The Advance TRS approach to the IR35 Reform in the Private Sector
3rd December 2019
HMRC is due to announce a Reform to the IR35 off-payroll legislation in the Private Sector. The Advance TRS approach to IR35 is being exceptionally well received by clients we have recently consulted with, mitigating risk for our clients with a compliant and insured solution.
Lessons learned from the Public Sector
Since the Public Sector Reform last year our Group Operations Director, Paul Merton, has worked hard to create a method of engagement that facilitates the continuation of supply of professional contractors in the correct manner via a professional services company.
He has attended a large number of IR35 seminars including several HMRC consultation meetings earlier this year. As a business rooted in the engineering recruitment sector, we are fully aware of the need to sustain a skilled workforce that can move freely from one project to the next without the need to be engaged as an employee.
Whilst IR35 in its initial form afforded many contractors significant tax benefits, the more recent changes have brought about a very clear definition of controls and the manner in which these workers must engage. Advance TRS has invested a great amount of time in understanding these controls and building them into our management system.
Rather than seeking to bring an end to contracting and force contractors into employment contracts that they do not necessarily want or need, we have dedicated our time to creating a contractual solution that demonstrates very clear processes and compliance with the guidelines set out by HMRC.
Whilst the reform requires the end-user to provide a determination, it also makes provision for the responsibility to pass to the fee-payer (agency) on the basis that ‘reasonable care’ has been shown in the determination. It is our intention as a business to ensure that all contractors are engaged correctly with a clearly defined control mechanism and auditable due diligence across Umbrella, PAYE, CIS self-employed and Professional Service Company.
Responsible compliance processes
The change in responsibility that is set out in the Private Sector Reform along with the opportunity to focus on the compliance of all parties in the supply chain has prompted us to review how we supply contractors to our clients.
The Advance TRS process of compliance will allow us to administer an honest and realistic ‘outside IR35’ determination that has been professionally assessed and insured to allow our clients to demonstrate ‘reasonable care’ in the eyes of HMRC.
Advance TRS is committed to partnering with any client who engages contractors through us and will provide full support and disclosure of associated documentation where required.
Managing costs and administration
The Public Sector Reform brought about numerous blanket ‘inside IR35’ determinations which saw large numbers of contractors increase their rates by 15-25% to accommodate the rise in taxation, HMRC have been clear in their guidance that they do not expect to see this in the Private Sector Reform.
Advance TRS provide a solution that not only facilitates the correct manner of engagement for these workers but will also allow clients to remove intermediaries from the supply chain who will become a cost to the business rather than providing a viable route to market. Whilst Advance TRS are unable to remove the responsibility for the determination from the end-user, we are able to provide an auditable and insured solution that will allow us to take responsibility for administering the determination itself. As a partner supplier, we firmly believe we can deliver the administration service for a nominal charge.
Contractor engagement – documentation and legislation
The end result of this process is to facilitate seamless and compliant administration and engagement of a contractor base who will each be determined and contractually engaged in the correct manner.
Due to the current political climate, the timescales for implementing these changes will become increasingly smaller once we enter 2020. The Reform also offers clients an opportunity to review their existing supply chain and the contracts of engagement that are in place with their contractors as well as the umbrella companies they engage.
The risk of poor compliance processes in the supply chain is that it can leave clients exposed if relevant legislation updates are not addressed adequately.
Don’t leave it too late, speak to us now about any questions or concerns you might have! Contact our IR35 Lead Paul Merton on 01483 361061 or email@example.com to book your free consultation.