Category: News

How much is going to change for Personal Service Companies during IR35s shift in liability? With not just the concern for a lack of control over the final determination, there is unease over what will happen to the flexibility of contracts. If deemed inside IR35 then the ability to work under your own terms, setting your own fees and hours to work, as well as being able to take on multiple contracts are not a part of the contract.  

With many benefits coming from working as a limited company outside IR35 it can be seen as an attractive position, but many of these benefits help both the contractor and client. Although the shift in who determines the status will highlight those illegitimately working outside IR35, it means it could also be putting those legitimate cases at risk. With a lack of understanding or preparation, many clients and agencies are looking to blanket ban all outside IR35 work, making it much harder for outside IR35 contracts to be found. By offering outside IR35 contracts to PSCs, we are constantly trying to match up the right work with the best talent, maintaining fairness with combining legitimate outside IR35 workers with appropriate contracts. 

When losing an outside IR35 status there are many benefits no longer available to the contractor, in addition to potentially losing 20-30% of their income.  

• Working their own hours 
• Taking on multiple contracts 
• Expenses no longer covered 
• No substitute 

With travel expenses not covered for inside IR35 contracts, there is little incentive for limited companies to work on long distance roles, restricting this flexible workforce and making it equally hard for clients to find the best talent. Being able to utilise these can help provide better skills and results to projects and attract further work in the future, benefiting both client and contractor. Causing these to be restricted has meant many contractors are prepared to find alternative roles or discontinue being a contractor altogether. In a survey conducted by Contractor Calculator of more than 12,000 contractors, 23% said they intend to quit contracting due to IR35 leading to a potentially far smaller pool of talent to choose from for clients.  

What can you do?  

Be a part of the process and make your own assessment to bring a more robust decision to your employment status and opening up the opportunity to challenge the outcome if required. As a part of this, going over any current contracts to make sure they reflect the actions you are doing in the role off paper. Just having it written in the contract may not be enough to show your status and by performing the role as described in your contract then the guidelines within which you are working are made clear. 

Status determination statements are legally required to be given to contractors under limited companies as they give the chance to challenge determinations made by the client or agency. Despite this, only 38% of respondents in a survey say they have been provided with a Status Determination Statement. While the clients, fee payers, and contractors can all make an assessment, SDS’ provide a final chance for you to get appropriate IR35 placement as clients are required to meet the 45-day challenge process. Having these three parties individually assess your role can lead to a more robust determination, alongside giving you some control within the process.  

With the concern of clients being unprepared, it is vital for YOU to have as much understanding as possible so as to be able to seek the right work for you; whether inside or outside of IR35. The initial delay for when it will come into effect has given more time, but with few companies taking advantage of that it is valuable for all involved to take action. Speak to one of our experts to gain guidance in getting a status determination reflective of your work.  

Survey reference: 

https://www.contractorcalculator.co.uk/rife_payroll_non_compliance_killing_flexible_557410_news.aspx

Getting IR35 wrong can be costly. Both contractors and fee payers are at risk of losing out without paying careful attention to IR35 assessments. With contractors at risk of losing between 20-30% of their income if their status changes it is no wonder some may be nervous about who makes the status determination. 

Making it the responsibility of the client to now make an assessment on whether a Personal Service Company is deemed inside or outside of IR35 has the potential to cause these contractors to feel they have lost control of their personal earnings. This is not entirely true. There are some clear actions you can take to be involved in the process, alongside having the opportunity to challenge the final decision. This shift in liability will help to discover disguised employees, and classify them with the correct determination.  

The majority of contractors had hoped the initial delay in the changes to IR35 could help ease their concern over their clients understanding and ability to correctly assess their IR35 status. Giving them more time to get to grips with the legislation and view each PSC within the extended timeframe. However, 63% of contractors surveyed would rate their current client’s knowledge on IR35 negatively. Being a part of the process can make it easier for everyone involved. 

What you should be doing now 

Educating yourself on the IR35 changes is the first key step in order to understand what to look for in new roles and how you can challenge a status determination that you disagree with. Communication is always a vital part of any process, so if you’re in a contract that will continue beyond April 2021 then discussions with your hiring manager and agency can help you establish what actions have been taken to prepare.  

While a vast majority of the responsibility now lies with fee payer, there are actions you can take to be involved in the process in order to get a fair assessment. You can evaluate whether these three main points that determine IR35 are within your contract as well as the actions you take within the role. Ensuring that the performance in the role is reflective of the contract will reinforce your status and allow you to work in the clear definition of either outside or inside IR35. 

