With millions of people in the world undergoing some form of social distancing due to Covid-19, life as we know it is currently looking very different. One piece of good news that has emerged in recent weeks in the UK at least is the postponement of the rollout of IR35 in the private sector. Given the largely negative impact this has had on public sector organisations such as the NHS, and the fear of blanket bans on contractors being put into place by employers, contractors and recruiters alike are understandably breathing a sigh of relief.
We must not, however, allow ourselves to become complacent, as all signs seem to indicate that the government will not be cancelling IR35 altogether. We can, therefore, expect the roll out to commence in 2021, once the pandemic is under control. We can also take advantage of the extra time we have been given to be sure we are completely prepared when it does happen.
They say knowledge is power, and nowhere is that more true than when we’re talking about HMRC regulations. Now is the time for recruiters, contractors and employers to really do their research and ensure that they have a deep understanding of how the regulations work and how they apply to them. You could check out the guidance straight from the horse’s mouth on HMRC’s website, or you could look for a version translated into plain English, such as Crunch’s IR35 Recruiter hub [https://www.crunch.co.uk/ir35]. Whatever your sources, you should ensure you have a thorough grasp of what IR35 is, and how it will affect you.
The next thing you need to do is make sure that you have some kind of process that not only makes it crystal-clear whether the contractor you’re bringing on board is outside of IR35, but also for the benefit of anyone who audits you later, as it is evidence to help you prove you’ve done a full assessment.
There are a few processes emerging in the market, one of which is Crunch’s own user-friendly tool. As a recruiter who may be bringing on board a new contractor, you can encourage them to get ahead of the game by having their own assessment undertaken. Crunch is also able to provide a unique service with overarching limited company and switchable Umbrella service to help contractors move between IR35 and non-IR35 contracts as needed.
Many employers may be looking at all this legislation and thinking it’s just not worth it. Wouldn’t it be easier for them to just stop taking on contractors altogether? This is an understandable viewpoint and as recruiters it’s important to be prepared for this. At the end of the day, we should be looking out for the interests of our end clients. While advising them, it’s important to highlight the potential additional complications of bringing someone on as a PAYE employee. There would be the additional time and effort spent on administration around tax and National Insurance, not to mention the added complication of what to do when the employer’s short-term needs have been met and the work has dried up.
It's worth noting that contracting has not been criminalised and if bringing on a contractor would best meet the genuine needs of the employer then, of course, this is the correct route. Recruiters are in a really good place to reassure employers and help them make the best choices, while ensuring that where a contractor is required they can gather the evidence they need to prove this to HMRC should they ever be challenged.
