20 Apr
Talent Management and Workplace Planning Conference
Online: Tuesday 20 April 2021
Book your ticket to the CIPD’s online Talent Management and Workforce Planning ConferenceUnderstand the ramifications of IR35 changes for in-house HR, and the five initial steps you can take to help your employer prepare for them
From 6 April 2021, private and voluntary sector businesses with an annual turnover of over £10.2 million, a balance sheet worth more £5.1 million or more, and 50 or more employees, will be responsible for deciding whether IR35 applies, and for deducting tax and NICs from contractors’ fees paid through intermediaries when it does not. How should you respond?
Step 1: Decide who in your organisation will be responsible for ensuring that the business is compliant with the new IR35 regime, and ensure they’re suitably trained in making IR35 determinations. It could be you, or someone in Finance or Legal.
Step 2: Identify those supplying their labour through a Public Service Company (PCS) or other intermediary.
Contractors could be providing labour:
For IR35 purposes, you need to identify those who fall into categories (a) or (c).
Step 3: Audit the arrangements to assess which contractors fall within and outside of IR35. Ensure a clear and consistent methodology is used, decisions are recorded, and data is kept secure.
To help you make IR35 determinations, HMRC has created a Check Employment Status Tool (CEST), with supporting guidance. It’s designed to establish the three main factors used to determine IR35 status; namely:
However, there may be instances where determination won’t be binary and CEST can’t make a determination, in which case you might need specialist help in making a judgement.
While you’re not obliged to use CEST, it has the advantage that the result is binding on HMRC, provided all the relevant information has been correctly inputted.
Step 4: Communicate the determination, known as the Status Determination Statement (SDS) and the reasons for it to the contractor, their PSC and the agency. You’ll also need to give details of the appeals process that you’ve established for those who wish to challenge your SDS.
Step 5: Consider any documentation and systems changes that are required. For example:
Understand the possible consequences for independent HR consultants by visiting IR35 implications for consultants.
Online: Tuesday 20 April 2021
Book your ticket to the CIPD’s online Talent Management and Workforce Planning ConferenceCharles Cotton’s article considers the implications of IR35, including the steps employers can take to prepare for the changes and how HR can help enforce it.