IR35 – April 2021 and beyond

It’s now almost 12 months since the IR35 Off-Payroll Reforms were due to take effect.

Many businesses had invested time and money into preparations for the 6th April 2020 with collaborations, new systems and updated procedures only for the legislation to be deferred due to the pandemic.

With the reforms now in play, what should businesses be doing, and what should business as usual look like?

IR35 – Prepared and ready?

With the IR35 reforms now in effect, businesses still preparing can take some solace in HMRC’s announcement about a “light touch” introduction. Whilst it is imperative that businesses take action, genuine mistakes will go unpunished for the first 12 months following the introduction.

In a previous article, IR35 —  deferred, not defunct! Workr Group outlined the changes in responsibilities for engagers and recommendations on what HMRC expects from engagers concerning processes and responsibilities. Now that the reforms are in effect, engagers should be doing the following:

Status Determination Statement (SDS)

The IR35 changes state that the engager must make a status determination and take reasonable care in doing so. The status determination is required to ensure that the correct taxes and deductions can be calculated and made in accordance with the legislation.

According to HMRC’s Employment Status Manual (ESM10013), a valid Status Determination Statement must:-

  • state in the SDS whether or not the worker would be an employee or office holder, or is an office holder, for tax and NICs purposes if they were directly engaged by the client,
  • provide their reasons for coming to that conclusion, and
  • have taken reasonable care in coming to their conclusion (see ESM10014)

It is essential for engagers to note HMRC’s stance regarding reasonable care as follows:-

“If the client fails to take reasonable care, the responsibility for the deduction of tax and NICs, and the payment of the apprenticeship levy and paying these to HMRC will rest with it. That liability will always remain with the client unless it takes reasonable care in reaching its conclusion set out in the SDS.”

Reasonable Care

By reasonable care, HMRC means that the status determination must be thorough and detailed, giving an accurate and clear representation of the work to be carried out by the contractor (worker). 

HMRC recommends that you formalise and record a consistent process, seek professional advice and assistance, involve relevant parties or individuals, use a determination test tool and define and communicate a transparent process for challenges.

Determination test tools

HMRC released its Check Employment Status for Tax (CEST) tool some time ago, but this has proved inconclusive for many assessments, even in some of HMRC’s own test cases.

However, suppliers in the industry have constructed several other tests using case law examples, representing credible CEST alternatives.

Insurance

Many engagers who want to continue to utilise contractors have stipulated a need for IR35 insurance within the supply chain.

A comprehensive insurance policy that supports a robust determination process should eliminate almost all liability from engagers and put them in a prime position to attract the best contractor talent for those assignments identified as outside of the legislation.

Challenge process

Contractors and agency suppliers must have the opportunity to challenge an assessment, whether inside or outside of IR35.

Failure to consider or respond to an SDS challenge will likely be regarded as a lack of reasonable care by HMRC. This would significantly increase the risk of liability should HMRC find an assessment to be incorrect.

6th of April 2021 and beyond – Business As Usual (BAU)

Businesses should not underestimate the benefits of having a defined, robust and documented process for IR35 assessment.

Engagers prepared to invest in some simple processes and procedures, along with the support of compliant suppliers, can quickly and easily mitigate the risks posed by the new legislation and meet HMRC’s requirements.

As with any other supply chain for products or services, some good due diligence and common sense will allow businesses to carry on with business as usual, utilising contractors effectively and productively.

In contrast to businesses that have changed policies or made blanket statements, engagers will benefit most from the choice of exceptional contract talent available to them due to their fair and credible approach to IR35.

IR35 – Act now!

We encourage anyone with a responsibility for IR35 compliance to ensure that your determination process is fit for purpose and meets HMRC’s reasonable care requirements. To learn more about this you can join Workr Compliance and STR Group at 4pm on Wednesday, 5th May for a webinar reviewing the landscape post 6th April and to gain key advice for maintaining BAU in the months ahead. 

If you are unable to make the webinar our specialist team can provide impartial advice and support to help you meet your reasonable care responsibilities. For a free, no-obligation audit and assessment of your IR35 compliance process, you can speak directly with Andy Webster on 07827 810851 or at aw@workrgroup.com.


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Gearing up for Growth

With many of the challenges of Covid behind us but with some still ahead, it’s more important than ever to reflect and have clarity of where we want to go, when we want to get there and how much growth is involved? 

Workr Group has partnered with Milestones Business Performance Consultancy to fund and develop an exclusive interactive webinar. This is provided FREE for Easypay clients focusses on gearing your agency for growth. 

