Executive Grapevine | Executive Grapevine International Ltd

Prepare, prepare, prepare

A longer run-in time means that recruitment agencies have time to get ready for IR35 changes...

Prepare, prepare, prepare

At the end of October, when the Chancellor announced the details of the Autumn budget there was widespread relief that off payroll tax changes in the public sector wouldn’t be extended to the private sector – not just yet, anyway.

But eventually the changes will come. Philip Hammond, amongst other budget pronouncements, laid out that April 2020 was when alterations to contracting tax practice in the private sector would come into force.

And despite hope that a consultation period, in which interested and affected parties had the chance to submit their thoughts on the public sector changes and potential private sector solutions, might’ve resulted in a different outcome it looks like the only significant difference is a longer run in time.

“We recommend agencies communicate with their end clients to get a firm idea of how well equipped these engagers are.”

However, Seb Maley, CEO at Qdos Contractor, argues that this should give recruitment agencies time to prepare.

Noting the longer run in time, he told Recruitment Grapevine: “The good news is that recruitment agencies have time to prepare for the arrival of changes, which aren’t due until April 2020. That said, given the size of the task that lies ahead, we advise them to have processes in place well in advance of the roll-out.”

Maley continued to explain that the first thing agencies should do to prepare is to communicate effectively. “Firstly, we recommend agencies communicate with their end clients to get a firm idea of how well equipped these engagers are - or will be - when made responsible for setting IR35 status,” he said.

“Agencies would be wise to speak with the contractors they place too,” Maley continued. “Understandably, independent workers fear being wrongly placed inside IR35 by engagers, as has often been the case in the public sector. Inaccurate and risk averse decisions are ultimately short-sighted and in the public sector simply deterred contractors from working on a number of projects.”

And, as with the public sector, Maley cited concerns over HMRC’s assessment method – advising recruiters to stay aware.

“CEST - HMRC’s IR35 tool - is considered to be unreliable and agencies should be wary about viewing it as the only way to assess a contractor’s status,” he added, noting that a recent IR35 tool-based assessment was overturned in court and the fact that most contractors don’t trust it.

Yet, despite this concern Maley believes IR35 reform can be managed and agencies will be able continue to place these workers in contracts that belong outside the rules while at the same time protecting their own liability.

According to Maley, it’s about “getting the ball rolling immediately and making sure [recruiters] are in a strong position to help clients make correct IR35 decisions well before changes arrive.”