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It’s been six months since IR35 launched into the Private Sector, but the hard work didn’t stop in April for businesses to ensure they remain compliant. To avoid confusion around how to effectively determine IR35 status and ongoing assignment management, a long-term strategy is needed to manage temporary workforces and make best use of the 12-month soft landing period.
Recently it was revealed that HMRC are already commencing compliance checks in the financial services, oil, and gas industries. Making it more important than ever that organisations can evidence compliance and have taken appropriate steps to make accurate IR35 status determinations to the best of their knowledge.
Make sure you’re utilising CEST effectively
The Check Employment Status for Tax tool (CEST) provides an HMRC perspective on IR35 status, based on the information the End Client provides. HMRC do not make the usage of this tool mandatory, but it is good practice to show that businesses are engaging with the official tools provided. HMRC have also stated that they will stand by any IR35 status determination made by the tool, where the information input was accurate making it a good starting point for End Clients when conducting assessments.
To utilise CEST, it must be assigned to the right people – those who have the best understanding of the contractor being engaged. These people must also be thoroughly and regularly trained, so that they understand how CEST works and are familiar with any updates HMRC have made to the tool.
End Clients should also consider conducting regular reviews of live contractor assignments. This will not only demonstrate reasonable care but highlight any changes to the IR35 status for their contractors. As we’re six months into the Private Sector launch, now could be a good time for businesses to undertake a review of assignments first assessed back in April.
Create an ongoing training plan
Businesses also need to ensure adequate in-house education and training is available to new colleagues, to allow a standardised process for status determinations. It’s also good practice to continue to engage hiring managers with ongoing refresher training, to maintain a good understanding of IR35 legislation and internal processes.
However, to further assist, organisations could consider IR35 checklists. These checklists would offer comprehensive step-by-step instructions for hiring managers to follow when completing an IR35 assessment. The list should cover essential areas such as contract reviews to ensure you are processing each status consistently.
By producing internal training material in a range of different formats, this will break down the complex of IR35 into manageable and consumable sections. This internally produced material could be specific to the business and relevant to the different roles who will be involved in the ongoing management of IR35.
Engage with your supply chain partners
It’s a good idea for organisations to include their recruitment supply chain partners in ongoing IR35 strategy development. This can provide access to industry best practice insight, to ensure assessment processes are robust. By applying external scrutiny to internal processes, businesses will gain an outside viewpoint and independent review to verify their IR35 strategic approach.
Consultancies such as Linx, part of the NRL Group, offer tailored business audits to check IR35 processes are compliant as well as reviewing in-house training materials to ensure they continue to be relevant in-line with HMRC legislative updates. If you’re looking for more long-term assurance, build in regular reviews and audits to provide ongoing assistance to support with IR35 working practices.