Staffing and recruitment specialist and transformational change expert Miles Lloyd will provide insights, hints, tips and simple models that can be used to provide a strong platform for growth.

Learn about:

  • Growth mindset and change readiness
  • The destination and the journey
  • Having the focus to deliver
  • Growing, improving and innovating
  • Competitive positioning right first time
  • Planning for success
  • Making it happen, your energy and engagement

Every Easypay client who registers and attends the session will be invited to complete a Game Changer Index profile and benefit from a 1:1 feedback session with Miles, an accredited GCologist, and receive a personalised 26-page report for FREE. 

RSVP

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People, processes, protection – How to turn IR35 into an opportunity

This article features in the Jan/Feb 2021 issue of Recruiter, and has been reproduced by Workr Group with permission.

With the upcoming changes to the IR35 reforms for the private sector just round the corner, Andrew Webster explains how savvy recruitment agencies can steal a march on their competitors and win new business

Enough has been said about the IR35 Off Payroll Private Sector Reform. Countless predictions and forecasts have been written but none of them change the fact that in a short number of weeks, it will impact all stakeholders in the contracting chain. Whether end client, agency or contractor, this change is likely to hamstring growth and income if nothing is done to navigate the new rules.

However, the changes also bring a huge opportunity. Savvy agencies will not just retain talent that operates through a PSC (and end clients) on their books – they could also win new business. Those with the right knowledge and resources will have a competitive edge over the less-equipped recruiter.

Workr Compliance have developed a three-pronged approach designed to keep agencies profitable and compliant. By prioritising these Ps – People, Processes and Protection – you’ll protect your bottom line, and potentially grow it as well.

People

If you want to navigate the reform successfully, you need to know more about IR35 than what’s changing. You need to understand case law and what IR35 compliance best practice looks like. Not to mention make sure everyone involved in managing your contractor books is clued up on an ongoing basis, as HMRC will likely start enforcing across the supply chain.

Consultants that understand the Off Payroll IR35 Private Sector Reform will be in a much better position to educate clients – and ensure they make the right decision on how best to manage contractors post-April. If you don’t, you risk losing contractor books altogether.

Without knowing why a client is more inclined to bring all contractors under PAYE, you’re unlikely to be able to convince them otherwise.

Nor will you be able to explain to a contractor how you can hope to establish and maintain a compliant IR35 status throughout their chosen career as a contractor or freelancer.

What’s more, it’s imperative that all parties within the contractor supply chain understand and are capable of establishing the status of roles. Without this knowledge, end clients are unable to pass with confidence out of scope roles to their chosen agency – restricting them from quality talent.

As a first priority, Workr Compliance helps agencies and end clients get up to speed. We have a team of IR35 experts to demystify the legislation and genuinely collaborate to meet the responsibilities. Their advice covers everything from the complications of blanket decisions to custom guidance on the nuances of preparing for the changes and enforcement whilst not affecting operational delivery.

Process

You can’t afford a significant upheaval at this stage. Wherever possible you should be attempting to maintain business as usual. In order to do this, your methodology and process of issuing a ‘Status Determination Statement’ needs to be seamless. If not, you risk losing more talent than you bargained for – denting your income.

Unfortunately, time isn’t on your side. Even if it was, manually assessing each and every contractor on your books is taxing and risks a heavy number of inaccuracies. One proposed solution is the HMRC CEST tool. However, the free-to-use software has been heavily criticised for its unreasonably high standards and lack of consideration for mutuality of obligation.

Specifically, most PSCs have had an issue with the fact that HMRC has reversed decisions when disagreeing with CEST assessments.

Thankfully, CEST isn’t the only option on the market. There are a handful of established and proven tools that have been developed by those on the frontline of contracting.

That being said, at Workr Compliance, we believe it’s otherwise impossible to be compliant unless using a blend of intuitive online assessment tools and a consultative approach.

After all, a blended approach ensures you can quickly process status assessments without cutting corners…

Protection

Perhaps the biggest reason why some recruiters haven’t jumped at the opportunity that comes with the IR35 reform is the risk factor. The new rules put the onus of liability on the agency – as the fee payer, the buck rests with you if HMRC did call your status determination assessment into question or, from investigation, prove that ‘reasonable care’ has not been met.

It’s for this reason that agencies should seek a robust solution that comes equipped with the correct insurance for their employment status tax investigations and, possible tax loss. Only then will you have peace of mind when moving forward with contractor recruitment.

