Joyce Blundell, head of compliance, Sopra Steria Recruitment on why a there should be a dedicated portal for IR35.
Transparency and consistency.
As the introduction of changes to off-payroll working in the private sector draw ever closer, there remains a fair amount of uncertainty about how exactly the roll-out will be implemented, and the impact that it will have on the industry. However, by being as invested as we can in the consultation – and getting as many industry peers as possible to help lobby in our favour, there is still hope that the roll-out can be done sensibly, and we are hopeful that HMRC will take into account the concerns we, and others, have raised.
However it is disappointing to see that the debate has shifted towards ‘how’ we can implement the changes, rather than their potential impact on the market and cost to recruitment businesses, contractors and industry.
Lots of potential problems
Whilst we welcomed the initial postponement of changes until April 2020, there are still a lot of potential issues that need to be addressed. My view is that, if the IR35 changes are not introduced in the same form as they were for the public sector, it will be problematic. The process must be unified across both sectors.
If this is not the case, access to talent may be significantly impacted for companies that employ contractors working through PSCs, who are most likely to raise their rates or look to permanent roles, with IR35 potentially cutting their net income by a quarter. Increased costs, readjustments of calculations already made to off-payroll workers, and back-payment claims from off-payroll workers that will have to be made, will all create huge administrative burdens for private-sector organisations.
IR35 implementation portal
In our response to the HMRC consultation, we raised the creation of a comprehensive portal that can manage the decision process, essentially an enhanced version of the existing CEST tool, was an absolute necessity. This is the only way I see that compliance, transparency, and consistency across private and public sectors can be assured. A central portal would make the decision making process transparent for all parties. For instance, workers challenging client decisions would be able to go through the portal, and clients would be able to inform workers directly of status determination, with a record of the reasons for determination freely available for all parties in the supply chain.
Another area we raised in our consultation response concerned liability and it is our view that HMRC must create legislation to mandate that liability flows down the supply chain, removing the need for agencies to introduce their own clause. Clients must be responsible for determining status of workers at the outset, ideally when the vacancy is created, with every party in the supply chain aware of this determination as is passed down the line. Ultimately, the fee-payer will then make the payment and manage deductions.
What should businesses be doing now to prepare?
There are some activities which businesses can already be looking at in readiness for the new regulations. Decision making processes for status determination need to be in place to ensure consistency and avoid subjectivity from hiring managers. If there is no strict criteria to do this, it could lead to all sorts of problems. Existing contingent workforces should also be reviewed to determine which employment models contractors are working through so that they can anticipate the impact of any change under the new rules. To ensure administration is as simple as possible, every company should have a person, or several people, solely responsible for assessing employment status of individual contractors, to ensure a consistent approach. Finally, it is vital that companies review their existing and future recruitment providers to ensure they are using IR35-compliant models. Those working with multiple suppliers may benefit from consolidating their hiring through an RPO model to improve consistency and reduce potential compliance issues.