IR35 in the private sector is just around the corner – it is coming into force in April 2021, and this time, after two close calls, it’s (almost) certain to happen.
But this isn’t another article about the impact of IR35.
With all the false starts over the last few years, most private sector businesses are already pretty clued up about how the IR35 reforms will work; you’ve almost certainly been on one of the many IR35 webinars (after all - you had to have some way of filling your time in lockdown), you’ve possibly had a go on the CEST test, and you may have already determined which of your current crop of contractors and consultants are now “inside” (about 80% of them if you’re anything like the average business).
However, what many businesses haven’t yet considered is what is the best way to pay and engage all these contractors who are currently engaged directly by your business? Right now, they are likely operating via personal service companies (PSCs) on an outside basis, but from April 2021, will need to be engaged via either a PAYE temporary contract, an Umbrella provider or (less likely) through a 'deemed' payroll.
It’s not uncommon for anywhere up to 60% of all contingent workers and consultants to be sourced and engaged directly by your business (i.e. they are known to your business or have been referred to you, so have not been sourced by one of your agency partners).
When these workers transition to an inside IR35 engagement, it could mean additional challenges for your business if you continue to engage them directly:
Tax will need to be deducted at source, along with managing legislative requirements such as working time regulations (holiday pay), National Insurance and auto-enrolment pension contributions
For PAYE workers, your business would be responsible for the employment relationships and the additional HR burdens these bring
In addition, it is not uncommon for contractors or consultants providing services directly for you to have no compliance checks in place. Therefore, this may also be a consideration moving forwards – especially if operating in a high compliance or regulated environment.
What to do?
To mitigate these new risks, we recommend engaging a specialist contingent worker payroll and workforce management provider which offers IR35 solutions.
Reed Talent Solutions has been providing these services for many years – both as an added value service to our strategic MSP clients and more recently in direct response to the challenges presented by the IR35 reforms.
As a payroll and workforce management provider, we:
Provide a low-cost, high-compliance, payroll and engagement solution for contingent worker populations of any size (whether you engage 10 or 100+ contractors) - it's the perfect IR35 solution
Have a talent engagement team dedicated specifically to providing a high-touch 'concierge' onboarding and payroll service to client-referred contingent workers
Employ all PAYE workers on contracts of employment, protecting you from any HR or co-employment risk
Have an in-house team that manages weekly payroll for over 65,000 temporary workers, processing over one point two five million timesheets each year, and managing all legislative costs and tax deductions
Manage an approved list of FCSA-accredited umbrella companies
Manage, track and report on Agency Worker Regulations (AWR)
Manage all compliance requirements via our dedicated vetting provider, Reed Screening
Provide detailed MI and reporting, a single online platform for timesheets and approvals, and consolidated invoicing for all workers
If you would like to talk to Reed Talent Solutions about how our IR35 solutions may work for your business, please get in touch.