Andrew Webster
Founder & Director Workr Compliance


With only weeks to go before IR35 takes effect, can you afford not to utilise the most robust and proven IR35 solution on the market? At Workr Compliance, we apply a genuine understanding of the intermediaries legislation and off-payroll working rules in a commercial context. We’ll collaborate throughout project delivery, assessing the potential impact to each stakeholder in the supply chain of status outcomes. We’ll ensure that compliant and transparent processes are created, implemented and adhered to in order to meet HMRC expectations of reasonable care and, anticipated HMRC enforcement.

We’re committed to giving agencies the upper hand, so apply our expertise to your negotiations today and contact Workr Compliance email, aw@workrgroup.com or mobile 07827 810 851

For more detaills and insights, visit our Workr IR35 Hub.


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Workr Group Support Cash For Kids’ Mission Christmas

For the past two years, Workr Group have proudly supported Cash For Kids – a fundraising initiative set up by Manchester’s Hits Radio station. The charity raises money to help children and young people affected by poverty, abuse, neglect, life-limiting illness and those who have additional needs.

Workr have hosted activities, donation stations and much more in our time as a charity partner. So when lockdown and social distancing measures put a stop to plans, we knew that we needed to go above and beyond to help… 

A time in need…

Run by Jessica Rigby and Sophie Davies, Cash For Kids provide gifts and support through community organisations, social workers, schools and emergency services. When the pandemic struck, they were forced to cancel a number of events – set to raise £115,000. At a time when young children and their families needed more support than ever, the charity was forced to find an alternative to ensure they could continue to offer this lifeline. 

Jessica commented: “Hits Radio Cash for Kids is made up of just myself and Sophie. We’re both working from home and doing everything we can to ensure we not only help families right now who are struggling to feed their children, but also raise enough money to still be here after the pandemic and help the children who rely on our support for life.”

… made even harder

Of course, the pandemic isn’t the only challenge that the families supported by Cash For Kids are facing. A luxury that some just can’t afford, Christmas can be a tricky time. Christmas 2020 is likely to bring with it a number of additional challenges, as COVID-19 has directly affected UK unemployment levels and household incomes. 

Hits Radio’s Cash For Kids want to make Christmas Day different for children and young people living in poverty across Greater Manchester. By collecting and distributing gifts and cash donations, Mission Christmas can make sure that disadvantaged children have a gift to open on Christmas morning. Having done so much for the local community, and now needing our support, we knew we had to do our bit… 

Our work as a charity partner 

Over the past two years, Workr have opened up a donation station in central Manchester for gifts to be dropped off in December. Further fundraising events over the years have included Football Friday in July 2018, volunteering at a warehouse picking and packing christmas orders and an auction – where a signed picture of David Beckham raised £80!

Like Cash For Kids, we had big fundraising plans for 2020 but world events got in the way. While we hope to volunteer and open our donation station once more, this could be restricted. So to make up for it, we’ve decided to give our biggest donation yet – £2,056.37. 

Jessica Rigby commented: “We honestly can’t thank you enough for everything Workr does to support us, it honestly means so much. Especially this year with us having to cancel so much of our planned fundraising activity. This donation will make a HUGE difference to our Mission Christmas appeal.”

If you’d like to donate to the charity, you can do so directly on the website. For families and young children struggling during these times, it really does help. 

Workr Solutions and JobAdder partner to deliver streamlined back-office and payroll solutions for Recruitment Entrepreneur

Recruitment Entrepreneur have always been pioneers in providing recruitment solutions, looking for new ways of improving efficiency for the 19 portfolio partners within their recruitment group. So, when they were looking to expand their back-office and payroll provision to service demand within the constantly growing group, they had some key strategic decisions to make.

JobAdder, a leader in the recruitment software industry, have been a close partner with Recruitment Entrepreneur since launching their CRM platform in the UK. They therefore decided that any back-office service provider they chose needed to fully integrate with JobAdder’s CRM. After researching several providers, Workr Solutions were selected on the premise of their outstanding track record and service, understanding of the group’s requirements, and shared vision of full platform integration with the CRM.

Following an introduction from Recruitment Entrepreneur, the two providers developed an API ensuring seamless data flow from one system to another. This allows complete visibility of all accountancy and payroll activity, across all 19 portfolio businesses, at a company and group level. Most importantly it has reduced immediate and long-terms costs, and dramatically improved efficiency and the end user contractor experience, resulting in excellent feedback.

Angus McDowell, CFO of Recruitment Entrepreneur commented, “What was so impressive was the collaboration between JobAdder and Workr Solutions. They worked hard over six months to deliver against the unique requirements of all our businesses, and the customer service levels have surpassed our expectations. Everyone in the group is trained and the result is that we have an automated system which facilitates the growth and scale of our group. We’ve already seen the efficiency it’s provided, along with the removal of any manual error”.

