Government publishes IR35 Consultation paper
Government publishes IR35 Consultation paper – and makes clear the responsibilities that hirers will face under new rules
On Tuesday 5th March the Government published a Policy paper & Consultation on the upcoming IR35 reform within the Private Sector, scheduled to take effect on 6th April 2020. Whilst the majority of the information contained in the document is in line with what we have been expecting, there were a couple of interesting additions to the information that the Government has released up until this point. There is also a theme running throughout the document about the necessity for all parties to comply with their obligations. This is a really important point for hirers as the new responsibilities they will face under this legislation are not to be taken lightly.
- 1. Status assessment may pass to the worker themselves
The first new proposal is that when a client makes an IR35 status assessment for a role that they wish to fill, instead of simply passing this assessment to the agency who will contract with the worker, the client may now be required to pass this assessment directly to the worker themselves, along with the reasons behind the determination. The Government has included this new provision as it believes it is necessary to legislate to ensure that information is passed appropriately through the supply chain. It doesn’t stop there either – another proposal is that if a worker disagrees with a status assessment, clients should “develop and implement a process to resolve disagreements” – another additional responsibility for clients to consider. The wording in the Consultation document states that “medium/large sized private sector organisations are likely to already have relatively sophisticated HR processes in place…. for managing workplace disputes” – which may be true, but for businesses who hire large numbers of contingent workers, who will all have views and opinions as to their own IR35 status, this is perhaps an underestimation from the Government about the work required for businesses to be able to manage these new processes.
- 2. New information on where liability rests when legislation is incorrectly applied
Another interesting point that has been included is around liabilities where the legislation is incorrectly applied. As expected, if a hirer complies with its obligations and makes the required status assessment, and passes it to the required parties within the supply chain, it will be the fee-payer (usually the Recruitment Agency paying the worker) who will be liable if the legislation has not been complied with. However, what’s new here is that if HMRC was unable to collect the outstanding amounts from that Agency – perhaps because they had ceased to exist, or they were offshore – then HMRC would ultimately seek payment from the hirer. This means that, even if a hirer has met all of their own obligations under the new legislation, they could still be liable for uncollected tax and NIC payments. It’s critical therefore – more than ever before – that hirers work with supply chain partners who are compliant, legitimate, and who will not expose the hirer to additional risk.
- 3. ‘Reasonable care’ to be taken in the determination of IR35 status
Contractors who have been eagerly awaiting further information on how status assessments will be made may be comforted to see information contained within the Consultation document emphasising the requirement for ‘reasonable care’ to be taken in the determination of the IR35 status of a role, and a specific nod to the fact that “it is not right” to make blanket status assessments without properly considering the contractual arrangements and working practices relating to specific roles and requirements. This was as expected in some ways, but again, will mean that hirers who haven’t started to think about how they will assess roles against IR35 rules need to start thinking about their recruitment processes now – after all, the one year count-down to April 2020 is fast approaching!
- 4. Plan for success now
This may seem like a lot of extra work – and don’t get me wrong, this is a project that needs to be taken seriously. But it doesn’t need to be approached with dread, and this change definitely doesn’t mean that hirers can’t/shouldn’t continue to engage contract resource. Compliant Recruitment partners can help hirers to prepare for these changes, and to build process which will allow businesses to benefit from the skills, talent, and flexibility of our value population of flexible workers.
Download our whitepapers for guidance on:
- Preparing for IR35 Legislation Change
- Ensuring a Compliant Contingent Workforce after IR35 Legislation Change
For more information and help with your path to IR35 compliance or Outsource UK Bench Consultants, get in touch with our Head of Compliance, Victoria Roythorne, by emailing IR35@outsource-uk.co.uk or by phone on 01793 430021