IR35 Contractor Payroll Solutions
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. This article explores the different options available to gain compliance.
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.
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)
- Have a Talent Engagement team dedicated specifically to providing a high touch “concierge” on-boarding 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 1.25m 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 Payroll and Workforce Management Solution may work for your business, please get in touch with Daniel Youds, Solutions Director, on Daniel.Youds@reed.com or 07712 881 119.
In addition, via our dedicated Consultancy+ team, we can provide a wide range of IR35 consultancy solutions including Readiness Workshops and Outsourced IR35 Determinations as well as delivering SOW Consultancy solutions, and Services Procurement get in touch with James Bridgland, Consulting and Solutions Director, on James.Bridgland@reed.com or 07949 975 424.
Daniel manages the private sector outsourced sales team for Reed Talent Solutions with a focus on developing sustainable client relationships and delivering new RPO and MSP contracts. Daniel has over 15 years experience in the recruitment sector, with over 10 years at Reed, working in both operations and recruitment outsourcing.
Daniel enjoys the opportunity to build resourcing solutions that make a real difference to our clients, and then see those relationships evolve and grow over time.
IR35 reforms were introduced into private sector organisations in April
2021, which significantly impacted the way organisations engaged contingent
Presenting legal and non-compliance risks for the private sector, it’s critical that businesses seek guidance from specialists to effectively navigate these changes.
IR35 is being rolled out into the private sector from April 2020, but even with the deadline fast approaching there’s still confusion regarding what the changes mean for businesses.
As a business that delivers change projects and consultancy, the changes in the application of IR35 legislation has a big impact on us and our clients. Whether it is making sure we are managing the legislation effectively, or helping our clients ensure they are handling it effectively, it has an impact on what we do.