Abid Hamid, CEO for the group said, “The outcome of the introduction has been that both JobAdder and Workr Solutions can now offer a best in class product suite, that’s been robustly tried and tested by a wide range of businesses, that are both diverse and complex. As well as us now being able to provide this transformational new service to new portfolio partners as we further scale our operation; it’s also created the opportunity for the two providers to reach out to their respective clients with the option of providing a wider integrated solution”.

Darren Watts, Co-Founder of JobAdder, said of the partnership “”This has been an exciting initiative and we are thrilled to be partnering with Workr Solutions. The collaboration between JobAdder and Workr Solutions has provided Recruitment Entrepreneur with considerable efficiency gains and we look forward to offering this solution to other organisations across Europe.” 

Yves Bizimana, Managing Director of Workr Solutions advised, “’We were delighted to be the partner of choice and work alongside Job Adder. By working collaboratively from the outset we were able to define outcomes and what success would look like and use our insights to blend our people, processes and technology. The result is a compliant and future-fit solution, tailored to the way Recruitment Entrepreneur works, that delivers measurable return on investment.’







About Recruitment Entrepreneur

Recruitment Entrepreneur is a multi-award-winning investor in recruitment businesses looking to start-up or scale. We won the Best Recruitment Business Investor 2020, alongside the Best Recruitment Start-Up Investment Firm 2020.Since 2014, we’ve invested in 30+ talented founders, enabling them to launch and scale successful businesses.

Our success lies in our ability to provide not just knowledge, but also knowhow. We have fostered a community of businesses that benefit from the expertise of our dedicated team who provide; funding, financial expertise, operational strategy, back-office support, legal advice, marketing and talent attraction solutions, all of which enable our partner businesses to flourish.

Investing time, money, and experience in people with the potential to become great leaders, we partner with and empower budding entrepreneurs to build world-class recruitment businesses, capable of achieving a high equity value on exit. We emphasise continual learning and development; supported by CASS Business School and accredited recruitment experts, every member of our portfolio receives professional training to help unlock their full potential.

About JobAdder

JobAdder is a global, cloud-based recruitment management platform designed to simplify and automate complex processes, allowing recruiters to focus their time and energy on productive work. Backed by global software provider Seek, JobAdder connects users with over 200 job boards, and integrates with some of the world’s leading tech platforms and HR software providers. JobAdder has offices in Asia Pacific, North America and Europe.

About Workr Solutions

Workr Solutions is an integral part of the Workr Group, a leading employment services organisation. Workr Solutions provide innovative, outsourced back office support services to recruitment agencies and end clients that accelerate time to value. From pay and bill through to fully managed solutions that connect service excellence in credit control, invoice discounting, payroll and statutory accounts. Workr Solutions has offices in the UK, USA, UAE and India, and is an employer or record throughout Europe.

Workr Group acquires Easypay adding funding to service offering

Workr Group, a leading international employment services provider, is pleased to announce the acquisition of Easypay Services, a Leeds based company providing funding and back office services to recruitment agencies.

Easypay, founded in 2003, employs a team of 25 experts who intimately understand the recruitment funding landscape. They are uniquely equipped to provide personalised solutions that support the growth of their existing and start-up recruitment agency clients.

Easypay will join Workr Solutions, an existing business unit of Workr Group, that specialises in accelerating time to value for recruitment agency and end-clients by providing specialist consultancy services and innovative back office solutions. 

The acquisition will extend Workr Solutions’ services to include funding capabilities and will be headed by Yves Bizimana, Managing Director of Workr Solutions.

Bizimana commented: “At Workr Solutions we have seen an increase in opportunities to manage more of our clients’ back office functions, allowing them to focus on recruiting. Funding is a key challenge for many of our partners and Easypay’s expertise will allow us to add even more value to the industry.”

Stephen Mix, Director of Workr Group led the acquisition and commented: “Easypay is a fantastic business with strong core fundamentals, focusing on customer service and good operational controls. The acquisition adds to our portfolio of complementary companies that have been designed to simplify flexible working across the supply chain. It is the sixth acquisition we have made in the last five years and will help fuel our continued growth.”

Commenting on the acquisition, Founder of Easypay Amanda Hobson said: ‘Workr Group stood out in the sale process as their strong values-led culture closely aligned to that of our own. Our management team are looking forward to becoming an integral part of Workr Solutions and supporting one another to continue our strong growth trajectories.”