried and tested ways to advise your contractors and efficiently transition them to their new working arrangements, ensuring they’re satisfied with their new working option. As working through an Umbrella company means contractors will receive less take-home pay, you may need to consider paying contractors more to retain them.
10) ‘Outside’ IR35 Contractors – If contractors receive an ‘outside’ result, you can take our separate cover from an insurance company to mitigate your financial risk in the event of HMRC challenge, and allow your contractors to continue working compliantly through their own Limited Company.
Phase 3: Ongoing Support
11) Role Assessments – as new contracts develop, you will need to conduct role assessments to ensure you place a compliant contractor every time. It may be beneficial to emphasise when the indicative status of a role is ‘outside’ to ensure you’re recruiting the best talent.
12) Regular Re-assessments – as contracts evolve, ‘outside’ contractors may find their assignment or working practices change, classifying them as ‘inside’ IR35. As your long-term partner, JSA can help you monitor contractors and conduct regular re-assessments for total compliance 100% of the time.