Tag: #Advance TRS approach

WHAT IS IR35?

IR35 was introduced in 2000 to address concerns relating to individuals who supply their services via an intermediary (such as a Limited Company) instead of as an employee. Therefore, they avoid paying employee income tax and national insurance contributions.

Where an assignment is deemed ‘inside’ IR35, PAYE deductions must be made from the contractor’s pay. Any assignment ‘outside’ IR35 is classed as a genuine B2B service and is not subject to the same tax treatment as employees. Advance TRS are here to support you through these reforms.

We have partnered with IR35 experts Kingsbridge and Liquid Friday to guide our client and contractor communities through the changes in legislation. Browse our latest IR35 news, read our FAQs or get in contact with any questions you might have.

WHAT HAS CHANGED AND HOW DOES IT IMPACT ME?

From 6th April 2021, following changes in the public sector in 2017, the government extended the reform to the legislation to capture large parts of the private sector. The key change is that the responsibility of defining the IR35 status of the assignment switched from the individual’s Ltd company to the client, as the recipient of the services.

The legislation states that all companies must take ‘reasonable care’ when assessing if roles are inside or outside of IR35. Taking a ‘blanket approach’ to assess all roles won’t deliver this. We have spoken about the reasons in a recent blog article.

The potential financial penalties can be significant if incorrect steps are implemented, but there is support available to help.

WHAT DO I NEED TO DO TO ENSURE THE CORRECT DETERMINATION?

We are working with clients and contractors to ensure everyone has taken the necessary steps. We’re also ensuring they have been given the correct IR35 determination for them.

  1. SPEAK TO YOUR CONSULTANT – If you are concerned about whether you have taken the necessary steps and want some guidance, the best place to start is by calling your consultant. They will be able to discuss how the reforms impact you and your method of engagement. 
  1. GET A SELF-ASSESSMENT – Next, you can use the Advance TRS free self-assessment tool to confirm your determination and which method of engagement is suitable for you going forward.
  1. CONFIRM YOUR METHOD OF ENGAGEMENT GOING FORWARD – Once you have completed your self-assessment you will need to confirm any changes with your client and agency to issue any new contracts/rate changes and agree your transition date.
  1. PURCHASE IR35 INSURANCE  – To ensure you and the supply chain are protected, we recommend purchasing IR35 Protection Insurance from our partners Kingsbridge who offer a Zurich underwritten policy

THE ADVANCE TRS APPROACH – Be prepared and proactive

Due to the scale of the impact of this legislation, we were prepared well before the Reform came into effect. This ensures our compliance and working practices facilitate confident determinations.

Listen and Learn – Our ability to gather intelligence from multiple sources allows us to learn at a faster pace and deliver the most informed approach to all parties.

Openly Communicate – Face-to-face meetings and regular bulletins provide clients and contractors with the most up-to-date information on how best to set out our working practices.

Free Self-Assessments – We worked with Kingsbridge to offer free self-assessments for contracts.

An Insured Solution – We understand the importance of peace of mind, so have worked with Kingsbridge to offer a Zurich underwritten insurance product to protect the whole supply chain.

WHY ADVANCE TRS?

  • Offering free self-assessments and IR35 insurance to protect the whole supply chain
  • APSCO accredited engineering recruitment consultancy with sector specialist consultants
  • ISO18001, ISO9001, ISO27001 certificated and 5* RISQS since the inception of the scheme
  • Huge financial investment in contractual documentation reviews from recruitment expert solicitors
  • Robust contracts and terms of business that are compliant with current government legislation
  • Open book policy on working practices with contractors and clients
  • Excellent legal support from expert recruitment and financial specialists
  • IR35 guidance from FCSA accredited supply chain partners
  • Partnered with Kingsbridge Insurance, one of the UK’s leading suppliers of PSC insurance packages
  • Over 100 years collective experience of engineering recruitment
  • Dedicated business services team focused on contractual compliance and payroll excellence
  • A compliance-focused supply chain partner experienced in supporting all levels of project delivery

A LITTLE MORE BACKGROUND INFORMATION ON IR35

HMRC IR35 legislation has been in place since 2000, but non-compliance is widespread.

HMRC estimate that only 10% of those who should be applying the rules do so, which will cost the Exchequer £1.3 billion in 2023/24. This deprives vital public services of important funds and is unfair to taxpayers who are complying with the rules.

Whilst the compliance of PSC workers has been a relatively mute subject for the last 20 years, HMRC have now realised there is a significant need for focus and attention on the management of this area of taxation, more specifically in relation to employers’ national insurance contributions.

With such significant growth in the number of £multi-billion engineering projects across the UK, there will always be a requirement for the engagement of a highly skilled and flexible workforce that is prepared and willing to move from project to project.

It is essential that this workforce becomes more educated on and compliant with the options that are available to them if they wish to remain off-payroll for the duration of their assignments. Advance TRS Ltd. are committed to providing the highest level of service and engagement throughout the recruitment process to ensure that workers and clients can deliver their services and their projects successfully in the knowledge that their status determination truly reflects their employment status.

It is important to learn from the public sector reform and ensure that we keep contractors fully briefed on their options whilst enabling clients to make confident and informed decisions.

It is essential to approach the private sector reform through the utilisation of all information and facilities available to each member of the supply chain. This offers the flexibility to evolve with HMRC decisions whilst retaining a common goal of providing resources to deliver projects.

It is clear that the public sector ‘blanket approach’ determinations should be replaced with the recommendation that contractor IR35 status assessments are dealt with on a case-by-case basis. This approach offers an assurance to valuable workers that their interests are treated fairly, in line with the legislation and not just for the benefit or safety of the end-user.

One of the key aspects of managing the implementation and impact of the IR35 private sector reform is to ensure that each party in the supply chain recognises their responsibility, communication is clear and processes of due diligence and compliance are auditable. Contractors must take responsibility for the management of their accounts and affairs whilst engagers must extend fair treatment or ‘reasonable care’ to their contractors by preparing diligently and not leaving off-payroll working processes and considerations to the 11th hour.

ADVANCE TRS

We have the operational capability to adequately deal with the extra administrative burdens and will work closely with all parties to manage a case-by-case approach.

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.

Consultation dates are still available in 2019 – book your free session now.

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 ir35@advance-trs.com to book your free consultation.