Following the announcement of a delay in implementation of the new rules until April 2021, which now seems increasingly likely as it has been included in the latest Finance Bill, companies now have an extended time to get their status determinations correct and review their working arrangements with their contingent workers. The issue for most has been a lack of detailed knowledge of the complex IR35 Legislation which under pins these new rules.
Off-Payroll and IR35 Compliance Made Easy
The Shield Passport Process is simple and tells you exactly what you need to do to prepare for the new “Off-Payroll working” legislation due in April 2020.
The Shield Passport Process is a simple four stage, 12 step process which tells you exactly what you need to do to prepare for the new “Off-Payroll working” legislation due in April 2020. Dave Chaplin of IR35 Shield, and Crawford Temple of Professional Passport, have combined their wealth of knowledge to create a 4 stage plan.
The Shield Passport Process breaks each one of these four stages up into straightforward steps covering contracts, operating structures, financial risk, renegotiation and advice for your hiring managers.
You can download the Shield Passport Operations Manual which provides a simple structure that ensures you have the correct determinations for the workers and only operate with compliant providers.
We are also able to run events for recruiters and their clients if required. Please get in touch to find out more.
The key points of the reforms to note are:
- The likely start date is 6th April 2021 with any payments made for work carried out after this date being within the new rules.
- The existing IR35 rules will form the basis for the assessment.
- As anticipated there are proposed changes to the liability structure.
- Any amendments made in the implementation for the private sector will also apply to the public sector.
- A right for workers to obtain reasons behind decisions of status.
- Small company exemption confirmed as one where the turnover at the start of the accounting period turnover was less than £10.2m, the balance sheet has less than £5.1m and there are less than 50 employees.
So what does all this mean?
We have been predicting that there would be changes to the liability structure based on the experiences of the public sector. It would appear this is the case. The Fee-Payer, the entity paying the PSCâ€ˆwill, in most cases, still hold any unpaid tax liabilities. However even where the end client has acted correctly and it is the supply chain partners that create a failing the liability can be passed back up the supply chain to the recruitment company holding the contract with the client. Where a recovery from this company failed then the liability could be passed back up to the end client.
Professional Passport comment:
This places significant pressure on end clients and recruitment companies to ensure the supply chain operates correctly.
As we are already seeing MSP’s, RPO’s and Framework Agreements are likely to amend their contracts to require any workers supplied under these arrangements operate through an independently accredited provider, Professionalâ€ˆPassport accreditation is already being widely recognised and accepted in these cases.
Recruitment companies and end clients will need to ensure they work closely together and understand the assessments and outcomes to ensure these have been carried out correctly as the ‘reasonable care’ get out seems to be coming to an end. As a result, making an ‘outside’ determination must be correct and accurate to avoid liabilities. This will also support situations here contractors seek to understand the reason behind their status and avoid the threat of ‘blanket’ determinations.
There is now a requirement for the determination, and the reasons behind this, to be sent to all parties in the supply chain; this includes the worker. This needs to be considered and reflect the actual working arrangements to meet the requirements in the legislation. Blanket assessments could result in 'fee payers' making their own determinations and, if HMRC successfully challenged these, the liability passing back to the end client.
Professional Passport comment:
Accurate assignment status assessment is critical in protecting parties from liabilities. As the requirements now include providing the reasons behind the determination any variation between stated arrangements and actual arrangements are likely to be challenged by the workers. The appeal process is client led so this will result in significant additional workloads for clients if an accurate assessment is not carried out from outset. It also opens up the possibilities of liabilities coming back up the supply chain.
With the initial volume and ongoing management requirements we do not believe a manual process would work efficiently across medium to large sized operations. Furthermore, ensuring the ongoing quality and accuracy of the assessments becomes a challenge. A manual process should only be used for a very small percentage of assignments and typically those that are very specialised.