IR35: A short window to implementation

On 22 January, HMRC published draft secondary legislation and a technical note in relation to the impending new IR35 regime, with feedback invited until 19 February. Simultaneously, the implementation review promised during the election campaign continues, with feedback to be collected by HMRC by the middle of January.

Both these processes are not due to complete until the middle of February. This means that any medium to large end client would realistically have had to have commenced their implementation, so end clients are working in an environment of uncertainty.

It is easy to get buried in the technicalities of the new regime and there is plenty of information publicly available in this regard, but there are three key points we feel important to re-iterate with our clients, contractors and business partners:

1.)   Do not wait - The draft guidance, technical note and review are all about how the new regime is to be implemented and will work going forward. There is nothing to suggest that it will be postponed, so with fewer than two months to go, end users of contract resource need to be into their implementation phase - where clarity of communication is key.

2.)   Supply chain compliance - End users should work with credible professional agencies who can ensure that the appropriate compliance management is put in place, monitored and audited throughout the supply chain, on an ongoing basis.    

3.)   It is not the end of flexible resource - If contract resource is currently the right commercial approach for an end user client to utilise then it will invariably be the right commercial approach under the new regime, so the business needs to understand what is required to continue on a Business as Usual basis.

Most professional agencies, ourselves included, are helping and supporting clients during the transition phase. We are also offering direct pay solutions (through our in-house PAYE) and supply chain management under the new regime - this will quickly become the “norm” and just the way the contract market works!

We are seeing many ‘solutions’ in the market, where companies are claiming to have blanket options to take the burden away from end clients. Statement of work is a good example, however this is a different service offering and must be used, setup and managed correctly to ensure that the legislation does not apply. This service is something that we can also provide where the client feels it is the appropriate solution.   

The flexible resource market has many legislative requirements that all parties need to be mindful of (such as EAA, AWR, Offshore & Onshore Intermediaries, MSC and the Criminal Finance Act. It is critical that clients partner with credible and compliant recruiters to ensure that all supply chain risk is managed effectively.

To find out more about IR35 and how it may impact your business, get in touch to arrange a consultation with our compliance experts.