IR35 for Agencies
All agencies are aware that the IR35 rules are changing and that from April 2020, those engaging contractors will be required to assess whether the role/service is inside or outside IR35. Alongside this change, end client engagers will be looking to ensure that intermediate “fee payers” are compliant and that they will not face unexpected tax bills.
The initial compliance burden and the ongoing need to audit or confirm the making of tax/NIC deductions in the supply chain has already seen major companies announce a cessation (for the moment) of contractor engagement. The appetite of individual freelancers to continue as such is not diminished, but agencies will need to provide the very best service they can to retain market share in what will be a shrinking market.
This shifting of the decision making and accountability will require that agencies are accurate, nimble and responsive in a world that expects them to be expert in more than just contracts. The inevitable increased HMRC attention will begin with you, the intermediary, meaning that clarity and compliance of the original “inside/outside” decision and all subsequent actions is crucial if those enquiries are to be settled quickly and efficiently.
Whilst the landscape may look difficult for agencies, an opportunity to seize market share by anticipating and preparing for the change is evident. It is likely that your client will want to continue offering roles that are limited in time or work. The first step will be to help your end-client understand the need to focus on the type of service they want rather than the individual contractor. Similarly, contractors in your supply chain will need to understand that they are providing a service, not themselves.
Marrying the services required with those available, via a mutually agreed Statement of Work contract, is an option which allows for reasonable adjustments to be made that all parties can commit to and maintain. By becoming pivotal to both the contractor and the end-client, the agency becomes indispensable and retains control of decisions that represent a risk to its business, now or in the future.
Implementing and maintaining your IR35 strategy is where we can help.
IR35 tools exist but many rely on the flawed CEST tool which is misguided and widely considered unfit for purpose. IR35 reviews, contract reviews, drafting recommendations and status determinations should be carried out on an individual basis by an expert who fully understands the parties, the engagement, the contract and the industry. Similarly, this analysis must be conducted on a continuous basis because the greatest exposure comes where planned working practices do not match the reality.
WTT offers a comprehensive compliance function for agencies who wish to prepare for IR35 changes. Our approach is to work with you to understand your supply chain and implement a framework which you can administer, with our help, so you can continue to offer contractors to end clients in a risk free and compliant manner.
We carry this our through the following steps:
- Collect facts of the role/service from all parties in the supply chain
- Agree those facts with all parties
- Make a reasoned decision based on those facts
- If required, draft the Status Determination Statement in accordance with the above
- If requested, consider what real changes can be made to achieve an outside decision
- Draft suitable contracts (SOW)
- Draft the Determination Statement based on the new facts where required
- Ensure all parties are aware of the new circumstances and their obligations
- In post reviews and if necessary report adverse changes that may impact agency liability
We also offer as standard complementary seminars, training sessions, webinars and newsletters for both your internal staff and contractors to educate them on changes and ensure compliance across the board.
This service is provided via low-cost monthly fee which includes all the above and conducted by our in-house law firm, led by Carla Roberts who has more than twenty years legal experience in the agency industry. For more information please contact us.
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Just want to add my thanks to Graham, Rhys and the team for the glimmer of hope they’ve given us. I can’t tell you how glad I am that I found WTT.