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More than four years on from IR35's rollout in the private sector, the need for continued diligence hasn’t faded. For businesses managing temporary workforces, a clear and sustained strategy remains essential - especially when it comes to accurate status determinations and effective assignment management. These processes should be consistently embedded across the organisation, supported by regular training and strong operational governance.
Who is responsible for making IR35 determinations?
Regardless of whether your organisation is hiring the contingent workers directly or through your recruitment supply chain, your business is still responsible for making IR35 Status Determination Statements, and if investigated HMRC will look to see reasonable care has been taken and you have a good understanding of working practices and contract terms to make accurate IR35 status assessments.
The golden rule for making IR35 Status Determination Statements
It’s crucial to keep in mind that a Status Determination Statement needscreating for every single assignment a contractor is engaged to deliver. In the instance where a contractor is taken on for a second time to complete another job for the End Client, a new Status Determination Statement will need to be created, taking care to ensure there have been no changes to working practices and engagement terms.
Make sure you’re utilising CEST effectively
The Check Employment Status for Tax tool (CEST) provides an HMRC perspective on a contractor’s 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.
Create an ongoing training plan
Businesses also need to ensure robust training is in place for 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.
Your organisation can choose to use a generic training package and tailor it with content that aligns more closely with your internal processes. Alternatively, you may opt to work with an external advisor to develop a fully customised training solution. If the off-payroll working rules have a significant impact on your business, investing in a bespoke training package is strongly recommended.
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.