• Substitution  

Being able to send a substitute to complete the work on your behalf. 

• Direction 

Being directed on how to complete the work by the client, using instructions, guidance, and advice. 

• Control 

Someone is dictating what work you do and how, including the power to move you to different tasks. 

There also should not be a mutuality of agreement, meaning that both stating within the contract and being carried out in the position, the client has no obligation to offer you more work as well as an absence of obligation for you to take it can indicate the contract is more likely outside IR35.  

Working with a proactive agency that advises their clients on how they can assist your process of determining an appropriate status. At Highfield, we have many years of knowledge regarding IR35 and have spent time understanding the changes, so contact us via [email protected] or phone a consultant on 01489 774010.  

Anyone within the process can make an assessment such as the client, contractor, or the fee payer (like a recruitment agency). Statement determinations from all three will make for a far more robust outcome, creating consistency and certainty through multiple matching decisions and making it even more important to have clear understanding on these changes from all involved. Clients are required to provide a Status Determination Statement (SDS) which is used to: 

• Declare a contractor’s deemed employment status following an IR35 assessment 
• Provide the reasoning behind the conclusion. 

This SDS allows you to see how the determination was reached in a fully detailed way, giving you the opportunity to challenge a decision if there are specific factors that can be disagreed with. Alongside this, it helps to prevent companies from enforcing blanket determinations due to requiring justifications for individual workers through the SDS.  

So, take action in your own earnings and utilise the options and people available to get your contract recognised with an appropriate status determination. Speak to our experts and avoid risking losing 30% of your take home pay. 

IR35 changes in April 2021. Are you concerned about contractors going elsewhere? Some of the best talent will be looking for correct assessments and processes, which they will now be relying on their clients to provide. IR35 doesn’t have to be daunting but instead could be beneficial to your company, bringing and retaining the best skills to keep projects running smoothly all with the flexibility that is provided by contractors. 

Understanding IR35 and the new changes is your best starting point. We have plenty of experts so feel free to ask us about any concerns you have at [email protected] or view our IR35 Hub to understand a little more. There is one main point you need to be aware of with this change and that is where the responsibility and therefore some of the risk will now lie. As of April 2021, it will be down to the fee payer to provide an IR35 assessment to all contractors working for the company, which in turn brings the risk with it.  

It will NO LONGER solely be the responsibility of the contractor. It is yours. 

With businesses already contending with the various challenges that the pandemic has presented it is not surprising that this may feel a little overwhelming, however, it is a crucial process to get right. In a survey of companies with 30-200 staff, 73% of them have classified themselves as having little or no process/system for the new IR35 changes. 

There are many benefits to hiring contractors.  

• Cost savings 
• Specialist skills 
• Flexibility 
• Ease of separation 
• Temporary cover 
• Start at short notice 
• Ease workload for permanent staff members 

Particularly with the current climate, having flexibility and an ease of separation allows you to not feel the need to take on a permanent member of staff but are still able to get projects completed, without overloading current staff members and while utilising specialist skills.  

Temporary workforce makes up 22% of the UKs overall labour market, highlighting the importance of contractors as they support the economy and provide great benefits for companies in completing projects quickly and effectively.  

Bearing this in mind, it would be desirable to retain those specialised skills and become attractive to future talents looking to be recognised as appropriate outside IR35 contractors. The most ideal way to demonstrate this is through case-by-case analysis of each contractor working for your company, giving the opportunity for each person to be defined for their individual work. Demonstrating a professional in-depth understanding of the legislation shows the value to which you hold contractors and deeming them a great asset.  

This fair and informed process can be time consuming or confusing, however, there are plenty of experts that have handled IR35 for many years who are able to help clients and contractors alike. We have invested time and energy into understanding the best ways to make IR35 work for everyone involved. Specialists with clear resources and training are on hand with guidance to keep legitimate contractors working outside IR35 with ease and help take risk away from clients. Involving experts as well as the contractors themselves throughout the process can make it faster and clearer, alongside providing the opportunity for contractors to be involved in their own outcome.  

To summarise: ways of retaining the best talent can be 

• Having the in-depth understanding of IR35 (check out our IR35 Hub) 
• Case-by-case assessments (avoiding blanket decisions) 
• Open opportunities for experts and contractors to be involved in the process 

This way of making IR35 work for you creates an efficient and smooth process with individual assessments showing care and attention as you make the company attractive to contractors, leading to the potential abundance of the best skills and talent to choose from.