13 Steps to prepare your business for the IR35 Off-Payroll reforms.

As lessons from the Off-payroll reforms in the public sector suggest, planning, not only for agencies but throughout the supply chain, is a crucial component to the level of success businesses will have in managing and adapting to the changes ahead.

Below is a brief step by step guide to some of the preparations your business should be taking to ensure you are in a position to manage the reforms effectively:

1.If you haven’t already, to set up a steering committee to lead on readying your business for IR35 reform. This will include a full impact assessment on your contractor base and clients, as well as taking responsibility for the preparation, planning, decision making, communications, implementation and project management of your chosen strategy. Ideally this group should include representation from senior management, sales, Legal & Compliance, payroll & HR and IT.

2. Prepare and train your consultants to educate and manage communications with clients and contractors. The public sector experience in 2017 suggests many consultants found this process very challenging, especially within tight time frames, so providing the right internal support and guidance will be key to their and therefore your success. Many contractors and clients may want to understand your plans and the ways you are able to support them.

3. Identify the population of contractors that will likely be in scope of new rules by conducting a supply chain review and communications with your clients (including RPO/MSP relationships).

4. Classify which of the contractors have highly sought-after and transferable skills and which ones may not.

5. Converse with clients about those contractors who if classed as inside IR35 are likely to leave or demand rate increases.

6. Educate clients around the proposed reforms, as well as their options and the implications of these decisions, including, for in scope assessments, increased costs, potential loss of talent and associated delays and costs to projects, and risk of employment right claims where there is a change in status.

7. To prepare for PSC’s classed as inside of IR35, start to review and scope out what changes are necessary to your software in order to handle the correct payroll and accounting treatment (the public sector experience showed that this can be both challenging and costly), or bed in alternatives such as a fully audited, compliant and reliable Umbrella provider like Parasol.

8. Consider if changes are needed to your contracts, policies and marketing. Aspects such as insurances and invoice discounting arrangements may also need to be discussed and managed.

9. Plan around contract end and start dates, particularly if they are likely to overlap 6 April 2021. This may help reduce risk of retrospective claims (by HMRC and/or contractors) or allow for arrangements to be reset on the correct and planned basis.

10. Consider whether supplying contractors in other ways is appropriate, such as simply through a compliant Umbrella company. Alternative models such as outcome-based contracts, SOW’s or consultancy models may also need to be considered.

11. Alert clients to HMRC’s Spotlights and aggressive schemes which competitors or providers may offer, as well as the Criminal Finances Act (CFA) 2017 and other risks that clients will be exposed to if they are tempted to use them.

12. Review and mandate your own PSL for Umbrella and Accountancy providers to reduce your risk and ensure strict compliance (compliant providers will welcome this).

13. Partner with specialists in this area to support your business and help you prepare for the changes.

Those agencies best placed to facilitate and support these changes stand to gain significant commercial advantage by both attracting clients and contractors to their books.